Alright, I can’t keep my mouth shut any more. They’ve screwed up too many times to not say anything. And of course, I’m talking about Netflix!
I know everyone seems to be writing about the Netflix “debacle” these days, but it has gone too far and I feel the need to speak my mind too. Unless you are anti-internet and anti-news (or you live under a rock), you have most likely seen Netflix making headlines; each message more negative than the previous.
Within 90 days, Netflix has taken customers on more twists and turns than a day at Cedar Point Amusement Park!
Here’s a quick recap of the roller coaster ride that has been Netflix’s news releases over the past few months:
First, the company announced on July 12, 2011 that it was separating DVDs by mail and unlimited streaming into separate plans, which could lead up to a 60% price increase for customers who wanted both. This resulted in the inevitable: a plummeting stock price and a loss of over 1 million customers.
Then, to rub salt in the wounds of millions, Reed Hastings, the co-founder and CEO of Netflix, personally announced that the DVD mail service was going to be renamed Qwikster and that customers would access a completely different website for DVDs than the existing Netflix streaming site. Even worse, subscribers of both Netflix and Qwikster would be billed separately!
Hastings’ meandering message started by saying that he “messed up” and “owed everyone and explanation,” but essentially still failed to explain why it was necessary to introduce the new pricing strategy and left customers with more questions than they already had.
And now they’re at it again, announcing on October 10, 2011 that DVDs will be staying at Netflix.com and there will be no Qwikster. They are basically saying that it was all just a bad dream and to ignore everything they said before (and more importantly, let’s never mention the whole Qwikster Twitter name fiasco again).
Look, I get it.
Netflix is growing company that needs to invest in their digital infrastructure in order to be able to offer better quality streaming and make more movies and shows available to customers. And in order to do that, the company needs to generate more revenue. It’s simple business principles really. But they have done a pretty crappy job communicating that to customers in my opinion.
This experience, however, has not been all negative. Netflix and other companies, B2B and B2C alike, can take some lessons from the Netflix debacle:
- Communication is key
Hastings introduced the price changes through press releases rather than addressing existing customers first. Customer loyalty has always been and will always be at the center of a good corporation, and it is as important as ever to provide existing customers with the service and respect they expect to receive.
- Planning and strategy is vital to successfully implementing change
Let’s face it, not many people embrace change; especially when there is a price increase attached to it. By planning in advance, establishing a more gradual timeline and implementing this change in a more strategic way that benefits both the company and the customers, this change could have been successfully implemented.
- Understand your customers
This point cannot be stressed enough. By doing some simple research before undergoing this initiative, Netflix could have seen that customers wouldn’t take to this plan and could have avoiding this debacle altogether. Always understand your customer and try to figure out exactly what they are looking for!
Let’s not forget that less than a year ago, Netflix was seen as an innovative company who was single-handedly changing the movie watching industry altogether, and was even branded as the “industry hulk” by the WallStreet Journal in December 2010.
A lot has changed since then, but its reputation is not beyond repair. The real question now is whether Netflix can regain some of its lost customers and continue to create loyalty to the Netflix brand. If not, there will be plenty of competitors looking to swoop in.
Do you think Netflix has gotten all the bad news releases out of its system? Are you a Netflix customer? If so, are you sticking with Netflix, even after they continue to throw you curve balls?
