Friday, September 07, 2007

Steve Jobs teaches how NOT to market tech products

Steve Jobs lowered the price of an iPhone, only 10 weeks after product launch, from $500 to $300.

Backlash. Hostile emails. Harsh Twitters. Blogocombat against Jobs, Apple, iPhone.

Jobs issues an arrogant, stubborn, "Apple is Always Right, Customers are Whiners!" statement ("Open iPhone Letter") .

Choice, hard to swallow excerpts from the Steve Jobs "Open iPhone Letter" :

"After reading every one of these emails..."

"First, I am sure that we are making the correct decision to lower the price..."

"It benefits both Apple and every iPhone user to get as many new customers as possible in the iPhone 'tent'."

"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."

"...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. Our early customers trusted us, and we must live up to that trust with our actions in moments like these."

A pompous, unrepentant, callous statement, guilt-tripping early adaptors for being naive, a statement that some marketing bloggers actually applaud, saying Jobs "stepped up to the plate" and "told the truth about tech marketing" (NY Times).

He did no such thing. He simply justified a pathetic act of desperation regarding a "breakthrough product" that didn't live up to sales expectations. More iPhones had to be sold. How to sell more? Lower the price! Brilliant! Er....

Early adaptors, those fanatic evangelists of Apple products who want to be the first to own new innovations, got screwed by this premature deep discount. Giving them a $100 rebate, a gift certificate that can only be used in the Apple store, amounts to about $25 in real value.

"Prices always drop eventually, get real!" is no justification for massive hype designed to sell a lot of product, at an inflated price, as fast as you can. And then, after the suckers have obtained the product and sing it's praises quite joyfully, turn against them, by offering a sweeter deal to the late arriving, less enthusiastic customers.

You're training people to NOT buy your products when first launched. The bugginess of 1.0 versions were bad enough. Apple adds insult to injury by making buggy 1.0 versions more expensive for early adaptors.

Early adaptors tend to be more vocal, connected, and combative, let's even say vengeful, than the more sluggish, passive, inarticulate masses.

You don't succeed in business by alienating, angering, and exploiting your most loyal users, your most sincere and deeply devoted customers. Make them pay a premium price, then reduce the price to bandwagon jumpers of the mass market? That's insane.

The next time you over-hype a "breakthrough" product, your sales will be slumped. Early adaptors, whom you treated like dummies, will now wait for the inevitable discount offer. Early sales figures will be lower than expected. Industry pundits will call the product launch underwhelming, a failure, or worse.

Seth Godin rewards early adaptors. As an early buyer of his book Free Prize Inside, I own the special, limited edition cereal box packaging. That's what you need to do for your fast-acting fans: give them a lower price or a special, elitist version of the product.

Treating your most loyal fans and most ecstatic customers like honored allies is the best approach.

Massive hype, quick initial sales, overblown publicity, customer shopping frenzies? That's old fashioned Silicon Valley slickee boy nonsense. It might be a good way to sell Harry Potter books and Super Bowl tickets. It's a stupid strategy for technology companies and most other businesses.

Even if Apple sales and stock prices get a bump upward, that's no measure of long-term success or ethical business practices. Alienate early adaptors, for greedy craving of quick profits, and see where it gets you.

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