What You Can Learn From The Radio Shack/Netflix Promotion That Went Wrong

By Kara Murphy, contributing writer, Integrated Solutions For Retailers

Struggling company gets a black eye with some customers at critical time

Radioshack began a promotion in late February giving six months of free Netflix online streaming to any customer who purchased a laptop, tablet, or cellphone. But the promotion quickly turned sour when some users figured out how to easily steal codes for the free Netflix service.

It’s not known exactly how many codes were stolen, but within hours of the promotion going live, Netflix codes had been redeemed and others put up for sale on eBay. It was supposed to take legitimate customers 48 hours before they could redeem their codes.

The problem became known when legitimate customers began complaining that their codes were invalid, because they had already been used.

So what steps can a company do to minimize damage in the face of bad publicity over a good intention gone wrong?

Doug Fleener, the president and managing partner of Dynamic Experience Group, a retail consulting firm, offers these tips to companies facing social media customer complaints in his blog, Retail Contrarian.

• Assess the potential damage. Could what happened blow up into something bigger? Is this something the mainstream media might cover in a detrimental way? Could you lose customers?
• Apologize for what happened. “Remember saying you’re sorry doesn’t mean you’re saying you did something wrong,” Fleener wrote.

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Radioshack has had its share of media attention lately: First the company had one of the most popular Super Bowl commercials, part of its rebrand.

Shortly afterward, rumors began of store closings, and the company recently confirmed it would, in fact, be closing 1,100 stores nationwide. The news came at the same time the company announced it had lost $191.4 million in its fourth quarter. For the year, the company lost about $400 million, vs. $139 million in 2012.

"We were trying to do too much too quickly" to turn around the company, RadioShack CEO Joseph Magnacca told analysts on a conference call.