And whhhyyyyy should I trust you, Mr. Big Business??
Goodwill is tuly a good thing for business!
SOURCES
https://labortribune.com/plumbers-warn-public-of-abuses-false-promises-by-tiger-plumbing/
https://www.bbb.org/us/il/collinsville/profile/heating-and-air-conditioning/tiger-plumbing-heating-air-conditioning-electrical-serv-0734-310006735/complaints?page=2
https://en.wikipedia.org/wiki/List_of_corporate_collapses_and_scandals
The Marketing Gateway is a weekly podcast hosted by Sean in St. Louis (Sean J. Jordan, President of https://www.researchplan.com/) and featuring guests from the St. Louis area and beyond.
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TRANSCRIPT:
So Sony has made some really strange moves this week that have not gone over well. First, they announced that they were shutting down their digital film service on their PlayStation consoles and that anyone who had purchased films through it was going to permanently lose access to them.
Not great.
Then, they announced that their next PlayStation console, the PlayStation 6, will not use optical discs or have Blu-Ray players for media, but instead will use digital downloaded content only.
That’s even worse.
And on the heels of that move, they announced that their digital storefronts for the PlayStation 3 console and the PlayStation Vita handheld – both of which have been around for awhile now and are no longer being produced or sold by Sony – are going to be shut down, which means that those who rely on those services to retrieve digital content they’ve already purchased can no longer do so.
And… do you hear that? It’s the sound of internet mobs grabbing their torches and pitchforks and assailing Sony’s social media accounts, mobbing benign corporate announcements with complaints and generally expressing their displeasure that Sony, probably the last video game platform and film studio owner to be considered “one of the good ones,” has reminded consumers once again that no, no it isn’t.
I realize not everyone’s a video game fan, but let me explain why this is a bigger deal than it might seem. Sony acquired Columbia Tri-Star studios in 1989 and then renamed it Sony Pictures Entertainment, and through that division they own a lot of intellectual property that you might not realize is theirs. Ghostbusters. Bad Boys. Jumanji. The Graduate. The Shield. Party of Five. Seinfeld. Peanuts. Days of Our Lives. The Young and the Restless. The Spider-Man movies, including the modern ones co-produced with Disney.And even Wheel of Fortune and Jeopardy!
Sony also owns a lot of music production, film production, sports broadcasting production and children’s media. They operate Crunchyroll, which is the main streaming service and digital distribution channel for Japanese anime. They run own the Game Show Network on basic cable. They even own the Alamo Drafthouse Cinema chain of experiential movie theaters. And I haven’t even mentioned their video game intellectual properties, which include big name series like God of War, Uncharted, Ratchet & Clank and The Last of Us.
In other words, Sony has its hands in a good chunk of our popular culture and doesn’t deserve a pass for making it harder for people to own physical media or access the digital media they’ve purchased. The goodwill they’ve built over the last decade and a half by championing physical media and promising that they’re one of the good guys has evaporated, and Sony’s too calculating of a company to do that rashly – you can bet they weighed the pros and cons, did consumer research and decided that whatever anger they might stir up wouldn’t last long.
But I have a feeling it might. As we discussed the other day, the world feels out of control to consumers right now, and taking away their freedom to consume media the way they want to can be detrimental to the brand’s image.
Sony’s always had a peculiar hubris that arises whenever they’re riding high on the success of a brand like their Walkman, their PlayStation 2 or their Spider-Man films that leads them to make some really dumb mistakes like releasing the Betamax, the MiniDisc, the digital music Walkman or the Spider-man-less spinoff films Venom, Morbius, Madame Web and Kraven the Hunter – all products that most consumers weren’t willing to help Sony save and that left early adopters feeling abandoned.
So let’s talk about what happens when goodwill goes bad and how marketing can sometimes save the day.
I’m Sean in St. Louis, and this is the Marketing Gateway.
So here in my neck of the woods in the St. Louis Metro East, there’s a plumbing company called Tiger Plumbing Services that has a terrible reputation, and you ought to know there’s a problem right away because their website is trusttiger.com.
In 2022, a group of Union plumbers organized a protest outside Tiger’s offices and brought attention to some of the company’s many sins, including taking out misleading ads offering scammy promotions and then lying to customers and charging them high prices for services they didn’t need. The plumbers said the company is preying on the elderly and homebound in particular. They didn’t want consumers to just take their for it, though – they encouraged people to go on the Better Business Bureau website and review consumer complaints.
And boy, oh boy, is that forum wild, in part because customers will offer detailed complaints about failed service and then Tiger posts a response to every complaint and often asserts that the customers are lying or trying to scam them out of free service. This is not only a really terrible way to do business, but also a rather alarming way of responding to customer complaints on a public forum. There’s also some evidence that Tiger has approached some complaints by asking the customers to whom they do give a refund to remove the complaints rather than to provide an updated explanation that they were ultimately satisfied.
This is what it looks like for a company to have really low goodwill, and if you’re not familiar with the concept, goodwill is actually an accounting term reflecting an intangible asset that helps to justify paying over market value for something. Often, this term is used in mergers and acquisitions to reflect the quality of a brand, a business’s reputation, its market position, customer loyalty or its ongoing relationships.
And it’s really important to understand that, at least in accounting, goodwill is not something you can self-create as an organization; it has to be assessed by outside entities when they’re evaluating your organization for purchase. Having a significant amount of goodwill can greatly increase the value of your organization and also provide positive tax benefits for the buyer, so the financial system encourages good corporate behavior.
So when a corporation signals that it’s less concerned about goodwill than it is about immediate revenue, it’s actually pretty alarming because that company or corporation is behaving in a manner that ought to place it in a disadvantageous position in the market. For a private company, it’s often going to attract media attention and potentially have a short-term or even long-term impact on the company’s reputation and future health. If it’s a publicly traded company, acting against the interests of the public tends to have an impact on its stock price.
Sony Group, for example, saw a decline in its share price as soon as it started making announcements, but management may have felt it was justified because their stock price was already sliding after a brief rally in early May and has overall lost about 20% of its value year to date. Sacrificing some goodwill now to have a stronger revenue model later signals to investors that tough decisions are being made, which helps the stock price to rebound.
But there’s always a risk to sacrificing goodwill, and it’s often that your competitors are going to swoop in and take advantage of your weaker position to siphon off customers. But sometimes, you can stave that off by pretending like the situation isn’t that big a deal.
In Tiger’s case, there are lots of other plumbing companies out there, but Tiger spends a lot more on advertising and branding than they do, which makes their visibility and awareness higher. They also benefit from the fact that people don’t really trust their competitors either. One of their larger competitors in the area was even worse, and its owner went to jail several years ago for committing PPP Loan fraud after a myriad of other poor decisions.
I’m pretty sure I went to high school with that guy, by the way. It was shocking news when it happened!
In Sony’s case, a similar situation is occurring in the video game space where Nintendo has already taken steps towards an all-digital future, Microsoft is flailing and completing wrecking its video game business and Take-Two Interactive, makers of Grand Theft Auto 6, announced that when their sure to be a mega-hit game ships in November, it will be digital only, and anyone buying a physical copy will just get a code in a box.
That’s definitely a favorable climate for Sony to sacrifice some goodwill, even if in the short term, the online hordes show up at all their digital gates.
But, as I said, another risk is that this sacrifice of goodwill is going to be more important to consumers than anyone realizes. To put this in metaphorical terms for a moment, let’s think back to the old days when people would make animal sacrifices to the gods. Ordinarily, this wouldn’t be a big deal – the sacrifice would get made, the gods would hopefully be happy, and the leftover meat would make a nice meal for everyone.
But say you decided to sacrifice that goat that your community had really taken a liking to and thought of as a pet. You might have good reasons for doing it, but once that goat is gone, people are going to miss it and perhaps even be angry at you for not taking their feelings into account. You might find that people no longer trust you and harbor a long grudge that results in their avoiding you or speaking badly about you in the presence of others. All because you misread how angry they would be about that action.
So, here’s what’s happened to companies like Sony in the past that misread the public – they’ve seen their share prices drop, they’ve seen their customers start boycotts against them, they’ve seen regulators take an increased interest in their activities and they’ve seen their channel partners, suppliers and distributors become less excited about doing business with them and perhaps even raise prices on them or create preferential arrangements with their competitors.
You can read the case studies – take a look at Target, or Wells Fargo, or Volkswagen or Silicon Valley Bank or Chiquita Brands, all of whom have had some very famous situations where they lost the goodwill of the public due to scandals or short-term thinking.
But what can you do to fix the problem if you find yourself in it? That is a place where marketing can help.
But look. You first need to recognize that following Sony’s arrogant playbook of stonewalling the public or Tiger’s combative playbook of blaming the people who are upset in the first place are both losing strategies. They make you seem apathetic and greedy and it’s very hard to convince people that you care about anything but taking the money out of their pockets.
If anyone from Sony or Tiger is listening, by the way, please grab a pen and a pad of paper. You need to take notes.
The first step is to step back and announce that due to public feedback, you are going to open up a channel for those who have a concern to voice it. This will take some of the pressure off the situation immediately because people will feel like they’re getting a chance to speak to the company directly. I recommend an online form that offers to add participants to a dedicated mailing list where you will share the results and your responses to the feedback. This creates accountability and connection.
The next step is to review the feedback and try to understand the common themes. In Sony’s case, some of the anger is about not offering a physical way to preserve entertainment media. Never mind that Sony already knows 80% of all game purchases are digital, movie sales are almost nonexistent in the era of video on demand and physical media aren’t cost effective to produce in small quantities.
There is actually a very easy solution to this problem – create a service for consumers who want physical media to pre-order it for a premium price and then limit production to just those pre-orders. They will get something more valuable because it will be limited in supply and therefore collectible, and Sony will get a chance to serve them as customers or to pivot them to digital if the price is too high. This business model works very well for small production runs on action figures, reproductions and limited interest physical media, so it wouldn’t be hard to implement because it already exists.
Another problem Sony might hear about is concern that owners of the older gaming systems or shuttered video platforms will no longer have access to their media. Operating the servers to run those services does cost something, and Sony knows they’re not cost-effective to run with limited interest. And so pivoting users onto another platform with discounts or carrying over some of their purchases or finding some other way to appease them would be wiser than just telling them, “too bad, so sad.”
Let’s think about Tiger now. I personally will never do business with a company that I know abuses its customers, and reading their BBB forums and seeing all the lawsuits and complaints out there about Tiger, I’m pretty sure there’s no coming back from where they’ve got themselves. They will eventually find that everyone’s been warned not to do business with them and they’ll exit the market. And good riddance if they’re truly ripping people off, as so many claim.
But let’s say a new owner buys them out for a nice low price – because of the lack of goodwill, you know! – and wants to regain the public’s trust with this flawed but very visible, well-known brand.
You see businesses do this all the time – “Under New Management!” signs go up and the public is assured things will be different now.
So, the first thing Tiger has to do is acknowledge those past mistakes. Not in a legally-binding way, but in a way that does show the company’s turned over a new leaf. The easy solution is to reach out to previous customers and offer, for free, to reinspect and repair any work done and to offer a new warranty on any new maintenance. This immediately communicates that the company wants to make its mistakes of the past right, offers a chance to rebuild the customer relationship and, paradoxically, can make the people who disliked the brand become its biggest defenders going forward.
To new customers, offer the same free inspection service if they have had some shoddy work done and then offer them a very generous rate to fix any mistakes found. Use union plumbers to do the work and educate the new customers about the importance of hiring skilled tradespeople for this sort of work and assure them that if they work with the new Tiger, they’re only going to get the best.
It would cost Tiger something to do this, but it would also allow them to turn around the negative perceptions and create a new narrative that they’re now the people to call if a repair was done badly. Over time, this would become their reputation – truly people you can trust because they stand behind their work and even fix the work their competitors have done badly.
Here’s another thing. Tiger wouldn’t need to advertise low prices and potentially scammy offers if it had this reputation. It would be able to command a higher price because people would trust its staff to make sure the work was worth paying a little more for.
And then, with that goodwill in place, when Tiger’s new owner is ready to sell the company years down the road, they will make a tidy profit on the sale because the company will actually be worth something now.
That is how you rebuild goodwill with good marketing. And honestly, I hope Sony and Tiger do something like this down the road. I’d love to see them turn things around, because we’ve got plenty of villains in this world.
We really need some folks who value doing what’s right!
I’m Sean in St. Louis, and this has been The Marketing Gateway. See ya next time!
So this is episode 143 of The Marketing Gateway, and we’ve had this show going for 8 months now. We’re so appreciative to our audience for hanging in there with us as we’ve grown, and we hope you’ve gotten a lot out of listening!
But here’s the thing – we’ve also gotten really, really busy in our day jobs at The Research & Planning Group, or RPG, because unlike last year when we started, our phones have been ringing and we’ve been lucky enough to have a lot of work to do!
Unfortunately, that means we have less time to prep for these shows and get them filmed, and I don’t want the quality to suffer.
And so we’ve made the decision that we’re going to take the show down to three episodes a week, hopefully with 1-2 interviews every week and an episode of me continuing to talk to you all about marketing topics. We love doing this show, and we’re excited to keep it going!
And we hope you’ll be excited to hang in there with us!
So thanks for listening or watching, and as always, if you’re in or around the St. Louis area and want to be on The Marketing Gateway, visit themarketinggateway.com and sign up to be a guest. We’d love to have you!
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