We expect the best from the brands we give our hard-earned money to, so when they disappoint, it seems that there must be a proper way to compensate for the frustration and inconvenience. These companies' reputations suffered greatly over the past few years, when they failed to meet the standards of their customers, and tried – unsuccessfully, in the eyes of some – to atone for their business sins. (For more on business failures, read 5 Big Companies' Biggest Blunders.)
TUTORIAL: Investing 101

RIM's Blackberry Outage
You couldn't turn on the news without hearing about the outrage that Research In Motion (Nasdaq:RIMM) customers felt during a two to three day service blackout in October of this year. When left without service coverage, texting abilities and other functions, that they needed for business and personal communications, customers complained, and the uproar hit a global scale. Blackberry's response was to apologize profusely and issue a free app package valued at $100.

Whether the "compensation" was adequate enough would depend on your idea of what makes an app valuable. Some users, who had no need for some of the complimentary apps, didn't feel that free access to Sims 3 or Vlingo Plus, for example, even began to cover their woes. Other complaints include the fact that a majority of the free apps (valued at $15 to 20, each, on Blackberry App World) come standard or have identical features for free on competing phones, such as the iPhone 4S. (Note: Blackberry enterprise customers were also given a free month of technical support following the outage.)

Apple Antennaegate
What would lead Apple (Nasdaq:AAPL) to issue scores of free cases (or "bumpers") to iPhone 4 owners? When Gizmodo and other tech outlets called them on the fact that, by holding the phone a certain way, users could actually be blocking antennae reception, Apple felt this was the only way to appease the masses. Online petitions around June of 2010, urged Apple to fix the antenna problem, which was resulting in dropped calls and an inaccurate display of the signal on the phone screen.

Apple responded quickly by designing an app specifically for the free case fulfillment process; this came in handy for even those who didn't seem to suffer much from the debacle. For those consumers, who felt slighted by the iPhone snafu, nothing much could satisfy their disappointment of what they considered a design flaw. Apple's handling of the issue was prompt, considering the size of the company, but many owners would have rather waited to purchase the hyped-up iPhone 4 until the bugs had been worked out. (For more on the iPhone 4, see iPhone 4: Numbers To Know.)

Sony PSN Network Outage
Angry gamers are not something to take lightly, as PlayStation realized when their PSN Network was out of commission for weeks this past April. The outrage began when the networks 70 million users were unable to log in to their accounts, leaving them unable to play the games that many of them dedicated numerous hours a day to, or the streaming entertainment options many used to watch movies and TV. In response, to what later revealed to be a hacking incident and the potential theft of the users' information, Sony (NYSE:SNE) compensated members by offering 30 days of free PlayStation Plus service for new users, and 60 days for existing users, in addition to one year of free identity theft protection. Sony also offered a "Welcome Back" Package due to its downtime. Users were given a choice of two full games from a list of four in the Sony PlayStation Network.

Many are speculating that the remedy fell short of the inconvenience and perceived security threats that users experienced. (The fact that Sony felt compelled to offer the identity theft insurance, speaks volumes to the magnitude of the breach.) While it's not likely that hardcore gamers will stop playing their favorites anytime soon, the impact that the Sony flap left on the consumer tech community remains significant. (Just take a look at the results of this reader poll from CNET regarding the appropriateness of the compensation.) (For more on hacking, see Most Costly Computer Hacks Of All Time.)

The Bottom Line
If anything positive can come from these horror stories, it may, perhaps, be that, in each situation, the turmoil led to process improvements that might not have otherwise been performed. With all three corporate giants, however, the simple lesson that it is much easier to keep a customer than it is to win one back, may overshadow the silver linings. As the competition stiffens for the gaming, cell phone and communications industries, it's even more important to get things right the first time.

Related Articles
  1. Stock Analysis

    How Expensive Is Whole Foods, Really?

    Learn about Whole Foods Market, Inc., and discover how Whole Foods pricing actually compares to that of other grocery store operations.
  2. Stock Analysis

    4 Quick Service Restaurants for Your Portfolio

    Learn about the four quick service restaurants with attractive investment theses and growth prospects that can be valuable additions to your portfolio.
  3. Stock Analysis

    What Makes the 'Share a Coke' Campaign So Successful?

    Understand how Coca-Cola implemented the successful "Share a Coke" campaign. Learn about the top three reasons why the campaign was successful.
  4. Mutual Funds & ETFs

    Top 3 Consumer Cyclical Mutual Funds

    Obtain information on, and analysis of, some of the best performing mutual funds that offer exposure to the consumer cyclicals sector.
  5. Stock Analysis

    The 6 Best Dividend Stocks in the Consumer Staples Sector

    Learn about the top six companies that make an attractive investment for investors looking for stocks for dividend income investing.
  6. Investing

    Procter & Gamble Restructures, Sheds 100 Brands

    All businesses face adversity, and Procter & Gamble is no exception. We take a look at recent developments affecting this global giant.
  7. Economics

    Explaining Manufacturer’s Suggested Retail Price

    The manufacturer’s suggested retail price (MSRP) is just what it describes – the price manufacturers recommend that retailers charge for their goods.
  8. Economics

    Calculating Cross Elasticity of Demand

    Cross elasticity of demand measures the quantity demanded of one good in response to a change in price of another.
  9. Personal Finance

    What to Collect: Apple Watch vs. Luxury Watches

    The "iWatch" is a new player in the luxury watch world. But will it stand the test of time? Some points for collectors to ponder.
  10. Stock Analysis

    2 Reasons PepsiCo's Snacks Division is Crucial to Its Growth

    Understand the recent trends in the North American snacks market. Learn about the top two reasons why PepsiCo's snack division is crucial to its growth.
  1. What does marginal utility tell us about consumer choice?

    In microeconomics, utility represents a way to relate the amount of goods consumed to the amount of happiness or satisfaction ... Read Full Answer >>
  2. What are some common ways product differentiation is achieved?

    There are many ways to achieve product differentiation, some more common than others. Horizontal Differentiation Horizontal ... Read Full Answer >>
  3. What role does the OEM (original equipment manufacturer) play in the finished product?

    Original equipment manufacturers (OEMs) do not typically play much of direct role in determining the finished product. However, ... Read Full Answer >>
  4. What is the difference between an OEM (original equipment manufacturer) and a VAR ...

    An original equipment manufacturer (OEM) is a company that manufactures a basic product or a component product, such as a ... Read Full Answer >>
  5. Is the retail sector also affected by seasonal factors?

    Generally speaking, the retail sector is highly seasonal. Almost invariably, sales in the retail sector are highest in the ... Read Full Answer >>
  6. What has the retail sector evolved to its current structure?

    Retail is the catch-all phrase for the sale of final goods to consumers; a retail transaction is considered an "end" and ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  2. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  3. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  4. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  5. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  6. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!