Putting Profits Before People: Just How Much Bad News can Apple’s Brand Withstand?

The damaging news just keeps flowing out of Foxconn’s “employee barracks” in China, where Apple’s iconic products are made.

In August 2012, the Fair Labor Association released the results of an investigation it had conducted at Apple’s request after reports of employees rioting and committing suicide over excessive work hours, inadequate compensation and unsafe working conditions.

The FLA reported that Foxconn had addressed most of the problems regulators said must be fixed, including ergonomic breaks and equipment redesign to prevent repetitive stress injuries, cutting excessive overtime hours and updating safety and equipment-testing policies.

But new trouble at Foxconn is creating yet more bad publicity for the Taiwan-based manufacturer – and for Apple.

The Economic Policy Institute reported earlier this month that the FLA’s assessment of Foxconn’s progress was too “rosy,” that high demand for the much-hyped iPhone 5 has essentially undone what few improvements have been made and gave a sharp criticism of the most valuable company in history:

“The paramount issue remains whether Apple will ever choose to apply its legendary business prowess and spirit of innovation, and its enormous financial clout, to the goal of protecting the basic human rights of the people who make those products."

Ouch.

The news comes at a time when the gadget giant is dealing with several PR hits it has taken over the past few 

months.

• In early September 2012, during the run-up to the big announcement of the iPhone 5’s impending release, Forbes reported that Apple’s patent court battle with Samsung was drawing criticism even from its fans, many of whom felt Apple is filing frivolous patents and is afraid of Samsung’s competition.
• Shortly after that the Maps debacle that left many befuddled iOS 6 users “iLost” dominated tech media for several weeks.
• More recently, research firm Strategy Analytics released a report showing that iPhone owner loyalty is in decline, with 75% of Western European iPhone owners planning to buy their next phone from Apple, down from 88% last year. In the US, repeat purchase intentions have also declined since 2011, from 93% then to 88% now.
• On November 8, former Apple exec David Sobotta told CNet that Steve Jobs’ successor as CEO, Tim Cook, is a technological “lightweight.”

And now there’s the latest episode in the ongoing Foxconn saga. If human rights violations continue unchecked at Foxconn, it could mean a very serious hit for Apple notwithstanding the powerful halo effect I’ve written about that seems to protect the company’s reputation and bottom line.

So I am in full agreement with the sentiment the EPI investigators expressed in closing their report. If Apple were to use its huge economic and cultural clout to force Foxconn to truly improve conditions at its Chinese factories – and I mean improvements verifiable by independent investigators, not those acting at Apple’s behest – it would not only make worker’s lives better (the most important thing), it would have the side effect of being a great PR coup for the company.

Pushing to put people before profits could protect Apple’s halo and advance its once-untarnished reputation. Will the tech behemoth put aside shareholder pressure and have the guts to do it?  I don’t think Apple will, but in this case, I would love to be proven wrong.

Loyalty To Go: How Mobile is Remaking Guest Allegiance

This article by Vanessa Horwell, Chief Visibility Officer of ThinkInk, originally appeared in the Hotel Business Review on 11/19/12. 

The ballots are in. The votes tallied. And President Barack Obama successfully avoided joining the more than 12 million unemployed. While pundits will argue his re-election was as much about an aggressive (and expensive) negative ad campaign as it was substance, there will be just as many supporters who will point to his recent speeches and swearing in address earlier and say they’re loyal to the man who offered a list of promises – prevented financial meltdown, began an economic recovery, fixed healthcare, hunted down Osama Bin Laden – and delivered, and so on.

Yet supporters will say even more. Obama loyalty remains multi-faceted: from his cool, calm, demeanor, to his matter-of-fact style, to his reliance on tech-savvy youth to help get out the vote via smartphones and tablets, to his all-too-human human blunders, (remember the Beer Summit?) people were also loyal to the person for good or for worse, and not the politics. As President Obama placed his hand on the bible and swore to “preserve, protect, and defend the Constitution of the United States,” his immediate concerns over citizen loyalty came to a close.

But when it comes to industry loyalty, and specifically the hospitality sector, hotel operations don’t run in four year cycles, and nor can they take presidential retreats to Camp David to collect their thoughts. Committing to loyalty is a constant process, where even the slightest misstep could impact occupancy rates and the equally important revenue per available room, (REVPAR). In these still-challenging economic times, for hotels as in other industries, retaining existing patrons – like voters – is vital. And to a large extent, mobile is the ideal medium to drive that engagement. While 2012 has proven to be a banner year for mobile and its incorporation into hotel hospitality and loyalty, 2013 is where hoteliers must get creative. They must move beyond mobile’s low-hanging fruit e.g. mobile booking, checkout, trip itinerary planning and really break new ground.

Why?

Because the above mobile amenities list is becoming as standard (and unimpressive) as the placard boasts of “in-room color TV.” As the New Year removes its training wheels, sobering itself from the parties and hoopla that closed out 2012, the new “loyalty party” is fast moving toward the realm of social media. Only through the combination loyalty programs and social media, and the ways in which guests are being empowered to become the next generation of brand ambassadors is where the as yet uncharted hotel loyalty territory lies.

The Rise of “Socialized Loyalty”

Just like the President’s mislabeled healthcare reform, “socialized loyalty” is not about a government or hospitality takeover of social media – far from it. But it is recognition that social media, specifically mobile social media is rapidly becoming standard and a must-have component for hotel loyalty programs.

In the last 12 months, US smartphone adoption has continued to surge and by all accounts, has exceeded critical mass. Business and leisure travelers alike now enjoy adoption rates above the 56% U.S. average (around 84% for business travelers) and others report that smartphones and tablets might be the world’s fastest spreading technology ever, beating out telephones, electricity, radio, television, computers, and others. Or put another way, according to a recent Flurry report, iOS and Android adoption rates are moving 10 times faster than the 1980s PC revolution, twice the speed of the 1990s Internet explosion, and triple the speed of social network adoption.

And with 3G broadband mobile Internet access nearly ubiquitous and 4G access being provided by Verizon, AT&T and Sprint in 2012 and T-Mobile joining the ranks in 2013, it’s clear consumers crave constant connectivity – even if many consumers are still uncertain what differentiates one broadband carrier from another.

Increasingly that connectivity includes their social media connections to brands as well as people. Consider these five staggering stats:

·         91% of adults use social media regularly

·         70% of adult “social networkers” shop online – which bodes well for loyalty programs

·         Every minute of the day 684,478 pieces of content are shared on Facebook

·         Facebook enjoyed a 67% year over year mobile growth rate

·         28% of consumers share deals, (coupons and discounts) through social media

So if social media is where consumers are already heading in other facets of their lives, why can’t hotels move their mobile initiatives one step further and join the social media conversation?

Socializing Guest Allegiance

The good news is that hotels are beginning to get the mobile message and are readily taking to social media in new and novel ways. But before we address those, one of the most effective approaches is for hotels to incentivize guest social media usage through loyalty programs. In July 2012, MGM Resorts International expanded the provisions of its M life loyalty rewards program to include points accumulation and tier status upgrades for members of various social media sites including, Twitter, Facebook, Foursquare and Instagram. All members have to do is rely on their smartphone’s embedded location-based technology so that their physical presence and social media shout out (worth 500 credits per tweet, Facebook post or Instagram picture) at MGM-owned properties in Las Vegas, Mississippi, and Detroit generates excitement and buzz from other would-be guests. Doing so earns members rewards that can be used beyond the casino floor, like restaurant dining. Dedicated loyalty members can rack up 6,000 credits each day and up to 30,000 a year.

Essentially, guests are rewarded for what they’re already doing naturally even before the rise of social media: telling people, both friend and stranger alike, that they’re at “such and such” a location, have had a positive experience, and directly and indirectly nudging others to “go check it out.”

Looking ahead, future use of social media and loyalty may involve aspects beyond the digital shout out and include items like gaming – another online and mobile activity that’s become increasingly social. Staying within the casino-hotel sphere, imagine if a casino offered a virtual gaming experience where future guests could play poker against other future guests and all of the winnings linked to one’s loyalty program membership? Rather than waiting for guests to arrive, they’ve already been incentivized possibly weeks before their journey. And, the more casino-hotels that offer such mobile amenities, the more their allegiance will be secure. Casino-hotels (and any others looking to drive guest allegiance via mobile loyalty) that fail to keep up will essentially be rolling snake eyes.

Caution in the Coming Quarter

While linking mobile, social media, and loyalty together are an essential 2013 next step, equally important is to be mindful of the basics and the realities of the current global economy. Even though stock markets have settled some following the presidential election, the world’s economic outlook remains uncertain at best: Europe’s debt crisis looms like an unpaid (and unwelcomed) hotel guest bill and the US “fiscal cliff” (the mandatory government spending cuts that went into effect some three weeks ago) is just beginning to be managed and dealt with.

That being said, there’s no denying that for hoteliers, 2012 was a positive year. As of this article’s writing, the week of October 2012 saw gains in three important year-to-date metrics: REVPAR grew 11%, to $71.42, occupancy rose 6% to 65.1% and the average daily room rate was up nearly 5% to $109.65.

But the proper implementation of social media and mobile means that it must be done in a way that doesn’t upset other budgets, or undermine the basics of what hotel brands do well: provide an unsurpassed, unique brick and mortar (read: traditional) customer experience. If the basics can’t be covered, mobile’s next-level incorporation may have to wait. Besides, assuming your hotel brand has been successful in the years leading up to 2013, it’s likely you’ve earned at least some leeway with your most loyal guests – before they reconsider.

The ballots may be in for the President and the Electoral votes cast. But in the early weeks of 2013, when it comes to the latest in lodging loyalty, hotel guests have yet to cast theirs. The hotel “election season” is just beginning and it’s looking like the merging of social media with loyalty programs might break the race wide open.

A new race is on and all hotels are up for a vote!

This article by Vanessa Horwell, Chief Visibility Officer of ThinkInk, originally appeared in the Hotel Business Review on 11/19/12.