Since their inception in 2006, Choice’s Shonky Awards have become the one prize that every Australian business doesn’t want to receive.
The consumer group’s awards pick out the most faulty and dishonest products or services of the past year.
Being awarded a Shonky is something that a small business cannot afford to simply brush under the carpet. The unveiling of the 2011 hall of shame this week generated widespread media headlines.
The power of the Shonky Awards was underlined by the revelation by Choice that major brands approach it to lobby for their non-inclusion, terrified of the PR fall-out.
We’ve picked out 10 of the worst Shonkys since 2006 and outlined what start-ups can learn from these business’ slip-ups.
1. Blinged-up baby dummies
It feels like every other business idea at the moment relates to young children and babies. Clothing, entertainment, even yoga.
One business has taken things a little too far, however, by selling baby dummies encrusted with “genuine Swarovski crystals”.
Choice tested the products and found that the crystals are easily removed by the champing maws of infants. Choking babies to death isn’t a great look for any product.
The ACCC duly banned them, although you can still buy them online.
Expanding your range beyond a single product is a good business strategy, as Tom Griffith from juice brand Emma & Tom’s explained to us recently.
Creating something “new” is a marketing trick as old as the hills. It creates anticipation and intrigue in the consumer and can open your brand up to a new demographic.
Beware packaging the same products under different names and ascribing them varying values, however.
Choice hauled Nurofen over the coals for its range of specific painkillers for migraine, back pain, tension headache and so on, despite the product being essentially the same.
You may be able to charge a premium price under this trick, but don’t expect to get away with it for long.
3. Power Balance
Even worse than dressing up the same product in different clothes is to have a product that doesn’t work at all.
The Power Balance band caused a minor media storm last year for its claims that its hologram was adept at “optimising the body’s natural energy flow, similar to concepts behind many Eastern philosophies. The hologram is designed to respond to the natural energy field of the body.”
Alas, the bracelet turned out to be little more than a rubber band with a plastic hologram on it. The Australian Consumer and Competition Commission subsequently exposed the product as a fake.
Businesses as large as News Corp are grappling with the concept of paywalls for content, but one rule is pretty clear – you need to let consumers know what they are paying for.
A school student who was researching the origins of names registered to use Babynamemeans.com, only to be invoiced by a debt collection agency for a $144 “subscription”.
Buried deep within the registration agreement text was the small detail that access to the site costed $12 per month, for the minimum of a year.
You may argue that the consumer should read the small print first. But if you are thinking of a similar scheme, be prepared for the ACCC to disagree with you.
Rewards programs are a tried and tested way to engender loyalty among customers. Throw in some warm small business service and you have a good chance of keeping your customers from the clutches of larger rivals.
But customers need to feel an actual reward from a rewards program. The clue is in the name.
Choice gave a Shonky to Commbank for its scheme, which offered just $20 in flights as a “reward” for spending $12,000 per annum on its credit card. Even then, this is just on Amex, with the value even lower for Visa and Mastercard.
Rewards don’t have to bankrupt you. But you need to offer something tangible to keep customers coming back. How about an event with free food and drinks that will create an invaluable bond with your customer?
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