Ten Important Takeaways From Steve Jobs' iPhone Pricing Apology
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.
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.
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