Honesty is not always the best policy. Gerald Ratner inherited a small jewelry business from his father and expanded it into the UK’s biggest chain of high street jewelers. He persuaded millions of customers that in addition to providing the enduring symbols of birth, marriage and death, a jeweler’s could be part of high-street fashion – a place you might drop into every so often for some casual bling to match a new dress or liven up a shirt cuff. He was a natural salesman, but his commercial success was equally due to his ready bonhomie, sense of humor and generosity of spirit.
Inevitably, such a man was a popular after-dinner speaker, and Ratner became accustomed to delivering speeches at sporting, charity, and business functions. He learned the ropes by trial and error, until he knew which jokes would work for almost any occasion. And he learned – from experience and from advertising – that people respect candor: tell the truth about your product and they buy more of it.
Ratner was at the top of his game on April 23 1991, though a little wary of his after-dinner audience at the Institute of Directors in London. He decided to include two of his regular jokes to loosen them up. One was enough. Describing a sherry decanter set that sold for 54.95, he joked ‘People say “How can you sell this for such a low price?” I say “Because it’s total crap!”.’… The room rocked with laughter.
Next morning, Ratner was assailed for ‘insulting his customers’ and ‘sneering at the recession-hit poor’. The tabloids crucified him. The Sunday Times called him ‘Gerald Crapner’. He lost his job and his company, and finally his name (when Ratner’s was renamed Signet in 1994) – only because, short of news, the papers decided to twist his joke into a headline declaration of class war.
When: April 23 1991
Where: Institute of Directors’ dinner, London, UK
Toll: Gerald Ratner personally lost £500 million. Though his self-belief was severely dented, he bounced back ten years later with an online jewelry business called ‘Geraldline’. For years, banks and former business associates refused to help him, so his subsequent success represents an even greater personal triumph over his very personal commercial disaster.
You should know: The ‘law of candor’ is the 15th law of The 22 immutable Laws of Marketing, one of the ‘bibles’ of marketing experts. Yes, everyone admires you for admitting a problem – but doing so goes against corporate and human nature unless you instantly qualify the negative with a positive solution. ‘Ratner’s gaffe’ is now shorthand for the consequences of ignoring that principle.