GoDaddy (a web hosting company) announced its support of the controversial Stop Online Piracy Act (SOPA) in late October 2011. The news of GoDaddy’s pro-SOPA stance appeared on Reddit on December 22, 2011, and then went viral. Within a few days, customers had moved over 72,000 domains off of GoDaddy’s domain hosting service in protest and declared December 29, 2011 “Move Your Domain Away From GoDaddy Day.” Protestors included major Internet figures such as Cheezburger’s Ben Huh, imgur’s Alan Schaaf, and Wikipedia’s Jimmy Wales. Even Ashton Kutcher joined in. GoDaddy halfheartedly withdrew its support of SOPA within a day of the Reddit post — but the customers’ revolt continued.
Advances in communication technology can make it easier for potential revolutionaries to learn about reasons for rebellion and coordinate revolts. This theory, more often applied to political revolutions, fits the GoDaddy customers’ revolt well. After the Reddit post drew attention to GoDaddy’s support for SOPA, the news spread rapidly across popular blogs to reach customers. Furthermore, posts on blogs, Twitter, and other electronic media outlets made it clear that a revolt was in progress; this reassured disgruntled GoDaddy customers that their protests would be heard.
GoDaddy is believed to host some 32,000,000 domain names, so 72,000 departures may not be directly significant. Nevertheless, the revolt against GoDaddy includes some marquee customers (like Wikipedia and the Cheezburger domains) and has hurt the GoDaddy brand. And GoDaddy’s decision to withdraw support from SOPA suggests that the protest has not left the hosting company unfazed.
GoDaddy now serves as a case study in failed revolt prevention, and the long-run impact of GoDaddy’s inability to placate its customers is yet unknown.
How can you avoid a customer revolt?
First, know the revolt risk factors: If your customers are media- or tech-savvy, then they can draw attention to your actions and coordinate plans for revolt. And if your product has close substitutes, your customers can abandon you at low cost.
GoDaddy suffered from both of these vulnerabilities. GoDaddy’s customers, all website owners, are technically adept. Meanwhile, many alternative domain hosting companies offer services similar to GoDaddy’s. The cost of switching to a new host are typically low, and some of GoDaddy’s competitors (like Namecheap.com) lowered customers’ switching costs even further by offering special deals during the turmoil.
Second, recognize potential sparks: Revolts often follow specific corporate actions which frustrate or disenfranchise a large fraction of the customer base. You must understand your customers well enough to predict which decisions might be incendiary, and use caution accordingly.
SOPA has been highly controversial, as many believe that SOPA will impede both free speech and Internet innovation. Some GoDaddy customers are especially sensitive to SOPA’s risks because they owe their own successes to open online communication.
Finally, put out fires quickly and comprehensively: Once they gain momentum, revolts can be costly and difficult to address. Thus, you must identify potential revolts at or before their outsets and efficiently develop clear, decisive, and public responses. It is especially important that you approach and pacify marquee customers, as those customers are best positioned to help you extinguish existing flames of revolt.
By the time GoDaddy acknowledged its customers’ complaints, the “GoDaddy Exodus” was being promoted through online news outlets and social media. And leading GoDaddy customers like Wikipedia had already announced plans to transfer their domains elsewhere. Worsening matters, GoDaddy did not respond conclusively: it withdrew its support for SOPA, but did not rule out the possibility that it would back a revised version of the bill.
http://blogs.hbr.org/cs/2011/12/lessons_from_the_godaddy_custo.html
