The Real Thing: What’s Most Important to Customers

By Rod Collins

 

Increasingly, business leaders are discovering the painful reality that what they think isn’t as important as it once was. In a hyper-connected, fast-changing world where customers have instant access to each other, what matters most is what’s most important to customers. Business leaders who assume that their years of experience provide them with special insight into the mind of the customer run the risk of falling victim to executive hubris. An important fact of our rapidly changing world is that the most important information business leaders need to know is probably not in the C-Suite. If executives find this hard to believe, they would do well to heed the timeless lessons learned by an American institution some thirty years ago.

In the early 1980′s, Coca Cola’s flagship product was in danger of losing its century old position as America’s most popular soft drink.  Coke’s chief rival, Pepsi, had been steadily gaining market share on the strength of a very effective advertising campaign touting blind taste-tests that showed that even Coca Cola drinkers preferred the taste of Pepsi. Unfortunately for Coke, their own independent taste-tests validated their rival’s claim. With a sense of urgency, Coca Cola embarked on a comprehensive market research project using surveys and focus groups in combination with taste-tests to interview almost 200,000 consumers.  However, the data yielded inconsistent results. While the remixed formula was handily beating Pepsi in blind taste-tests, the focus groups hinted that there could be widespread dissatisfaction with the reformulation of the world’s oldest soft drink. Putting their faith in the positive response to the taste-tests, on April 23, 1985, Coke’s executives unveiled the reformulated version of their flagship product, New Coke.

New Coke turned out to be one of corporate America’s biggest business debacles. The negative reaction among Coke’s customers was so widespread, that just 78 days after the lavish launch of New Coke, the original mix was brought back and reintroduced as Coca Cola Classic. While taste is important, many customers valued Coca Cola as a source of social connection and a personal reflection of their identities. Coca Cola wasn’t just a soft drink – it was a meaningful American icon that was an important part of people’s lives.

In the beginning, Coke’s executives ignored the mounting protests of their customers. Coke’s top brass had the data and they thought knew better. They were convinced that their taste-tests were correct and were confident the backlash would die down once the customers came to appreciate the improved taste. However, customer dissatisfaction continued to build to the point where the bottlers—who were much closer to the customers—prevailed upon Coca Cola’s senior executives and forced them to comes to terms with the reality that, for Coca Cola lovers, old Coke was the real thing. Sometimes what matters most isn’t found in corporate reports; it’s found in the minds and the hearts of customers.

If Coca Cola executives had paid more attention to their own bottlers and had involved them in correcting their diminishing sales, perhaps the New Coke fiasco could have been avoided. In all likelihood, the bottlers would have put the executives in touch with the customers’ true values and would have identified far more effective alternatives for addressing Coke’s declining market share. Fortunately for Coca Cola, both the customers and the bottlers found a way to make their voices heard before it was too late, and the executives were humbled by a valuable lesson: The market doesn’t care what the bosses think; like old Coke, what’s most important to customers is the real thing. Now that we live in a hyper-connected world, this wisdom has never been more fitting.

 

Rod Collins is Director of Innovation at Optimity Advisors and author of the upcoming book, Wiki Management: A Revolutionary New Model for a Rapidly Changing and Collaborative World (AMACOM Books, November 1, 2013)