We’ve just witnessed one of the highlights of the year in global business, and it’s an unusual (if costly) sort of event: a TV entertainment celebrity’s nineteen-word tweet wiped $1 billion off a global company’s market value.
Snap Inc, the parent company of the social networking site Snapchat, took quite a battering at the US stock markets on Wednesday, losing a whopping $1.3 billion in the days’ trading. Its losses piled after reality TV star Kylie Jenner tweeted a comment critical of a recent update to the Snapchat app. Kylie’s tweet read:
A chorus of agreeing disdain at Snapchat’s sins began pouring in quite snappily. Since the update to Snapchat was released earlier this year, there’s been an overwhelming expression of disappointment and indignation at it from the app’s users across the world. Social media (especially Twitter) and app stores were awash with negative reviews, and
over a million people signed a petition demanding that the update be rolled back.
Snap took it all cooly until Ms. Jenner’s tweet happened.
Let’s picture this. Ms. Jenner feels irked about Snapchat today. So she does a quick (say, twenty-second) raid on her device’s keyboard, casually taps the ‘Tweet’ button on the screen, and sees her post go live. A few hours later, and Snap is in fits, hemorrhaging value to the tune of over a billion dollars.
Is Kylie Jenner’s opinion worth more than the angry rants of millions of other users put together? And, why is an American celebrity’s tweet or a foreign company’s stock market woes worth your ponder?
Here’s an answer: the whole fiasco holds lessons for us, especially for businesspeople. Even if you don’t have a billion dollars to lose, you should be mindful of your business’s operations, what your customers think of them, and what socially influential people are (or could be) saying about your products and services. A short list of takeaways from the billion dollar tweet event follows.
- Never belittle customers’ opinions- even if they’re just ‘sentiments’
It appears that Snapchat didn’t show enough concern for its followers’ thoughts about their product ‘improvement’. When complaints began to pour in about the app’s November redesign, the company just let them simmer. It seems that its strategy was to ‘let them fiddle with it and whine about it until they like it.’ At least, this was the impression many people got from the response of Snap Inc’s CEO Evan Spiegel to irate users.
The company did come around to offering concessions to Snapchat users, including changes to the app’s Friends and Discover sections. But the damage had been done; the Kylie Jenner episode simply confirmed (in a costly way) that users’ discontentment was still capable of inflicting losses on the company. If they’re unable to douse the flames of bad press that’s brewing at their doors, they could lose followers to their arch-rivals, Instagram.
Your customers are the reason you’re in business. Trying to force products on them is always a bad idea. Listen to them.
They might not always be right, but you should at least closely consider and respectfully respond to their concerns.
- Social influencers can make or mar your business
We know that celebrities and ‘opinion shapers’ can help boost businesses’ public image and make them more widely known. That’s why there’s such a thing as influencer marketing. But we aren’t always trying to make sure that these influencers don’t spew something negative about our products in public. We should. Their misgivings about a product could color that product in the eyes of their fans- more severely so if those fans haven’t had any previous contact with the product.
Kylie Jenner’s tweet generated a significant response at the markets because she has a large fan base (24 million Twitter followers is no joke). Her words have real purchase with them, and they are likely to be swayed by the things she says. Snap Inc’s shareholders weren’t jittery because Ms. Jenner tweeted. They trembled because they knew her tweet could whip up (or reignite) negative sentiments about their company’s product.
Negative customer sentiment is bad for business, whether it’s about a roadside restaurant with bad customer service or a social media giant that introduces a ‘product improvement’ that nobody seems to like. If you own a business, you’ll do well to address customer dissatisfaction as quickly as possible, and (better still) do what you can to keep it from developing in the first place.
- The markets aren’t always fair.
Shares in Snap dipped 8% after Ms. Jenner’s tweet. At this depth, not many observers quickly recalled that the company’s share value had risen by nearly 50% earlier this month. They soared at that time because the company had reported good revenue figures. The positive numbers were a good reason to be optimistic, but maybe the valuation was a bit too upbeat. Many analysts have pointed out that the upward-downward swings triggered by business performance reports and celebrity tweets demonstrate just how erratic markets can be.
Marek Zymslowsky (‘Chinedu’), Jumia Travel’s co-founder, seemed a bit miffed about this.
“And people talk more about Jenner “power” than the idiocy of the market itself,” he tweeted, in response to news about Snap Inc’s share price. Other industry watchers have mocked the market response to the tweets as well.
Actually, markets are largely a reflection of our own sentiments. Apart from electronic trading systems (which sometimes ‘decide’ to do their own thing), it’s us humans who dictate the pace of the markets. This is true for the market for cucumbers and footballers as it is for shares. Businesses are better off accepting that their markets can react to their actions in ways that seem irrational and unfair. Careful planning for ‘unknowns’ and being stoic about your businesses’ outcomes is probably the best way to handle this.
- Consult widely before introducing a new product
Maybe Snapchat did consult some of its users before making the changes that are now being talked about. If it did, it must have collected a not-too-representative spread of suggestions, or maybe even ignored them. Otherwise, the negative response it’s gotten from the wider public is puzzling.
Two things can be noted here. First, it’s important to find out what your customers want from any new product you’ll be introducing. Don’t give them something they won’t want, and just expect them to ‘take to it’ as time flies by. Also, if you’re seeking opinions on possible product improvements or prototypes, be sure that your survey pool is a representative one. Choosing survey correspondents wisely is hardly ever a waste of time.
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This article was first published on 26th February 2018
ikenna-nwachukwu
Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.
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