Case Study: LEGO — live from Word of Mouth Supergenius

2:20 — Bergen Anderson introduces Ant’s Eye View‘s Jake McKee.2:23 — Jake McKee says, “a powerful global conversation has started.”

2:24 — “Inside Fort Business” nothing gets in, and nothing gets out unless it’s dead. In 1999 the majority of LEGO’s business came from Christmas, and the week before Christmas–LEGO used to rely on their three biggest retailers on creating their products. Their social media plan was inspired by, “Cluetrain Manifesto”.

2:25 — LEGO was told by the big retailers that they didn’t know enough about their customers, and that they needed to learn more.

2:26 — “Paranoia kills conversation. That’s its point. But lack of open conversation kills companies.” When you’re dealing with kids, everyone is scared. “We don’t accept unsolicited ideas.”

2:27 — The legal department decided it was the core policy that LEGO had to stick with because they kept getting into litigation over “stealing” ideas. This eventually evolved into not accepting ideas period. The customer conversation was almost cut off completely

2:28 — “When we have questions we turn to each other for answers.” It was hard to get ideas as a company that relies heavily on young kids to determine what will sell.

2:29 — Jake is showing slides of old forums that were developed back in 1995.

2:30 — Adult fans started to build their own marketplace before LEGO even began to think about utilizing that demographic. All of this happened without the interaction of LEGO.

2:31 — “You’re too busy ‘doing business’ to answer our email? Oh gosh, sorry, gee, we’ll come back later. Maybe.” All of this began because LEGO didn’t accept ideas from its customers.

2:33 — The majority of LEGO’s clients were boys ages 7-12, that was who they worked for. The 5% minority was adults. One of the first adult LEGO enthusiast was given a shopping spree in the LEGO company store–he spent $2,000 dollars and had to re-arrange his flight to ship things back home to himself.

2:34 — The average kid would spend $10 a year on LEGOs. The more active kid fans of LEGOs would spend $20 a year. The adult enthusiasts would spend upwards of thousands of dollars per year on LEGOs. This is all without the conversation, and engagement of LEGOs the company.

2:35 — The adult fans of LEGOs got on the front cover of the LA Times in a full picture. LEGOs had been pitching the LA Times for months to get a story.

2:36 — Jake shows a slide:

“The old way” Company —> Customer

“Today” Company <—> Customer

2:36 — The idea of LEGO evolved into, “LEGO is a creative platform,” that engages in two way conversation with its customers.

2:37 — Online system is now available with a custom box that can be designed, bought, and shipped to your house in a matter of weeks.

2:38 — We are not talking about one group of fans. (The adults) We were taking the experiment as a case study for what we could do with enthusiastic fans. “Live it, play it.”

2:39 — The enthusiasm of the adult fans helped teach LEGO how to gain more fans with their other fans including kids.

2:40 — Today, LEGO is highly profitable after taking large losses earlier in the decade. It even lead to a Wired magazine cover story.

Q&A

Q: What was the initial step taken to join in the conversation from completely ignoring the two way conversation?

A: Jake: “Philosophy of 10,000 paper cuts.” We tried a few things and slowly learned what worked. The first step was to start interacting anywhere:

– Forums
– Bars
– People’s houses

They didn’t worry about approval. They went out with tenacity and kept pounding away until they found small successes, and then presented their successes and gradually were given larger and larger projects.

Q: After you connected with the new target market (Adults) what was the impact on sales?

A: Jake: Whenever you’re working with adults on a kids toy you have to accept the fact that those percentages would be small. We tried not to worry as much initially about sales at first and focused on the small successes– until the small successes eventually ramped up to being larger and larger successes. As soon as they adopted that “LEGO was a creative medium” sales went through the roof.

Q: As soon as conversations became two way conversations, how did that change things?

A: Jake: When we started to develop new LEGO sets that were $300 it took a long time to get it approved internally–luckily, we didn’t have to get approval, and we produced it anyway. We had major success with the large sets of LEGOs with our direct to consumer store. When that young kid sees that at his uncle’s house, he knows that that’s what he wants. Year after year we started seeing more successes.

People started going into stores to get products that they could only get direct from us. There are sets that are good for kids and themes that have been reintroduced that go into the retail line of LEGO–and those products still sell extremely well and that keeps our retailers happy.

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  1. A recap of the amazing ideas shared at Word of Mouth Supergenius - December 28, 2009

    […] LEGO — with Jake McKee of Ant’s Eye View […]

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