Many were surprised in 2009 when Cisco decided to enter the consumer electronics market. The company shelled out $590 million in stock for Pure Digital, the makers of the affordable, consumer-friendly Flip video camera. At the time, Cisco reasoned that the acquisition would help the company’s network business because more digital content would require bigger, better networks.
It sounded like a good plan.
But a mere two years later Cisco announced it was shuttering the Flip business and discontinuing the product. The shock that rumbled through the tech and business communities was nothing like the initial surprise at the acquisition.
While many have analysed what might have gone wrong here, that’s not what I want to talk about today. Instead, I want to take a look at the customer experience lessons we can take away from Cisco and the Flip.
1. Choose target customers wisely
In past lives I have been part of many acquisitions, and many decisions to enter new markets. I was nowhere near the room, though, when Cisco decided to purchase Pure Digital as a major step toward building a consumer business, so I won’t venture a guess at what the decision was like. I had questions about what role consumers should play in Cisco’s future, as did tech industry watchers at TechCrunch and the New York Times. Since much of Cisco’s business is focused on providing networking solutions to other businesses, serving the needs of the amateur videographer was quite a turn. I wonder how many of their systems and processes were ready to handle the consumer market? What needed to change in channel relationships? Customer support? How would consumers learn about the Flip, try it out, buy, get help from a business whose existing experience is designed for a large enterprise customers?
What’s the lesson here? Choose target customers wisely. Sometimes the energy for expanding the definition of those you call “target customers” is intoxicating. I’m not saying “don’t go there,” but choose to go carefully. Great performance requires a laser-like focus and daily actions across your organisation matched to your target customer and the need you’re solving for just for them. The closer the match, the better your performance, so don’t blur the target.
2. Anticipate your customer’s next need (so you can solve it)
This is perhaps the biggest lesson we can learn from Cisco. Had they studied the consumer market and seen the direction it was going — social media, uber-simple video sharing — the Flip might have had a fighting chance. Like the classic “trains vs transportation” mistake Theodore Levitt taught us in 1960 (focusing on growing trains when customers wanted transportation in new forms), Cisco was blind-sided by the explosion in smart phone popularity and the way it allowed consumers to take quick videos and share them instantly with their friends, families and followers.
The lesson here is to anticipate your customers’ evolving needs. I can’t overstate this. By studying your customers and the evolution of their needs you gain the insight that can and should help inform your product and service development strategy. They should shape your approach up-selling and cross-selling. Since your customer’s evolving needs are the headwaters of the future demand for your company, customer needs are your long-term plan for sustainability.
3. Know when to cut your losses
Sure it’s easy to point the finger at Cisco and shake your head at what seems like such a foolish misstep. But, there is some wisdom in cutting your losses. I like to think Cisco saw, albeit it a little too late, how the consumer market was shoring up and recognised that competing head-to-head with the iPhone and Android-based smart phones to solve video sharing was a no-win situation. It couldn’t have been easy for Cisco’s leaders to put the kibosh on the Flip only two years after they acquired it – and it can’t be easy even now in the midst of revamping the company’s overall consumer market business.
The lesson here is that there’s no shame in cutting your losses when it becomes clear things aren’t going to pan out the way you’d hoped, or in a way that you can reset, adapt and overcome. It’s a smart move to stop what’s not working and get back to doing what does work.
4. Communicate, Communicate, Communicate
Turning out the lights on a popular product is never easy. When Cisco announced the end of the Flip, there was a huge outcry from consumers. Why? What now? Cisco did an admirable job of explaining what would happen to the Flip and the services and support that went along with it. By clearly laying out the plan for the product’s “end-of-life”, and being transparent about those end dates, Cisco set expectations and provided consumers the information they needed to make informed decisions about their future video camera needs.
These are just four lessons we can learn from Cisco and how they handled the decision to shutter the Flip. What are some of the customer experience lessons you’ve learned from watching the company and how they’ve handled the situation?
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