MarketerBlog

Lessons from SunRocket’s Sunset: It’s the Customers, Stupid

2007-07-23T15:19:40-04:00

I’ve been reading coverage of the abrupt demise of SunRocket with great fascination. Last week SunRocket slammed the doors shut on its customers without so much as an email in advance. They turned off dial tone for everyone from small businesses that regard phone service as a business lifeline to pregnant women for whom it is an actual lifeline. What’s even more astounding is that they charged customers in advance for this service – $199 for a year. And according to the Washington Post, ran through $80M in funding.

So what went wrong? How did this company go so far off the rails? I find this question of particular interest since I worked with members of the founding team (both management and funders) during the telecom price wars of the early ‘90’s. These folks are intelligent, experienced technology executives. And it certainly seems like their original instincts were on the right track. Just take a look at a few points from the founders’ “Member Bill of Rights”:

‘Unconditional Satisfaction: You have the right to a reasonable refund if we fail to perform to your satisfaction.
Dignity & Respect: You will be treated with the utmost dignity and respect in all dealings with SunRocket and company personnel.

Integrity & Trust: We endeavor to fully inform you of available options so you can make timely and informed choices. We will never abuse your trust through deceit, exploitation, neglect, manipulation, or discrimination.’

I haven’t spoken to executives or investors about this and I have no insider information, but here’s my hunch about what went wrong.

First, they positioned themselves as a low-cost provider in a commodity category where they didn’t control the essential infrastructure needed to deliver service. In other words, they set themselves up for disastrous competitive moves by the telco’s and cable co’s. According to the New York Times, cable companies are adding Internet phone service customers at nearly four times the rate of all the Internet phone service startups combined. The San Francisco Chronicle reports that the cable companies account for 70% of the market. SunRocket and the other Internet phone service startups woke up the sleeping giants. But when you position yourself as the low-cost provider there’s no place to go but down market, so these startups are struggling to find sustainable business models.

Second, despite the great promises in their Member Bill of Rights, they failed to treat their customers with dignity and respect. They commoditized their customers, and when you commoditize customers you can count on them to commoditize your product. SunRocket executives seemed to have missed the last ten years of tools and technologies for engaging with consumers. Although they built a 200 seat call center in Springfield MO they passed up all those opportunities to listen to and learn from their customers. Why would an early stage technology company build a domestic call center unless it was to ensure premium service and great customer insights? It doesn’t appear they had a blog … though they abused blogs liberally in a contest held early in 2006 where SunRocket users were encouraged to post gripes about companies in order to win cash prizes of $200 - $5,000.

Lastly, rumor has it that new executives brought in didn’t share the founders’ vision for great service and commitment to customers. While you can’t lay the blame for this entire debacle on CEO Lisa Hook, it’s fair to say that she didn’t handle the shutdown well. According to a Washington Post report, Hook held a company meeting on July 11th, where she told employees that buyers had approached the company but that bankruptcy was a “possibility”. Of course she had to make that session brief in order to catch her flight to San Francisco where she was a panelist at Fortune’s iMeme Conference. The following Monday she shut the doors and turned out the lights. Poor form, to say the least.

Heaven knows start-ups are tough. Just because you have a great product and a shrewd marketing strategy doesn’t mean you’ll make it. The Internet Deadpool is littered with as many good ideas, badly executed as bad ideas. But it’s been a while since we’ve seen a meltdown as stunning as this one.

Somewhere along the way the SunRocket team forgot why they were in business: customers. They designed their products to accelerate sales not inspire loyalty. They lost their customer relations compass. These are easy mistakes to make in the heat of the moment. SunRocket reminds us that this doesn’t just happen to twenty-something garage startups. Even seasoned technology veterans can get caught up in the scramble. It’s not rocket science, but SunRocket missed that calculation.

Technorati Tags

brand
customer insights
customer relations
deadpool
marketing
sunrocket

Marketing Artifacts: Brand Positioning Statements?

2007-02-07T11:43:33-05:00

I recently struck up a conversation with a group of friends and former colleagues who are branding experts. I’m working with a new company and wanted some examples of positioning statements. The responses I received were intriguing. A handful of folks sent examples. One response from a VP of Global Branding was contrarian.

I have come to feel that positioning statements are mostly a waste of time and energy unless they are amazingly concise and contain 1 idea. The whole P&G ‘For (target audience) who (list of needs) we provide (benefit) (benefit) benefit) because only we provide (reason to believe’ pro forma statement construct seems woefully cumbersome today and very communications brief driven.

3-5 great attributes you want your brand to stand for/represent seems to lead to better creative briefs and ergo better creative work both in terms of communication and product/service design than positioning statements.

Wow! This from a guy who’s spent much of his career wrestling with these issues with F500 brands. One of our colleagues, who spends his days shepherding marketing for technology startup companies, responded as follows:

Name these companies:

1) The computer for the rest of us

2) Networking networks

3) The world's information in one click

4) Personal video broadcasting network

These are not tag-lines. The companies who expressed these words successfully positioned the value proposition and differentiation within a simple ‘one-liner’. Founders and executives delivered these one-liners to everyone who would listen and whom they needed to fold into the cause – investors, landlords, lawyers, recruits, customers, and partners.

And yet another response (from someone who’s a hybrid technology/marketing guru) provided another dimension:

Information today flows every which way.

The "shape" of the brand in the minds of customers may be more varied now.

Some percent of the variation is not good, but some may very well be.

Over-constraining the ‘position’ with too much specificity would not reduce variation (provide management control) anyway.

Therefore craft a simple, succinct statement that does a better job of absorbing or exploiting complexity (variation) rather than avoiding it.

So it seems the positioning statement is not going the way of the Dodo bird. But it has evolved to something more practical. In a world where brands are verbs instead of nouns, positioning statements have become the headlines that encapsulate the action instead of static monuments to marketing discipline. The exercise of designing a “classic” positioning statement is often a good one … it forces focus on critical marketing issues (audience/target market, competition, differentiators, etc.). But the result needs to be the brand experience, not a couple of awkwardly constructed sentences that collect dust in the marketing department.

Technorati Tags:

Brand, Marketing, Positioning Statement

Back to School: Marketers Learning How to Work With Social Networks

2006-09-14T17:02:56-04:00

A friend and blogging inspiration, Toby Bloomberg, recently sent me a note about a new program she’s developed on behalf of one of her clients, GourmetStation. GourmetStation is a great little company down in Hotlanta. They provide “delicious prepared meals delivered with an upscale worldly spin” – in other words a gourmet experience in the comfort of your own home, without the cost of a private chef. The company attracts an upscale customer base and is trying to expand to new audiences. So they decided to run a test program on MySpace.

In typical Diva Marketing fashion, this is a well thought-out and executed program, and I’ll be fascinated to see the results. It also got me thinking about the concept of Social Network Marketing in general, and how companies large and small can leverage this new media format as an opportunity for greater consumer engagement. Apparently I’m not the only one … there’s been a spate of articles on the topic over the past few days. And of course a number of strong reactions to NewsCorps’ Peter Chernin’s rather stunning comment.

“If you look at virtually any Web 2.0 application, whether its YouTube, whether it’s Flicker, whether it’s Photobucket or any of the next-generation Web applications, almost all of them are really driven off the back of MySpace,” Chernin said at the conference. “There’s no reason why we can’t build a parallel business.”

While I wouldn’t agree that the success of every Web 2.0 company is dependent on its relationship to MySpace, I would suggest that social networking is a critical element in the new marketing landscape. The numbers are hard to argue with, whether you’re talking about 100 million registered users at MySpace or the impact of professional social networking sites like CollectiveX and LinkedIn. Tony Hung summarized it well in a post yesterday, when he said that social networking is creating a new marketing “ecosystem”, and that today’s social networks are similar to instant messaging circa 2001 – they create stickiness (e.g. brand loyalty) because the costs of switching are too high. (You’re locked into networks where your friends or colleagues are.)

So if you’re not Google and you can’t pony up $900 million to ensure your access to MySpace users, what should you do? Find ways for your brand to become part of the conversation in the community. Understand first and foremost that you’re entering a community, not placing a media buy. Be respectful and transparent. Get to know the sensibilities of that community and make sure that your brand presence fits. If you’re targeting teenagers on Facebook your brand presence should look and sound like something a 14 year old would dig. (And yes, I’m told “dig” is back.) If you’re trying to reach professionals to raise awareness of a political issue, then use appropriate creative and copy for that community. If you’re running a promotion, make sure that it’s clear and the benefits are relevant. Burger King’s character on MySpace has some 120,000 friends, not because he’s such a likable guy, but because they’re giving away free episodes of Fox shows like “24”. But most importantly, be realistic about your brand your goals. If you’re a big hit with the AARP crowd, chances are your clickthru rate will be pretty low on Facebook. Be as strategic about your targeting and audience analysis with social networks as you would with any other form of media. It’s early days for social network marketing and a good time to test and learn.

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CGM,
Marketing,
MySpace,
Social Networking

Sleeping With The Enemy Or Savvy Marketing Strategy? YouTube And NBC

2006-06-30T09:58:36-04:00

There was a lot of coverage this week about the YouTube NBC deal, not least of which was a segment on the NBC Nightly News broadcast of June 28^th. The deal is being approached with skepticism by bloggers and marketers alike. While I borrowed from the MediaShift blog for the title of this post, I’d have to agree that AdRant’s takes the cake.

All of that aside, this is a very interesting deal to watch. It bears some similarity to NewsCorp’s acquisition of MySpace. In both cases big media companies recognize that something exciting and powerful is happening with consumer generated media and they’re wading in to test the waters. (It’s a very big test, in NewsCorp’s case.) The great irony with this deal of course is that it came from the very network that slapped YouTube on the wrist for distributing the SNL skit “Lazy Sunday”. Josh Hawkins had a particularly salient observation about this “do as I say, not as I do” policy, wondering whether the legal eagles at NBC would continue to enforce these restrictions while simultaneously leveraging YouTube as a promotional vehicle.

I would also question the validity of advertising pre-roll on consumer generated media. I for one am convinced that one of the reasons consumers are flocking to CGM is sheer exhaustion with mass media marketing tactics.

But this deal certainly put some more energy behind the CGM momentum and may have introduced it to new groups of consumers. (I suspect that Brian William’s Nightly News audience demographics are considerably different from those of the average YouTuber.)

Indeed, it gives a whole new meaning to the phrase “Must See TV”.

Technorati Tags:

CGM, Marketing, NBC, Web 2.0, YouTube

Blogs & Public Policy: Stimulating Conversation Where It’s Needed Most

2006-06-29T15:06:10-04:00

People often accuse those of us who live “inside the Beltway” of being an insulated group of policy wonks. While it’s true that you could spend a lifetime going to policy briefings in Washington, there are in fact more than a few things being done which benefit society, both in the US and elsewhere. Today, representatives from a variety of public policy organizations came together to discuss ways to use blogs, wiki’s and workspaces to further their missions.

The session was hosted by Forum One Communications, a consultancy which assists not-for-profit, foundation, government and commercial organizations in making a positive impact on social issues by providing Internet business strategy, technology implementation and user experience & design.

One of the most interesting discussions was on the use of blogs. As usual, the NGO community is a bit behind the private sector in implementation, but in this case they may benefit from the lessons learned by early adopters. Clearly the social sector is well-suited to the kinds of transparency and constituent engagement offered by blogs. And if the Bivings Group recent report is at all accurate, the Internet and CGM will have an enormous impact on this year’s elections.

Both the World Bank and the Center for Global Development presented case studies on the success of their blogs. The World Bank blog was launched a year ago, and today is ranked 1,569 with links from 221 sites according to Technorati. Both organizations have seen a substantial jump in traffic, as well as search engine rankings as a result of their blogs.

These organizations approached their blogs strategically. They understand that their work is part of a larger set of conversations on important issues. They see blogging as an opportunity to engage in these conversations and a way to improve the transparency of their respective organizations. They cautioned against using blogs as a pure PR mechanism. Their experience was that readers responded to genuine dialog about issues of interest. Their point: don’t try to dominate the conversation, use your blog to be a voice in the conversation.

That’s sage advice, even for those of us who aren’t trying to save the world.

Technorati Tags:

Blogs, CGM, Marketing, NPTech, Public Policy, Social Sector, Web 2.0