Turning a product “miss” into a CRM “hit” – The iPhone 4 and the Kin

This week, Microsoft and Apple both announced what many would refer to as “misses” in their mobile device product lines.

Microsoft cancelled their Kin social media telephone product line (less than six weeks after launching it). Apple admitted to flaws in its signal meter of its iPhone 4 (and all other prior iPhones). However, it has countered industry and consumer reports regarding problems with its newly redesigned antenna—one that many customers are purchasing of a USD $30 case (or bumper in the UK) to mitigate.

Both of these situations have led to stories in both the tradition and social media that raise a common points: consumers feel as if they have been let down by a established company they trusted enough to invest money in a newly-released product. This is a classic customer relationship management (CRM) miss that reduces customer loyalty. However it is one that both companies can easily repair in a way that restores long-term trust.

What I would do if I were at Microsoft

Microsoft is investing heavily in a revamp of its new Windows Mobile line. (This is the very reason they gave for ending the Kin). Take advantage of this by sending all customers who bought a Kin a coupon that lets them obtain a free new Windows Mobile smart phone if they pick from a list of specified (partner) providers and continue their contract through completion.

This would let Microsoft provide a high cash-equivalent (i.e., retail price of the phones) offer for a fraction of the price (the true external cost of the phone after removal of partner revenue sharing). It would transform legitimately disgruntled customers into potential evangelists of their new strategic products. It would also restore trust: customers would see very clearly that buying a new Microsoft mobile product is a safe thing to do.

What I would do if I were at Apple

The Apple situation is complicated by a two contradictions: 1) Apple’s testing indicates that signal meter problems exists but the antenna problem does not, while 2) many of their customers firmly believe there is an antenna problem. Apple does not win by trying to tell customers their belief is wrong (or offering them their money back if they return their new phones within 30 days of purchase). However, there is a simple fix…

Email everyone who bought the iPhone 4 a coupon (an experience well-known at the Apple store) that provides a link to download a the new signal meter fix and provides a USD $30 gift certificate for any product or accessory at the Apple and iTunes stores to compensate them for the signal meter inconvenience. Customers now have the choice to use this to 1) “buy” (for free) the case to “fix” their “antennae problem,” 2) do nothing or 3) use the certificate to buy another product (potentially one more expensive that the gift certificate). By providing customers the power to choose, they can very quickly show good service without engaging in a “perception vs. reality” debate.

The cost and time-sensitivity of restoring customer loyalty

The cost of these actions is low—especially when one considers their true cost (vs. their retail value) and compares this to the overall profit across a smart phone purchase and two-year access plan. The benefits are enormous: good reputation, facilitated upgrade of the book revenue per customer, and conversion of a customer from someone who is likely to turn to a competitor to one who is likely to return. However, achieve this, both of these companies must move quickly, in the next 10 days: before negative experiences become permanent brand opinions.