What an incredible year to watch and learn from CEO-level behavior in times of crisis and difficulty. First we had Jet Blue, faced with an impossibly difficult situation, take to the airwaves on YouTube, apologize profusely, and announce a new passenger bill of rights. While Menu Foods practically hid their CEO during the pet recall issue, Mattel put their CEO, Bob Eckert, on the website video airwaves to nurture trust and confidence in the wake of the toy recall (a still-in-progress case study). Now we have Steve Jobs, who just wrote and posted the most remarkable letter in response to concerns about iPhone’s recent price decrease. He coupled an apology with a $100 Apple credit for all early-buyers of the iPhone. This is classic Defensive Branding. I predict it will be one of the most discussed, debated, and linked-to letters of the year, and so far I've already counted over 800 unique blog postings referencing his letter since 6 PM last night. I'd thought I'd dissect the letter, and draw out key "takeaways."
Exact Text From CEO Steve Jobs Letter
I have received hundreds of emails from iPhone customers who are upset about Apple dropping the price of iPhone by $200 two months after it went on sale.
1. The Power of Listening: He read his mail, and he understands the core issue. Most CEOs wait for the formal report from the consumer affairs department.
After reading every one of these emails, I have some observations and conclusions.
2. The Power of Responsiveness He has listened, and now he is responding.
First, I am sure that we are making the correct decision to lower the price of the 8GB iPhone from $599 to $399, and that now is the right time to do it. iPhone is a breakthrough product, and we have the chance to 'go for it' this holiday season. iPhone is so far ahead of the competition, and now it will be affordable by even more customers. It benefits both Apple and every iPhone user to get as many new customers as possible in the iPhone 'tent'. We strongly believe the $399 price will help us do just that this holiday season.
3. The Power of Restating the Rationale: He’s re-affirming excitement around the product, as well as rationalizing Apple’s core decision to lower iPhone price. He’s doing so confidently and rationally, and as a build up to his eventual apology.
Second, being in technology for 30+ years I can attest to the fact that the technology road is bumpy. There is always change and improvement, and there is always someone who bought a product before a particular cutoff date and misses the new price or the new operating system or the new whatever. This is life in the technology lane. If you always wait for the next price cut or to buy the new improved model, you'll never buy any technology product because there is always something better and less expensive on the horizon.
4. The Power of Empathy: Jobs is attempting to show empathy and understanding for those who have a tendency to buy products as soon as they hit the market. These are the coveted early adopters and enthusiasts, and they represent to sweet spot of the “new” marketing. These are also the same consumers who ranted to loudest when Job's announced, barely 24 hours earlier, a 33% price slash. They are the influentials.
The good news is that if you buy products from companies that support them well, like Apple tries to do, you will receive years of useful and satisfying service from them even as newer models are introduced.
5. The Power of Service as Brand: He’s underscoring Apple’s historic legacy of providing value and exceptional service, no matter when and how consumers buying the product. (Caveat: a smart statement, but not 100% accurate. Apple still has service blemishes.)
Third, even though we are making the right decision to lower the price of iPhone, and even though the technology road is bumpy, we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price.
6. The Power of Accountability: In essence he’s taking accountability for not being sufficiently sensitive to these coveted early customers. He's also expressing resolve to right the wrong. Key message: we can't afford to lose you!
Our early customers trusted us, and we must live up to that trust with our actions in moments like these.
7. The Power of Nurturing Trust: Job's is openly underscoring the undeniable role of trust in the relationship between the brand and the consumer. Indeed, trust is what makes the world go around, and it’s one of most important drivers of credibility.
Therefore, we have decided to offer every iPhone customer who purchased an iPhone from either Apple or AT&T, and who is not receiving a rebate or any other consideration, a $100 store credit towards the purchase of any product at an Apple Retail Store or the Apple Online Store
8. The Power of Walking the Talk! Jobs is putting a real, tangible value on consumer value. If you were there for us early on, we will credit you $100.
Details are still being worked out and will be posted on Apple's website next week. Stay tuned.
9. The Power of Imperfect Timeliness: Jobs didn’t have all the detailed worked out but he clearly saw the upside in communicating the basic concept as quickly as possible
We want to do the right thing for our valued iPhone customers. We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple.
10. The Power of Forgiveness: In the end, he is offering a sincere apology, but also advertising the degree to which Apple consumers expect and demand more. In essence, his apology is reaffirming the power of the Apple brand. Here it's also important to note that saying you are sorry is a "consumer bonding" moment. It cements emotional connections.
Let's keep this case study alive. And to that point, what promises to be an excellent thread has just started on WOMMA's Facebook thread. My very smart WOMMA colleague Rick Murray of Edelman has fired off the first comment, suggesting that "entire episode was avoidable had Mr. Jobs done one thing: reach out to and listen to his most ardent fans.