In 1985, the Coca-Cola Company, in a move that is still hotly debated today, concocted a new Coke recipe in hopes of reinvigorating interest in its number-one selling soft drink. Logic dictates that when a product is number one, you don’t mess with it. The problem, however, was that Coke’s market share had declined to only 24% in 1983, down from a commanding 60% in 1945. Competition from rival Pepsi was steadily eroding Coke’s dominance in the now famous cola war.
As a result, in 1985, almost 99 years after Dr. John Pemberton first created the Coke formula, the company scrapped the original soda formula for a sweeter recipe. Emboldened by consumer blind taste tests, which indicated that consumers preferred the taste of the “new Coke” over the original Coke and Pepsi, the marketing team replaced the beloved soda with the new product.
And it was an unmitigated disaster.
Consumer reaction was quick and decisive: 40,000 complaint letters were received immediately after the launch, not to mention the tens of thousands of telephone calls and negative media attention. Three months later, the Coca-Cola “Classic” was introduced, or is that re-introduced?
Do Customers Really Know Best?
Last week, I engaged in a Social Media Monthly-sponsored debate with Ric Dragon on the pros and cons of crowdsourcing. I was tasked with arguing the negative aspects of crowdsourcing, which made rethink the real value of customer feedback. Do customers really know best? Can their feedback in online forums really be trusted as a basis for new product development?
In the case of New Coke, marketers did everything right, at least according to the text books and historical marketing paradigms. To validate the new product, they went into the field and connected with their customer base; focus groups were held, surveys were completed and taste tests were conducted.
Yet, despite the plethora of positive customer feedback, New Coke was universally rejected. Don’t customers know best? Is that not the basis of today’s crowdsourcing trend? Social media promises to deliver a direct and open dialogue with customers, and that their views will provide your business the market research required to successfully launch your next marketing campaign or new product. But does it?
How Valuable Is Online Customer Commentary?
In a recent interview on the merits of digital interaction with customers, Monica McGurk, Coca-Cola’s VP of strategy development and eCommerce stated:
“With that speed (speed of customer interactions online) comes the need to really trust and empower our marketers. You can’t go through a five-step approval process to respond to an Instagram post or a trending Twitter topic; if we make a mistake, we don’t have weeks of evaluation time like we had with the New Coke campaign in the 1980s – we have hours or maybe minutes.”
She’s correct; the speed at which consumers engage with each other makes every brand marketer’s decision a potential landmine. You don’t have the time to regroup, rethink, and spin consumer reaction the way we used to pre-social media. Listening to – and collecting – customer insights from social media and crowdsourcing sites is supposed to provide the data required to mitigate negative customer reaction to new products and marketing messages, yet wide consumer rejection of brand engagement and product launches still occurs.
You need look no further than the recent U2 album giveaway by Apple, which saw the most generous giveaway in music history turn into a PR disaster. Likewise there has been significant negative sentiment associated with the recent launch of Apple’s iPhone 6, iOS 8, and the iWatch.
Critics of the New Coke marketing effort state that Coca-Cola severely underestimated the nation’s sentimental attachment to the iconic American brand. That may be the case; yet, the majority of customers interviewed indicated that they would purchase the new product with only 10% stating they felt angry or alienated at the thought of a new Coke. The reality is that customers underestimated their own sentimental attachment to the Coke brand.
What You Need to Know About Listening to Customers Online
1. Online Customer Commentary is Prejudiced
When posing “A or B type” questions to consumers in focus groups or online forums, consumers typically respond literally and without the effect of the situational factors that affect their day to day decision-making processes. Further, the context of the commentary in online conversations is often skewed to the channel or community within which the conversations are being exchanged. Consumer sentiment gleaned from online commentary and communities is just one data-point.
2. Crowdsourcing Doesn’t Mean Relationship Building
Understanding or evaluating the underlying meaning of raw consumer data requires more than statistical models. Often, there’s an emotional connection that people have with the use of a product that will outweigh any logical conclusion they will offer in something as non-emotional as a taste test or survey.
3. Follow the Trend Current, Not the Current Trend
Think back to the creation of iTunes and the iPod; each was conceived to either solve problems that consumers didn’t know they had or provide a utility that consumers didn’t know they wanted or needed.
If Apple relied on current trends or direct consumer feedback, like the rest of the industry, it too would have been focused on fighting copyright infringements from the likes of Napster users who were feely sharing rights-protected music. Instead, the late Steve Jobs looked the trend current and realized that peer-to-peer sharing signaled a fundamental change in how people would prefer to consume music. Less than a year later he introduced iTunes to the world and within a few months was boasting one million downloads.
Apple’s recent iPhone 6 launch has been criticized by many because the phone’s new size and features are largely replicas of Android-based phones, which have captured a lot of Apple’s market share in recent years. The upgrades were in response to online consumer requests and market research but they were also not the innovations Apple customers have come to expect. The resulting criticism that the iPhone is no longer leading the industry, but following it, should not be a surprise to anyone.
The current focus on acquiring big data by businesses must be tempered with the knowledge that consumer data collected is linear and often lacks the required context upon which to base marketing and product decisions. Customers may know best but their online opinions may not always reflect that knowledge.
Sensei Debates – Crowdsourcing: Customers Don’t Always Know Best
Do customers know best? Can we rely on consumer data collected through online crowdsourcing as the basis of brand and product decision making?
Feed Your Community, Not Your Ego