Microsoft’s ‘New Coke’ moment – On knowing when your customer is dissatisfied

Microsoft has been trying its hand at a bit of innovation of late in an attempt to raise some of its lost brand equity, and stem the larger market decline in PC sales, which has recently started accelerating. (On a side note, Deloitte have a caveat to these figures, saying the true measurement is in usage, not units).

One of the ways this innovation has come about is in the release of its Surface product, which has interested many but earned the ire of erstwhile manufacturing partners as Microsoft has pursued its own path, making the product in-house. Its new operating system, Windows 8, has struggled to gain traction with consumers. The president of Fujitsu, one of Microsoft’s partners, declared interest to be “weak” back in December last year. The most obvious step-change from previous iterations is the slate screen that greets users upon booting up. On proceeding through this, users then come to a more familiar Windows layout.

In yesterday’s Financial Times, Microsoft said it was preparing to “reverse course over key elements of its Windows 8 operating system”. Envisioneering analyst Richard Doherty was quoted as saying it is the biggest marketing fiasco since New Coke. The only difference being, Doherty comments, that Coca-Cola acknowledged their error three months in, whereas Microsoft is pushing eight months now since launch; Coca-Cola conversely paid more attention to what its customers were saying about the product. “The learning curve is definitely real”, said head of marketing and finance for the Windows business, Tami Reller.

IDC research tells a discouraging story for businesses relying on PC sales

Today’s FT featured an editorial entitled “Steve Ballmer was right to gamble on change”. Opening with a quotation by Bill Gates, saying that to “win big you sometimes have to take big risks”, the editorial cites Kodak as a primary example of a company that refused to take risk, and ended up succumbing to creative destruction at the expense of trying to protect legacy revenue streams. We’ve written before about Kodak and creative destruction. The editorial calls for a revival of a “climate of creativity” at the company, and certainly that is what Ballmer is trying to instill, very nobly and with good reason. Zeitgeist’s bone of contention is with the following, seemingly logical statement,

“…disruptive innovations are disruptive precisely because the new technology does not appeal to traditional customers. Instead, it appeals to the customers of the future.”

We would argue that Microsoft’s customer base is made up overwhelmingly of what might be considered “traditional” customers. Users who find familiarity with a long-established incumbent, who have no interest in OS alternatives like Linux, Apple, Android or Mozilla. They are not looking for a revolution. By all means change your product, but it must evolve, not look like a completely different way of computing when you switch it on. This point is confirmed nicely by a recent piece in Harvard Business Review, which details how to get customers to value your product more. The author, Heidi Grant Halvorson, describes the importance of knowing the right emotional fit for your customers’ mindset. The article elaborates,

“motivational focus — whether he tends to view his goals as ideals and opportunities to advance (what researchers call “promotion focus”), or as opportunities to stay safe and keep things running smoothly (“prevention focus”). While everyone has a mix of both to some extent, most of us tend to have a dominant focus.”

We would argue that users that prefer Microsoft Windows OS to other systems would strongly fall into the latter category. Change is perhaps inevitable, but Microsoft are choosing a precarious path with such radical changes aimed at a group little interested in such fundamental alterations to the way they interact with such an integral device.

Was Sky Bet’s offer of free money an act of genius or madness?

As many sages have noted, there is a thin line between genius and insanity.

This is particularly true in marketing. And like so many things in our industry, which side of the line you fall on is often post-rationalised.

If your campaign was a success you are a hero and a creative pioneer. If it bombs you are a bumbling fool who simply doesn’t understand consumers.

Credibility is important when proposing ideas. So is rank. Many great ideas will not leave an agency simply because of who did or didn’t propose them.

One example of the guys at the top making a decision and putting their names to it is the New Coke episode of the 1980’s.

It is generally considered a case study in not really understanding the importance of the emotional attachment consumers can have to a brand and giving them something they didn’t ask for.

Nevertheless, to this day there are conspiracies that it was in fact a deliberate act of genius. Despite the main protagonists holding their hands up and admiting they got it wrong.

Given they remain dominant in the soft drinks market and are one of the biggest, most identifiable brands in the world, any damage was temporary.

Money For Nothing

On a smaller scale, late last night Zeitgeist was alerted to an opportunity to make free money.

Somehow, the fact that activating a couple of bonus codes on SkyVegas would allow a player to make a guaranteed £27 in five minutes, began doing the rounds on social media.

In the name of research, Zeitgeist gave it a go and sure enough my balance was £27 better off at the end of the exercise and the funds were withdrawn.

The question is, was this a huge error that is likely to see someone hauled over the coals or a great way to get new signups, as in the long run, the bookie always wins.

In all probability it was the former. The money has yet to appear in my bank account and if it doesn’t it will be proof that it was a mistake.

The ‘trick’ doesn’t work anymore, it was deactivated earlier this morning.

However, Skybet will know the value of a new customer. Perhaps they have identified that one who is online at close to midnight is particularly profitable in the long run.

And so, instead of spending their money on advertising, media and giving all players a standard £10 introductory bet, it is possible that Skybet decided to invest their budget in giving a more active type of customer a bigger incentive to sign up, just before the weekend, confident that they will get their money back with interest.

And if that is the case, then maybe it was an act of genius after all.