HTC sent out an email at 9 AM yesterday offering Nexus 9 at half price. Things did not go well. But, if they follow Motorola’s lead on this subject, they’ll do fine.
Let’s rewind a bit to late last year. Motorola, determined under Google’s leadership to make sales numbers, offered up a fire sale. The 2013 Moto X rolled out for $399 one fine morning. And then, everything went awry.
As one of those people first-in-line, the web site stopped working. Those reloading before the site went live, clearly couldn’t get through. The site was being hammered before the sale even started.
This is a problem. It’s one thing to have a small quantity of devices available for sale to the hardcore customers that are willing to camp out and get in on the deal. But when the server overloads before the gates open… those first in line, lose out. The server then randomly starts handing out devices to whoever gets in the millisecond-wide windows that the reload-page request gets in. It’s random, it’s chaos.
But worse, it breeds foamented animosity towards the very company that was trying to win over said customer.
Much like HTC’s woes, the big-box-blogs then began covering the crisis. This damaged the credibility of the company’s worse – now it’s not just customers that are scorned, it’s a tainted-brand crisis.
Motorola’s Gold Standard in Damage Control
Motorola took three big steps that solved things. If HTC does each, they’ll do fine. If they don’t, it’s another shovel of dirt for a company already quite deep in the hole currently.
Step 1: Admit The Problem is a Problem
Many companies in this situation just chalk up fire sale chaos to it being a fire sale… even when there’s clear evidence to the contrary. HTC is doing that currently to people that complain on social media. It’s been a long time since I started getting personal tweets from other people asking me to help them get HTC make things right.
Motorola Mobility did step up and admit that the fire sale, in their case, was a disaster. They acknowledged that their servers were not prepared, and that there was no method for actually making sure those who were logged in at zero-hour were handled in order.
And, most importantly, Motorola promised to make things right.
Step 2: Offer to Make Things Right
In Motorola’s case, they did something smart. These devices cause a fraction of the purchase price to manufacturer. Even on a fire sale, these companies are still making bank.
So Motorola just decided to slash the full retail MSRP of the 2013 Moto X to match the fire sale price – for a full 48 hours. Then everybody gets the same deal. Hey, you can hear Oprah shouting that, right?
HTC has yet to do this step. The closest thing is that they’ve promised more deals next Tuesday. They haven’t even promised that it’ll be a Nexus 9 deal, no less.
Step 3: Make Things Right with Existing Customers, Too
For Motorola’s case, the situation was actually even worse. Their servers were actually not adjusting prices – so people were buying phones at $599.99 despite being in the window where the phone was supposed to ring up for $399.99. Many customers decided to hit the buy button anyways – expecting to be refunded the difference.
It took about 48 hours for Motorola to realize this was a major problem (and they did), but Motorola began refunding everyone that was charged incorrectly. Additionally, Motorola also offered anyone in the return period for a full-retail Moto X bought direct from Motorola, to get a price match – thus averting massive scorn from people that may have paid $600 for a now-$400 phone.
Consider This a Template…
I wrote this primarily as a damage control plan for other companies to look at – the case study of one company that got it right (Motorola), and another company that I have lower expectations with (sadly, HTC).
Fire sales can be very compelling, effective ways to promote a company and get a product marketed through backchannels. It’s a way to get consumer evangelists new devices quickly – and allow them to promote that product with friends, family, and social networks.
But, fire sales are not without risk of backfire, no pun intended. Setting things up, being prepared to open the floodgates if things go bad, is a good action plan whenever you attempt one.