How words could destroy your brand: The phenomenal downfall of Gerald Ratner

The gentleman in the picture above is Gerald Ratner. He was the CEO of Ratner group, a billion dollar company till 1990. Until he chose to deliver a “crap” speech in 1991.

So, basically, the story goes that Gerald was a successful businessman who grew his family business to multiple jewellery retail chains. Their products were affordable and quite popular. The revenue estimate of that time was around 1.2 billion US dollars.

Then it so happened that Mr Ratner went to a public event as a speaker and delivered a speech disparaging his own products. He mocked some of them as cheap and valueless. The speech is on the YouTube video link below.

Without any delay, the next day media picked up his speech and the news spread like wildfire. Sales crashed immediately as consumers delivered the backlash against the CEO making fun of them. And thus, ended Gerald’s illustrious career as the CEO of Ratner group. The group itself had to rename as Signet group.

So, what do we take away from this story? I guess I will make a short list down below.

1. Think before you speak

Each word you utter as a leader of the company is picked up by your followers and audience. If you don’t believe in your products, you should probably not be selling them. But even if you do sell some things which you don’t use or like, please never speak ill of it. This not only applies to products but for everything. A leader should be consistent in communication and clear. So, think about what you say and what impact it might have on the stakeholders.

2. Always understand your consumer well

Ratner probably never understood why his products sell so much even if he personally thinks they are crap. The fact that there were some people who really appreciated the products and were happy purchasing them means that they offered some value to them. They were willing to shell out hard earned money for a little bit of happiness in the ear rings or decanters or whatever Ratner was selling. You may not use the products you sell, but if you don’t understand your consumers and their needs, why they do what they do, you will never be able to explain why your products sell.

3. Each Employee is a brand Ambassador

I have harped on this before in an earlier post. I believe every employee must behave like a brand ambassador for the company. What each person perceives about the products and brands must replicate and reverberate across the organization. This is how insiders influence outsiders in their contact and this is how a strong brand is built.

4. Focus on creating value and not the money

The conviction with which Ratner says their products are crap, indicates how low the quality must have been. Low quality products don’t create great brands. They are easy to criticise and replace. Consumers are not loyal unless they see value.

5. Always respect the consumer

When Ratner was giving the speech, probably in the back of his mind, he didn’t have much respect for his customers. But everyone deserves respect. Even if they are poor or chase deals and bargains all the time, they are still consumers and your target segment. They are bringing in the value to the business. It was a grave mistake to disrespect their choices.

Gerald Ratner apparently spent the next 7 years in bed after handing over the reins to his successor. I guess most people would feel and behave that way after such a blunder. Sad as it may be, it will stand as a lesson for the future for anyone who cares to read or listen to his story.