F.L.O.P. — Failure in Launch, Operations or Premise
By: Karl R. LaPan, President & CEO, Northeast Indiana Innovation Center
This is my second of a series of blogs on failure. This week I am focusing on marketing flops and the lessons learned. For every “win” out there in the marketplace in terms of innovation, there are likely at least nine other failures. It’s just that we don’t always hear about the flops. Indeed history doesn’t tend to favor the mistakes. But sometimes the most important lessons come from failure. Here’s a look at 5 flops over the last few years and the takeaways:
The Fail: Speaking of flops, The Cartoon Network went overboard with this promotion and instantly became a case study for guerrilla marketing gone wrong in 2007. The company was trying to promote the show Aqua Teen Hunger Force with LED circuit boards featuring the show’s pixelated characters on public structures around the city of Boston. What they didn’t account for was the anxiety they induced with a bizarre creature making an offensive gesture, along with complex electrical circuits laid out for no apparent reason. The campaign completely backfired, as some were concerned the boards were bombs and contacted the authorities. As a result, parent company Turner had to pay $2 million to the Boston Police Department for the resulting investigation.
The Lesson: If you plan to do something unorthodox, it’s always good to work with law enforcement from the outset. Keep them informed of what you’re doing and get the permits and licenses that are necessary to execute something that might seem—at best–out of the ordinary or–at worst–suspicious.
The Fail: Tropicana was looking for a fresh and new look for its cartons, but what they took for granted was the loyalty their customers had to the design. When the new look and feel was rolled out in 2009, the consensus was that it looked too generic. After a deluge of negative feedback, PepsiCo announced that it would promptly return to the old carton design.
The Lesson: Know your customers. Do your homework. Be sure to do the customer insights work (used to be called marketing research) to know what your customer wants and expects from your product and brand. Some would say if ain’t broke, don’t fix it–or at least invest funds to know whether it will be positively received or not so you can hit the mark. Others in the innovation world would say “fix it before it breaks”. This can work too if what your fixing is a pain, gain or job to be done (think business model canvas and value propositions!)
The Fail: Critically acclaimed as a marketing disaster, Radio Shack’s decision in 2009 to call itself “The Shack” failed faster than you could say “OMG.” They basically flushed decades of loyalty down the toilet for the sake of adopting a cooler brand persona.
The Lesson: Some brands aren’t meant to be “cool” and that’s OK. Stick with what works with your target audience. There’s a danger in trying to pander to a certain demographic at the risk of seeming out of touch with your base or even worse alienating your loyal customers.
The Fail: In December 2011, the New York Times sent an email to people who recently cancelled their subscription asking them to reconsider, and giving them a discount to further entice them. Smart, right? Unfortunately there was a snafu involving an employee accidentally sending it to 8 million subscribers instead of the list of 300 that it was meant for targeting.
Some subscribers ignored the email, thinking it was spam, while others were incensed by the fact they weren’t getting the same discount as a loyal customer. Naturally, the company responded immediately apologizing and telling people it was an unfortunate mistake. Still, they likely lost some loyal customers in the aftermath who shopped around for a better deal (having lost confidence in the NYT’s brand.)
The Lesson: Human error can cost you. Be sure to know what problem you are solving and what and how you will measure success. Be sure to consider the impact to other customer segments when launching special pricing and focus on keeping the right customers. I have never understood why banks and phone carriers are more loyal to new customers than they are to their existing customers. Know your metrics: the acquisition costs of new customers, the lifetime value of a customer and customer churn rate when deciding on who the ‘right customers’ are. According to a 2014 Harvard Business Review article, “Depending on what industry you’re in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. However, if you were to increase your customer retention rates by 5%, it potentially increases profits by 25% to 95%.”
The Fail: Coffee behemoth Starbucks went out on a limb in March 2015 when it launched a campaign encouraging customers to talk about race. Their stock plummeted and, consequently, Starbucks dropped the campaign in less than a week. In my opinion, Starbucks CEO’s recent efforts to be a polarizing voice in the 2016 election is detrimental to the brand.
The Lesson: It’s often best to stay clear of controversial issues, unless it’s part of your brand DNA. If you serve coffee, serve coffee—and spare the social commentary. Starbuck’s CEO should spend its time focusing on his sluggish, same store sales growth than pontificating on political and social turmoil in the United States. Frankly, I agree with Schultz’s critics who remind him that his “role is to create shareholder value and profit; not to use Starbucks as a political tool.”