By Greg Bensinger
(Reuters) – Speaker-maker Sonos unveiled on Tuesday a broad series of reforms that it hopes will restore its reputation after a disastrous app update in May that torpedoed customer trust and caused the company to cut staff.
In an exclusive interview with Reuters, CEO Patrick Spence acknowledged mistakes around the release of the app, users’ central hub for playing music and controlling the speakers, and said he and seven other company leaders would forgo their bonus in the most recent fiscal year and, unless certain benchmarks are met, the coming one.
“This is obviously a failure of Sonos, but it starts with me in terms of where it started,” said Spence, 50. “So these commitments are what we’ve put together to make sure that we learn from this and make sure that the Sonos experience is better than ever as we go forward.”
After its release, Sonos quickly learned that the new app was not allowing users to perform essential functions, such as accessing or searching their music libraries, setting sleep timers and even downloading the app. The company has since been updating the app with new or revamped features roughly every two weeks and said on Tuesday it is more than 80% towards its goal of a complete overhaul.
Since May, Sonos and Spence have been on something of an apology tour to their roughly 15 million users. Sonos has released multiple statements of contrition, studied bringing back the previous app, pushed out new app updates and in August Spence fielded questions on Reddit from angry customers.
“When we make a mistake, we hear it, and that’s okay,” he said in the interview.
Spence said the app’s problems were the result of insufficient testing and a desire to release too many features at once, which he called a “big bang roll out.”
“We underestimated the complexity of the system and so our testing didn’t capture all of the things that it should,” said Spence. “We released it too soon.”
COSTLY MISHAP
The Santa Barbara, California, company said it will extend existing speaker warranties by an additional year, improve app testing, release upgrades every two to four weeks in perpetuity and appoint a current employee as “quality ombudsperson” to give executives regular updates on new tech development and publish an audit twice annually.
Sonos is also forming a customer advisory board, similar to the one for its dealer network, that can advise executives on what improvements are necessary before they are broadly released. Spence said that committee had not yet been formed.
The app mishap has been costly for Sonos. The company lowered its fourth quarter sales projections, delayed the release of two new products, estimated a $20 million to $30 million expense related to fixing the app and, in August, cut about 6% of staff, or 100 jobs. Its shares have dropped over 30% since the day before the new app was pushed out.
Still, Sonos posted a 6% jump in third quarter sales to $397.1 million and swung to a profit of $3.7 million compared with a loss of $23.6 million a year earlier.
Spence said in the interview that no additional job cuts were planned.
The CEO said the board and other executives were working on new metrics to measure leaders’ success to warrant bonuses and would release those details in a securities filing. Spence, whose total compensation was $5.19 million in fiscal 2023, took a roughly $72,000 cash bonus.
“We’re not going to relent on this until we’re satisfied,” he said.
(Reporting by Greg Bensinger; Editing by Muralikumar Anantharaman)
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