How Fitbit, Like Tylenol Before It, Handled a Recall the Right Way
It's the call that no CEO ever wants to get. The product that was supposed to help people get and stay active had some unintended side effects.
In this case it was the Fitbit Force, a wristband designed to help wearers understand their physical habits and make healthy changes. Shortly after launch, a small percentage of users reported getting rashes from the devices. CEO James Park made the decision to pull the $130 Fitbit Force from the market as well as offer refunds to those who purchased them. Only 1.7 percent of wearers experienced any problems, according to a letter from the CEO posted on the website. Other Fitbit products, including a different wristband, remain on the market.
The expensive decision to pull the product quickly, before a media storm started brewing, is a smart one. It demonstrates a company that listens to its customers and takes action. While it's true that the rash affected only a minor part of the Fitbit community, its impact could have been much greater. How many potential buyers would have reached for a competitive device if they even questioned the safety of the Fitbit Force?
This is a tried and true method of crisis management. Tylenol set the benchmark for consumer recalls back in 1982, when Johnson & Johnson recalled millions of bottles of Extra Strength Tylenol after seven people died from taking the pills. As the story goes, a killer had laced the bottles with poison and the deaths were limited to Chicago, but pulling all the bottles acted as a precaution and put the public's mind at ease. In all, 31 million bottles of medicine were pulled from the shelves, costing about $100 million. After that, new bottles were introduced that made any tampering evident, something that is now standard in all packaged consumer goods.
On the other side of the spectrum is Kryptonite, which ignored the problem of people picking its locks with a cheap plastic pen. Despite blog posts and videos on the topic, Kryptonite didn't bother reacting until a front page story appeared in the New York Times. Suddenly, rather than a positive story about how a company takes care of its users, Kryptonite looked like an uncaring behemoth.
Eventually, the lock maker went through all the same actions, recalling products and fixing the problem at an estimated cost of $10 million. But it also needed to spend significant resources rebuilding its brand and trust with customers. Had it been proactive rather than reactive, the added rebuilding could have been avoided. It should be noted that it took the company 10 days to react from the first video going live.
As it happened in 2004, Kryptonite was also an early lesson in the impact that the social channels had on consumer sentiment and news gathering. Back then, few companies had social listening campaigns in place, and that tin ear approach to users is what left Kryptonite flat footed. Flash forward a decade and you'd be hard pressed to find a consumer brand that doesn't listen to social chatter in some way.
The challenge lies in how to use that information once you get it. If you get out in front of a story, just as Fitbit did, you can administer some level of control. The corporate voice becomes its own trusted channel of information. If you wait and let others begin asking questions, that trust shifts away.
Fitbit's Park did everything right in his letter to customers. He wrote to them directly, spoke in plain English, didn't try to hide behind corporate speak, kept it short and even included a bulleted list of "what we know." His letter became quoted in nearly every article on the subject, giving him and Fitbit complete control over the story. The assumption is that once the company has more information, they'll share it.
It also means that when the product comes back on the market, consumers will be waiting for it.
What he clearly didn't do is blame his customers. That's what Lululemon did when people started complaining that its expensive yoga pants are somewhat transparent. Rather than issuing the recall and taking blame, founder and Chairman Dennis "Chip" Wilson said that the pants just weren't meant for some women's bodies. Many took that to mean: Sorry, your butt is too big for our pants. Not exactly a flattering look for the company.
Of course, that's a survivable faux pas, but the company's troubles kept coming. It recently took some aggressive tactics with resellers and also has a stringent return policy. All this puts the company first and customers second.
Shareholders are now suing, saying that the company knew about the problems and hid them. We're left to wonder that if the company had been more like its pants and offered some transparency from the start, would its shareholders have taken the same action?
In the case of Fitbit, Park and his team are offering clear guidance and value to their customers. Isn’t that a position that we can all envy?
Related: Lululemon Messes Up... Again