Motivation by Disaster

Motivation by Disaster: Speaking of Bragging about Your Negatives

By Barry Maher

Let’s call this next company, Dot Bomb. At Christmas a few years back, during the height of the dot com fantasy, Dot Bomb’s vertically-integrated, off the shelf, B2C e-commerce enterprise solution systems—which I guess means order-taking software since that’s what they sold—decided to go into business for itself. Customers were charged random amounts for products that they may or may not have ordered.

“Are you talking newlyweds billed $1.37 for living room sets or $.63 for TVs?” I asked when the VP Marketing explained it to me.

“Sometimes. But more often it was an Ohio farmer billed $26,937.07 for a lifetime subscription to a magazine on Salvadorian salmon spawning. Or a 75 year old minister billed $487,898.35 for a ‘life-size, inflatable, anatomically-correct companion (female).’”

“That could present a problem.”

“You think? The newspapers, the TV and radio stations that picked up the story all seem to agree with your keen assessment. The good news is that we’re finally getting the kind of PR coverage we’ve been fighting to get for the last couple of years. The bad news is that it’s killing our business. The question is: What are we going to do about it?”

Fixing the technical problem was easy.

Within 24 hours the software was performing as flawlessly as the company’s ads and brochures promised. Within a week, because of what they’d learned, it was far superior. And safeguards were in place to make sure that the problem could never happen again. Everyone involved believed the software was reliable enough to bet anyone’s business on, including their own. Which of course was exactly what they were doing. If they could ever get anyone to try to improved version.

Fixing the problem their marketing department faced was more difficult.

The screw-up had become famous, at least within the small circle of companies that might be Dot Bomb’s prospects. There wasn’t any hiding this particular negative even if they had wanted to. But nobody was taking their calls anyway: their salespeople couldn’t get through to decision makers who’d been anxious to talk to them just a few weeks before. And if they did get through, no one would let them even begin a pitch. What good did it do to have the best product on the market if no one would listen? And even if people did listen, they weren’t likely to believe.

So we helped Dot Bomb put together a marketing and sales campaign that began by admitting the problem. It mentioned the pricing debacle and the devastating effect upon Dot Bomb’s business. It continued:

“We screwed up. We screwed up good. So good we can’t even think of asking people to trust us again. Who cares that we’ve fixed the problem? So what? Why should anyone trust us? They shouldn’t. So we aren’t going to ask people to. What we are going to do is to create a situation where anyone who does business with us will have everything to gain and nothing, NOTHING, nothing at all to lose. Because right now, that’s the only way we can get anyone to take a chance on us. We’ll make it worth your while—and then some—to check us out. So . . .”

In that campaign, the negative—the pricing problem and all that horrible press—suddenly became a positive. The general thrust was, “Yes, we’ve got this problem. We’re not only admitting it when cornered, we’re the ones who are bringing it up. And guess what?  This problem is exactly why you should do business with us.”

Dot Bomb knew that their prospects were terrified of a recurrence of the pricing debacle. The company was betting the business that it would never happen again. If it did, they were out of business anyway. So why not assume all the customer’s risk in this area? Dot Bomb had nothing to lose. So, instead of selling the software, charging a large, flat, up-front fee as they had before, they set up a much smaller monthly royalty arrangement, in effect leasing out the software. With no billing for the first 90 days. And if the pricing problem or any similar software-related problem appeared again even for a few hours—which they pointed out was the total length of time it had happened the first time—the software immediately became the property of the customer, all previous royalties would be returned, no future royalties would be charged, and all subsequent updates would be free. And of course, the software would be fixed as soon as possible. After 24 hours, the company would face massive penalties for each hour it remained unfixed.

The risk Dot Bomb was assuming was minimal. It was in fact a risk they had anyway. Long term, licensing the software was far more lucrative than selling it. Especially since their salespeople would be able to license far more copies than they ever would have sold, even if the Christmas pricing disaster hadn’t occurred. Once it had, of course, they would have been lucky to sell anything.

All in all, that negative was one of the most positive things that ever happened to the company. Or it least it would have been if they weren’t simultaneously wasting millions on the full range of dot com stupidity. Ego-building advertising on mass media aimed at millions rather than their few thousand potential customers. Flying around the world creating useless strategic alliances, often nothing more than link exchanges on each other’s websites. Remodeling old warehouses into office space for maximum techno-nerd coolness. (So what if the acoustics were so bad no one could hear anyone else. No one was listening anyway.) And of course, ridiculously inflated salaries for too many executives who’d never held any one position anywhere for long enough for anyone to figure out they were every bit as ineffectual as they appeared.

Bragging about the negatives can only take you so far.

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