A Crisis Management Success Story: AppFirst
AppFirst provides IT professionals with the most complete and transparent data about how their applications and infrastructure are performing. One Friday morning, CEO & Co-founder of AppFirst, David Roth, was woken at 2am to a crisis that threatened the organization’s reputation and, ultimately, their profitability. How David chose to manage this crisis is what saved the company from any and all negative press and any loss on their bottom line. Here’s David’s story and his first-hand advice to organizations everywhere…
Q: Tell us a little about who you are and what you do.
A: I am a ‘serial technology entrepreneur,’ navigating the unchartered, start-up waters of many technology companies over the past two decades. Currently, I am CEO and co-founder of AppFirst headquartered in New York City, which I launched five years ago.
Q: You woke up to find your organization in the midst of a crisis recently, tell us about it.
A: When the phone rings at 2 a.m., it’s never good news. I was informed that we had a company crisis; the account of every customer using the free level of our SaaS (software-as-a-service) solution had been deleted. We had been experimenting with different levels of product offerings and pricing models, and worked through an exhaustive process to get everything right. Yet, despite that effort, an unintentional execution happened and all free accounts were deleted. That erroneously triggered an email from us informing them that their account was no longer active and, if they wanted to keep using our product and view their IT operational data, they would need to enter their credit card to regain service.
Q: What type of impact did this crisis threaten to have on your organization?
A: I was concerned on three fronts: one, that even though these were non-paying customers with free accounts, our business model depended on them falling in love with our product and expanding their use to a paid level. Also, the speed at which this audience could seize social media with broad-based, negative rants against our company alarmed me. Thirdly, we couldn’t just apologize and re-activate the free accounts; they would need to go back online and initiate the re-start process themselves.
Q: What did you do to regain control of the crisis and prevent it from hurting your organization’s reputation for the long-term?
A: Immediately, we published a blog explaining in detail the mistake we made, followed by an apologetic email to every impacted customer and, finally, I personally called each one, clarifying what happened. Simultaneously, I mobilized a team to cross-reference our customer database with SalesForce.com so they could research any missing phone numbers. Next, we set up a common online system that could be updated in real-time by multiple people. From there, I organized my calls by time zone so I could avoid adding insult to injury by unknowingly calling people at 6 a.m. Finally, I hit the phones and spent four consecutive days calling our customers from my home office until every affected customer was reached.
Q: Most CEOs wouldn’t have chosen to react the way you did. What made you do so?
A: First and foremost, I believe every CEO is responsible for driving value to his/her customers, partners, employees and investors. I owed it to all of them to take swift action, personally. Because the perception of my company is paramount to me, I genuinely wanted to handle this situation correctly. It was important that our customers – regardless if they were paying customers — know we cared enough to develop and activate a solution. That said, an apologetic email asking them to come back to us was not enough; I wanted impacted customers to receive a phone call from me. I personally wanted to reach out and clarify that a mistake was made and reaffirm their value to the company and to me.
Q: What major lessons did you learn from this experience?
A: Primarily, this experience reinforced the need for cross-company transparency. The individual responsible for the mistake stepped forward immediately, which enabled us to address it immediately.
It was also a powerful opportunity as a CEO to speak one-on-one with our customers and learn that our free service offered real value; they were disappointed and frustrated to lose it. I learned firsthand how they used our product, what they’d like to see, and what they’d be willing to pay for – invaluable information to receive.
Additionally, I learned that their biggest pain point was not the loss of the service or even our mistake; it was the misperception that we were trying to take advantage of them that angered them. A key takeaway is that people are most forgiving if you step up promptly, admit that ‘we made a mistake’ and then swiftly show them that improving their negative experience matters greatly.
Indeed, there was a lot of buzz on social media, but not with the sentiments I had feared. Instead, they were all positive, even expressing grateful disbelief that a company CEO called his customers personally to apologize and handle a mistake in the right way. Because of our effective approach, we did not receive a single negative post on social media. And, almost every customer went back online and re-initiated the process to resume using our service.
Q: What advice would you give to other executives, in regards to their crisis prevention or crisis management?
A: This situation reinforced the importance of transparency that we had built into our company culture, where a mistake is not seen as a failure but rather an opportunity for acknowledgement and learning. With that philosophy, teams can learn to work through mistakes and be problem solvers instead of problem avoiders. Mistakes are going to happen, and it’s really important to have the right attitude about them, as well as a willingness to accept that they’ll happen, and empower people to learn from and work through them.
It’s essential to apply that same transparency to your customers. It was an uncomfortable and time-consuming process, but I wanted our customers to know I really cared. Be honest, humble and clear about what happened, why it happened and what you’re doing to fix it. Customers deserve that, and they’ll thank you with their business.
About David Roth
David Roth is the CEO of AppFirst, where he is responsible for the company’s strategic direction and day-to-day business execution. He co-founded the company in 2009 and is based in the New York City headquarters.
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