Friday, December 4, 2009

Lifetime Social Value, How Sony Screwed the Pooch

About a year after I started dating my girlfriend, who is now my Fiancee, she needed a new laptop. I helped her do the research and suggested a Sony laptop. Two months after it went out of warranty, the motherboard died. This was a well known issue at the time and was all over their website. Elaine called Sony, but they wouldn't budge and would only offer an unreasonable fee of over $600 to fix the problem. During this time, laptop prices had gone down and this fee made no economic sense.

I felt horrible about it. My family has been life long Sony bigots. Our first color TV was a Sony and we've had a strong preference for Sony products ever since including desktops, laptops, DVD players, stereos, Walkmen, clock radios, etc..

Not only had Elaine bought the laptop I recommended, she recommended Sony to several other people some of whom also bought.

Elaine resolved to never buy another Sony product ever again. .....This is where the story gets interesting from a marketing standpoint. Every time I suggest buying a new product that happens to be Sony, I get brow beaten to death. Elaine also tells anyone that will listen that she'll never buy a Sony product again. The result of all this Sony dogma is that I haven't bought another Sony product since Elaine's laptop failed two years ago.

It's a real shame for Sony too. We are both in the information technology industry and to say we are heavy consumers of technology would be an understatement. To give you some insight, Elaine is willingly accompanying me to CES this January for the second time since we've been going out, and both trips were personal and had nothing to do with our jobs. I believe we are the ideal consumers for an electronics company...early adopters who generally get asked by our friends, both male and female, what models of popular electronics they should buy.

We really aren't gamers (except for Elaine's new for an early Christmas present Nintendo Wii). However, tonight I told Elaine that I wanted to get a Sony PS3 because after comparison shopping, it looks like a very credible Blueray player that will be easily upgradable for some time to come. The first words out of Elaine's mouth were: "I am not paying for that." I would have never thought to ask her to contribute to my pursuit of 1080p (Blueray resolution), but she went on breathing Sony fire and damnation for several minutes more.

Effectively because Sony had no concept of how connected Elaine was to so many tech consumers, Sony screwed themselves by not fixing a known defect with Elaine's laptop. She can't help but badger me into not buying their products which compelled me to write this blog entry as an interesting marketing issue.

This story begins before the heavy use of the type of social media that will now see this story go from my marketing blog to my Twitter account and then on to my Facebook account automatically.

From a new marketing angle, this story made me think of two principles:

1. The Perpetual Profile - Businesses don't spend enough time profiling customers after they buy. We know we want them to buy again, so if they spend a few thousand dollars with us, shouldn't we figure out who they are? Elaine is a Technology Development VP, spent $2,000 on our laptop and lives with Ken who loves(ed) Sony. Perpetually profiling people who spend bigger dollars with us would be a necessary step to realize the theoretical lifetime value we all strive to achieve.

2. Poor Product Support Judgement Calls in the Social Era will Kill Brands - Effectively, some unimpowered support rep in the bowels of Sony effectively ruined my lifetime relationship and value for Sony and I am not even the one that had the direct issue.

Both these points speak to the need to get much smarter about how we deal with our customers and increasingly the web of people they influence and those who influence them. The good news is that for the products we like, we will give away this information freely. Everything Sony needed to know to alert them, perhaps electronically, that screwing up this issue would be a costly landmine for them was there for the taking.

Sony, I think you lost your opportunity to be our One and Only, but maybe there's still hope to get your act together and save a few more people like me.

The lesson for most companies is that your installed base matters. In fact they are the engine of your growth which is now amplified positively and negatively in the social era. Fail to identify or ignore those who have been your biggest or most loyal customers and deeply suffer the consequences. We used to say that those who had a bad experience told 10 others. This may be a more modern case, but I think it is the shape of things to come. So we are going to have to revise the phrase.

People who know people who've had a bad experience tell thousands of others. (via social media).

The good news, Sony, is that there is a short window to learn from your mistakes. The reverberating effect of Social Media is well documented, but its impact is really just revving up. Act fast and my second LCD TV may not be another Samsung.