Customers of Netflix had a pretty good deal – for $10 a month, you could rent DVDs through the post as well as watch movies online.
Inexplicably, Netflix decided to separate these two options and hike the price. Cue outraged customers. Netflix apologised and backed away from its plans to split the services, but not before its share price was decimated and it lost 800,000 subscribers in the September.
The lesson? If your business’ proposition is simple and popular, tread carefully and involve your loyal customers when making any changes.
Start-up can get great marketing leverage from major events in the news. Whether it’s the AFL Grand Final or the latest political uproar in Canberra, quick-thinking businesses can exploit public recognition of a current issue.
It can go horribly wrong, however, as fashion house Kenneth Cole discovered in the wake of the popular uprisings in Egypt earlier this year. It decided the time was ripe for a Twitter offer:
The swift apology wasn’t enough to spare Kenneth Cole from widespread scorn.
The problem with PR mistakes is that it doesn’t really matter whether the subsequent outrage is justified or not.
When online retail portal RedBubble started getting complaints over its stocking of ‘Hipster Hitler’ t-shirts, it took a firm line that freedom of expression should be protected. Vocal opponents claimed that the merchandise glorified Hitler and made light of his crimes.
RedBubble finally relented and pulled the t-shirts, but not before six tortuous months of negative headlines and customer fury. If you are faced with a customer backlash, act quickly, whether they are in the right or not.
A familiar news cycle has taken hold in 2011 when it comes to the ‘big four’ banks – ANZ, Westpac, Commonwealth Bank and NAB.
Grumbles over executive pay have bubbled under the surface, but the real backlash came when the Reserve Bank decided to cut interest rates twice.
Focus immediately turned to weather the banks (combined 2010 profit: $24 billion) would pass the rate cut onto their customers.
Even a small delay in doing so, as witnessed this week, triggers an avalanche of criticism from newspapers, small business groups and Treasurer Wayne Swan. While your start-up won’t be in quite this position, it’s important to remember that overt penny pinching is likely to disillusion your customer base.
When Hollywood actress Hilary Swank made an appearance at the 35th birthday party of Chechnya’s president Ramzan Kadyrov, she wouldn’t have anticipated the backlash it would provoke.
Kadyrov has been widely accused of being one of the world’s human rights violators, putting Swank in a rather awkward position.
She promptly fired her entire management team and did a series of grovelling TV appearances to make amends.
As a start-up, you need to think carefully about who or what your brand is associated with. Is it a good fit? Is there the chance it could backfire? Do you really want to tie your reputation to a third party?
Kyle Sandilands, the radio and TV presenter, is one walking PR disaster. Whether he’s grilling school girls about their private lives or verbally abusing journalists, negative headlines are sure to follow him around.
Of course, if your brand is edgy and thrives on the kind of divisive content that Sandilands thrives upon, there is a clever way of doing this. Mindlessly insulting people, however, rarely works.
