Specialized: A brand in defence

  • To preface the obvious: I am not a lawyer. So read the following in the spirit it is offered – as commentary and opinion about a respected business and how it handled its public relations, marketing and brand defence leading up to Christmas 2013. 

From outside the industry: An all American success story, the realisation of a dream for a guy starting his own business: Mike Sinyard, taking a punt on life and building up a company from nothing to something. A bicycle company, but more than that, one that competes successfully on the world stage with a cohesive brand that communicates a strong market presence, cutting edge product, dominant at the competitive level and immersive involvement at all points across the industry. By all measures, Specialized’s brand and market presence can be equated to other global greats, leaders in their respective fields from a public persona perspective. Mike Sinyard has been compared to other visionary leaders in their industries: Richard Branson – Virgin; Phil Knight – Nike; Steve Jobs – Apple.

From inside the industry: Reliable, if predictable gear. The Big S. The Big C. Those letters don’t necessarily equate to the Big Specialized or the Big Corporate. Uncaring. Arrogant. Bullies. Litigious. Out of touch. Disenfranchised. And worse.

A brilliant feature piece in Bicycling.com interviews Sinyard and comments to his preeminence in the industry. http://www.bicycling.com/news/featured-stories/sinyard-obsessed

Some background:

Im a big fan of Specialized and its elite, high end skunkworks outfit S-Works. I own a dual suspension mountain bike – a Specialized Stumpjumper FSR – which has served duty across many trails, adventure races and been a treasured friend. Reliable, unfailing, enjoyable to ride. I explore uncharted paths with it. I race it. I crash it. Get up and do it all again. The bike represents my personality and unwavering focus perfectly. I also own lots of other gear, including first hand experience of a Specialized Decibel Cycling Helmet saving my life, which I wrote about here: https://theculturemind.com/2011/09/27/bike-helmet-the-case-for-wearing-one/

When my son turned 5, it was a no brainer for me to buy as his first pedal bike, “the same as Daddy’s” – a Specialized Hotrock 12″.

On his birthday he got straight on and rode it. Proud Dad moment only starts to explain how I feel about him on a bike. My wife and I take turns and go running with him riding next to us. We run and share the moments of discovery as he goes on his own adventure. On his Specialized.

Specialized win a lot of races. World cups. Adventure races. A race called Le Tour de France.

So, from a storied perspective, Specialized put their money where their mouth is and market and control their brand persona, crafting it, re-crafting it, maximising its potential, protecting its hallowed status.

Calgary, Saturday 7th December, 2013:

A small bike shop in Canada, called Cafe Roubaix was interviewed by the Calgary Herald. In recent weeks the owner Dan Richter had received a letter from people purporting to represent Specialized advising him, in no uncertain terms that he had to change the name of his cafe as the name “Roubaix” was trademarked by Specialized in Canada. The premise of the trademark infringement is that potential confusion could arise for cyclists between Cafe Roubaix the bike shop and the Specialized road bike product, also called Roubaix.

The internet exploded.

http://blogs.calgaryherald.com/2013/12/07/war-veteran-forced-to-change-bike-shops-name-after-threat-from-u-s-bike-giant-specialized/

I first read this early on Tuesday 10th December, Australian time, which is 9 hours in front of the US.

@TheCultureMind Tuesday Dec 10 (AEST)
Aggressive litigation can irreparably damage your brand. Unfolding now in Canada, US bike manufacturer Specialized http://wp.me/p24cw9-vZ

The Calgary Herald blog article has closed comments on its original article, but at last count it had 839 replies. But the shares of the article across social media – Facebook and Twitter – went into orbit. Facebook = 58,500 shares and Twitter tweets were at 9,009 for the original article.

The Twitter hashtags #CafeRoubaix and #RoubaixGate and #SpecializedSucks were making the rounds.

David vs Goliath:

At this point, things go downhill for Specialized, 2 weeks out from Christmas 2013. Negative comments thick and fast were at one stage buffering on the Official Specialized Facebook wall, with 389,000+ followers, every few minutes. It was reported Specialized changed the Facebook comment settings to hide the new comments appearing on the wall. On existing posts, where publishing rules hadn’t been altered, comments intensified.

Further reports suggest that the Specialized UK Facebook page went one step further and started to “delete” comments that were challenging the Big S. Positive sentiment was eroded further as this little cherub of information broadcast itself back to other social media channels.

Three things stand out that this was really bad publicity for the Big S, watching this unfold in real time:

  1. the sheer volume of comments from the average customer, some obviously not even cyclists, wading in
  2. industry commentary and feature articles appearing
  3. the number of bike shops proudly proclaiming their support for #CafeRoubaix and some of the associated commentary directed at @iamspecialized.

Work colleagues were talking about it. Colleagues within the PR (public relations) industry were talking about it. Friends – cyclists, riders, owners of Specialized product – were talking about it.

As a business online, Specialized has an enviable reputation of updating numerous times a day on Twitter and Facebook, responding to customer comment almost hourly. During events like the Olympics, World Cups and noted races where the factory teams were competing, they would update even more often.

Specialized’s response to this outpouring of opinion and sentiment? They entered stasis and did NOTHING for 4 days. FOUR days. No comments on Facebook. No comments on Twitter. No press release on www.specialized.com.

@TheCultureMind Dec 10
Read the negative press smashing Specialized’s Facebook page in relation to #CafeRoubaix http://www.facebook.com/specializedbicycles

#CafeRoubaix started to trend – other media outlets weren’t letting up either:

And the internet memes started to flow:

@TheCultureMind Dec 10
I own a Stumpjumper FSR & my 5yo son has a Hotrock. Your legal stance with Cafe Roubaix just lost you an S-Works sale @iamspecialized

Having now read multiple posts from different sources, partnered with silence from Specialized, I was disgust-d by the strong arm tactics being undertaken. Not much gets me riled up, but this was a classic case of bullying, recorded for all to see.

ASI – Now things get messy:

So this was a trademark infringement case, right?

Summarised: Trademark owner finds someone using their registered trademark and gives them a nudge to stop using it.

On the surface, this is about Specialized protecting its intellectual property, but therein lies the challenge: Specialized doesn’t actually own the trademark – another company called ASI does, and they license it to Specialized. The game changer was when was it was bought to the public attention when ASI’s CEO Patrick Cunnane published a statement reported on several websites:

The end result was that ASI’s CEO declared that Cafe Roubaix could use the trademark.

“We have reached out to Mr. Richter to inform him that he can continue to use the name, and we will need to license his use, which we imagine can be done easily,” Cunnane said.

@TheCultureMind Dec 10
So #Roubaix is actually licenced by Specialized from ASI. OUCH. #Epic smack incoming http://bicycleretailer.com/north-america/2013/12/09/asi-says-calgary-bike-shop-can-use-roubaix-name

No one before this event, in the public space, had ever heard of ASI. ASI’s consumer product Fuji Bicycles got an instant shot of street cred and free publicity based on the fact it had registered “Roubaix” earlier for its own line of bikes. The discussion on the viability of a province in France being trade marked is a separate issue. The point is, ASI were there first. They don’t have the marketing clout of the Big S, but everyone knows Fuji Bicycles now.

Damage Control:

Fast forward 4 days and it is reported that Mike Sinyard flies into Canada to meet Dan Richter at Cafe Roubaix in what has to be one of the most awkward pieces of public relations footage ever.

Comments were generally in the positive. But there was an undercurrent of cynicism directed at the brand, discussed in different forums.

Just as things were starting to cool down, another company, Epix Athletic wear publishes its own cease and desist letter from Specialized. Although the public outcry wasn’t as vehement, due in part to the novelty of the initial Cafe Roubaix story unfolding suffering publicity fatigue, it prompted Specialized to step up and offer a glimpse into the real situation here.

Thursday December 12th, 2013

Mike Sinyard’s post in entirety: https://www.facebook.com/specializedbicycles/posts/10152051815982579:0

I Screwed up, and I own it

I would like to apologize and let everyone know I realize I handled this situation wrong from the start and I’m very sorry for that. As many of you have probably already seen by now, I went up to Café Roubaix to meet with Dan in person to apologize and make good with him. Café Roubaix will continue on with its name. The video is up on Café Roubaix’s Facebook page. Dan is the real deal, after meeting him I realize this and am embarrassed by how ridiculous this is. What happened was wrong. There are no excuses but I do feel like I owe it to you all to explain how we found ourselves in this situation, the lessons we’ve learned from it and, most importantly, how it will change the way we do things moving forward.

Over the past few years we’ve seen a massive spike in counterfeit products, and most of the riders have no idea these products are fake, which is extremely dangerous because the risk of failure on these untested products is extremely high. In one instance, the entire head tube and fork sheared off a counterfeit Tarmac, causing the rider who had no idea he was not on a genuine Specialized product to faceplant and destroy his shoulder. To give you an idea of how much this issue has blown up, 10 Specialized employees hunt fake products across 30 major ecommerce platforms, we’ve identified over 5,000 listings, worth $11,000,000 USD in counterfeit goods since January 1st of this year alone. This is about double what it was last year. Due to this we have recently gone after IP and trademark issues more aggressively in the interest of protecting the safety of riders and the livelihood of our dealers and their hard-working employees. See the attached picture to understand how dangerous fake goods are.

In the deal with Café Roubaix, the wheels were the red flag that got the attention of our outside attorney’s who were already sort of on red alert for anything that pops up, although Café Roubaix wasn’t in the same camp as the counterfeiters, they still got caught in the crossfire. There is so much activity with infringers that it’s overwhelming and I don’t see them all. The first I heard of it was Saturday morning and by Monday the thing went huge. But still, that was my fault, which is why I’m so embarrassed. I should have called Dan immediately.

I heard you and you can rest assured I took it to heart. I realize now that we went too far with this aggressive approach and as a result and in some cases we hurt the local bikes shops and small businesses we wanted to protect. As a result we’re going to take a much closer look at all pending and future intellectual property and trademark issues, making sure to only pursue those that present a clear and obvious danger. The letter on Epix Gear was issued before the Café Roubaix story broke and has since been pulled.

I handled this very poorly and I own full responsibility. Dan at Café Roubaix and I have become friends and he’s happy with the solution. I hope you too accept my sincere apology. Like you all, I’m passionate about cycling and want to do everything possible to grow the activity we all love.

Sincerely,

-Mike Sinyard, Founder

This was welcome news for many, including myself. Specialized in protecting its market was giving a direct insight and view as to the over arching strategy of the business.

The take home here, is that whilst Specialized was protecting its interests so aggressively, they should have been up front with the level of defence they would bring to bear, if a counterfeiter was ever targeted or caught.

A couple of weeks later after the chatter had calmed, Cafe Roubaix published a photo of a gift that had just been received by Specialized Europe: a real cobblestone from Roubaix, mounted on a stand.

I’m still stuck between smiling in appreciation and grimacing in cynicism. Dan Richter, if anyone, can acknowledge the irony of this gesture.

My perspective:

For a brand that had acted so buoyantly for its audience in social media delivering relevant and insightful content, the silence that followed the Calgary Herald report was deafening. It is astonishing that team Specialized played it so badly.

Here was a company that I thought “got” social media and what it was about. But by their lack of response to what the public perceived as a bad corporate, living up to the self perpetuating belief that “bad corporates, do bad things”, Specialized treated its audience with contempt and a total lack of respect that “the little guy” was worthy of some consideration.

In delaying the official response and indeed, appearing to treat the community as irrelevant, Specialized opened itself to inaction and was viewed by the community with uncertainty and scorn. Publicly, prior to this, they had a reputation across the industry for “calling it, for what it was” yet they weren’t marching to the same drum beat in relation to their own behaviour when this situation began to unfold.

Specialized’s strategic mistake was in two key areas:

  1. they were using social media as just another broadcast channel.
  2. in defending its competitive edge by being secretive, the entire notion of counterfeiting wasn’t even on the table as an option prior to the public outcry. The internet took the easiest target; big corporate bullies.

They were doing what alot of companies do when they enter social media – not inviting conversation. Outward bound, not considerate of the incoming data – opinion and sentiment. What they counted as interaction and taking the viewpoint of “the people” into consideration was really just paying lip service to what was considered nothing more than another media outlet likened to print, television or radio. The metrics the sites were gaining – followers and comments were considered at the highest levels within Specialized as just another success criteria based on volume and market penetration.

It didn’t consider, or take seriously, that social media is a two way street, between the business and its audience.

It is here that Specialized failed abysmally and it is readily apparent they had no case scenario covering the “what if” situation of bad press besieging the brand. No one likes to think of bad situations, because well, if you think it, you live it. Lawyer’s spend their entire lives forecasting and defending against worst case scenarios – in this instance, they weren’t tasked with articulating a cohesive and coherant response to the consequence of their actions.

What Specialized should have done:

  1. Have a published statement of intent on their website describing the steps they will take against counterfeiters. Talk about the problem, get industry buy in, that it IS a problem. Put this up as a code of conduct and governance for the brand and its followers to follow and the organisation to abide by.
  2. On social media, at first indicator that things are going pear shaped, comment “Thanks for contacting us. We’ll look into it and get back to you”.
  3. When comments went north of 50 negative, Specialized should have put a dedicated post on FB and Twitter “Specialized acknowledges the feedback in relation to our organisations handling of a trademark dispute in Canada. We’ll be in touch with more details”. Why 50? The average cost of an Specialized/S-Works is around $5,000. If you equate each negative comment to a lost sale, $250,000 in potential lost revenue for any company is enough to take notice.
  4. Halt all updates on social media until the official response. Allow any additional comments to unfold, with a carbon copy of the acknowledgement post, reposted every 50 comments. People do read, so they will get it, once they wade through 25 comments. Do NOT delete comments, negative or otherwise.
  5. Publish Official response, on social media.
  6. Publish press release on their website.

The result? We’ll never truly know. Specialized has reached the pinnacle of the industry by being secretive, fast and always out manoeuvring its opposition, methodical in its justification. Whether this episode has resulted in sales lost at the cash register, is without dispute, how much is the question.

I personally believe it’s a far greater number than anyone outside of Specialized’s upper echelons will ever realise. Given that it’s reported that Specialized has annual turnover of $500 million USD per year, if it was measured in the millions, I wouldn’t at all be surprised.

@TheCultureMind Dec 10
http://blogs.calgaryherald.com/2013/12/09/cochrane-bike-shop-owner-may-have-won-his-case-against-specialized-over-use-of-word-roubaix/Still going to buy a #Cannondale instead. #roubaixgate

Mike Sinyard’s entering the fray so late only confirmed to me that the heart and soul of the company, was no longer involved in the day to day running of the business. I get that – he’s got better things to do than manage employees, being involved in the mundane stuff. His head is in R&D, improvement, being the flag bearer. However what it also illustrated to me is that he was was able to step up and take accountability for his actions.

What prompted me to write this post was talking to work colleagues and friends, all avid cyclists, who were observing this all unfold and speculating on the nuances of comments and the details. They all ride decent kit – Colnago, Bianchi, S-Works, Cannondale, BMC, Scott, Santa Cruz, Giant, Trek. Not just the run of the mill gear, but full spec – SRAM, Shimano, Campagnollo, Zipp and Easton kitted gear.

When you get these guys dedicated to cycling, who inevitably own Specialized and S-Works gear, putting duct tape on the logos to cover up their association – something’s gone really bad. By this visual, but unmissable stance, cyclists the world over have made it known that whilst they might own a Specialized, it was purchased before #CafeRoubaix.

Looking pragmatically, Specialized has undone years of good public relations with this episode. The sign of the brands underlying strengths and core values will be its ability to step up and take its responsibilities seriously.

What will my next bike be?

I was looking at an S-Works Cyclocross, but upon reflection, I’m also going to focus my attention on the product from Trek and Cannondale. My choice will be informed by a myriad of factors, including who I think supports the industry the best. 

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