The Key Role of Sincerity in Restoring Trust in a Brand with a Corporate Apology

Abstract

How should a firm respond in situations where consumer trust has been shattered? Corporate apologies are a common response, but there is uncertainty regarding this being the best approach. Prior research has compared apology to alternative corporate response strategies without fully considering the elements that constitute an effective apology. We apply insights from the inter-personal relationships literature to an experimental examination of a corporate apology issued following a guilty plea to charges of misleading advertising. Structural equation modeling shows that perceived sincerity of the apology statement plays a central role in enhancing assessments of reputation and trust in the brand, minimizing brand damage. Excusatory statements and high stability both detract from sincerity, but corrective action reinforces it. Our findings provide important guidance for restoring reputation and regaining consumer trust.