I think one of the worst things a company can do is to hurt a product category. This happens when a company makes repeated public failures, releases a technology too soon, or attacks a rivals product in such a way that it brings disrepute on everybody’s offering.
The most recent example of repeated screw ups has to be the ocean cruise liner business. Here is looking at you Carnival. Nothing screams epic disaster better having a boat like the Costa Concordia getting its own Wikipedia entry and its Captain bereted by the Italian Coastguard as a coward on Youtube. Then because one collossal headline grabber wasn’t enough they followed up a year later with the Triumph where passengers were left stranded in the Gulf of Mexico wallowing in their own filth. Here is a nice story on that.
If you are a competitor to Carnival you would be tearing your hair out because you are going to pay a price in terms of reduced bookings. After all as a marketer you cannot come out with a slogan like, “We are safer than those bozos”. It just doesn’t work. That’s why the tobacco companies never competed in terms of product safety. It implies that the product is dangerous in the first place.
Releasing a product too soon can also damage a category. Electric cars have had some bad press thanks to Fisker’s exploding vehicles. This makes the world question the safety of electric cars. Tesla is shrugging it off for the moment, but I have to think that seeing videos like this one cast doubt on the technology.
Attacking rivals or partners to extricate yourself from a mess makes everybody look bad. My favourite example of this is the Bridgestone versus Ford SUV fights. These two companies could have worked together, shared the expense and resolved the problem. Instead they decided to engage in a public finger pointing match, tarneshed both of their brands and wrecked a long term business partnership. Well played. Here is a brief summary of that stupidity.
The bottom line is that companies must work hard to avoid trashing an entire line of products, because recovering from these misdeeds can take a long time and slow growth in the whole industry. All of the examples I used either caused deaths or led to the risk of great bodily harm. The public will rightly wait a long time to revisit the idea of purchasing a product with this stigma.
In Canada, consumer debt is hitting some pretty high levels. Mortgage debt forms a big part of that debt load. The banks keep putting fuel on the fire by lowering interest rates. Consumers are rationally borrowing more when the money is at historic rates.
The finance minister went onto chastise the banks for their “race to the bottom” through lower prices. As finance minister, Jim Flaherty, has some moral suasion he can use on the banks. I am not sure how I would feel about a finance minister telling me how to price the goods in my business if I was a banker. I see the banks ignoring him unless they really, really need his help.
Here is the story.
I think the way to retain customers is by offering great customer service, have an excellent product and provide superb value. You don’t have to brilliant at all three but must excel at one of them. The least effective way in my view is by holding customers hostage like Mobilicity does by not providing unlock codes to their phones. To me this is ridiculous. Mobilicity customers own their phones outright, there is no contract, and there are valid reasons to having the unlock codes besides leaving your current carrier. Some people like me travel and use the local carriers SIM card to reduce costs.
WIND by comparison offers up unlock customers after a few months with the service.
So here is the story. I own a Lumia 710 phone. I bought it last year from Mobilicity and it was part of a decent sale. I think the phone is great and it is performing very well.
Now here is the rub. The phone cannot be upgraded to Windows 8. It shipped with Windows 7.5 and Microsoft and Nokia promised me that it would eventually be upgraded to Windows 7.8. The good news is that Microsoft delivered and released the upgrade to the phone companies. The bad news is that the phone companies are sitting on their hands and not releasing it to customers. T-Mobile said that they would never release it.
I will be the first to admit that I have no idea what kind of testing the carriers do before they release an upgrade over their network. So I do not know how risky these upgrades are when they are mass released. I do know that I paid good money for my phone less than 6 months ago and I expect to be supported properly. I think treating you customers like T-Mobile did or burying your head in the sand and not saying anything at all like Mobilicity is pretty pathetic.
I got the upgrade anyway, you can trick Microsoft’s Zune into giving it to you. If you are interested in the details drop me a line. Forcing your customers to go through hoops for regular product maintenance is pretty sad, and a good motivator to look for a carrier who will take better care of you.
When I look at these two companies I see nothing but a commodity. You can brush away the airy fairy marketing fluff and the services are pretty much indistiguishable. The phones are the same, the monthly rates are comparable, and having been a customer at both companies I can say that the service is very good with both.
What differs between the two is that WIND does a better job with financing phones through its WINDtab plan, and has a wider service area. Either way, these differentiators may not impact a large chunk of their customers. I think the two companies have done an excellent job in training their customer base to wait for Christmas and late August/early September for the deep discount sales that will inevitably appear. Like clockwork at Christmas Mobilicity will cut its rates in half and WIND will follow in mid-December.
There have been signs that their business model has not been too profitable. The most visible was the rapid churn of Chief Executives at WIND and the active lobbying for more foreign ownership by WIND. To me, these are signs of weakness and not strength in the business.
In short, I think that these companies have to do a rethink of their businesses and decide how they can truly take on Bell, Telus and Rogers. My idea, and its a stretch, is to come up with mini-networks covering university campuses only, to lure students who live in the dorms to their plans. WIND is targeting university towns, but I would stay even narrower in my reach.
I seriously don’t know what Mobilicity is trying to do other than compete purely on price by cherry picking a few cities. I don’t think that this will work in the long run.
Tomorrow I will start looking at just how competitive their pricing is.