By now, I’m sure you have heard, Netflix intends to split its streaming and DVD services in two. Customers that were once receiving DVDs and streaming, will now how to pay for both. Not so bad on its surface, right? It actually sounds like a smart move, separating the company into dedicated segments allows employees to specialize and deliver more expertise. The problem is not what Netflix is doing. It’s how it did it.
Netflix has grown a loyal following through the years by over-delivering when other carriers under-performed. Blockbuster charged way too much on the way out the door and the way back in (late fees). Netflix charged an acceptable amount and made going to the mailbox fun again. When most other streaming services suffered from frequent buffering and only allowed us to watch on our computers, Netflix delivered a strong, reliable solution that made consumers overlook the dearth of content.
Instead of building on this brand equity Netflix under-delivered AND under-performed. The brand began by alienating the enablers of its tremendous growth, its customers. Some customers (like me) did not receive notification of the change in a timely manner. The news exploded on social media and some customers had to find out from friends and the Twitterverse before hearing directly from the provider.
Recommendation Number One: The Customer Comes First
No matter what the message, it’s important that the first news of the change comes from the brand. Otherwise, the noise from social channels amplifies the negative and drowns out the positive. If your brand can get the first word in, it’s at least a building block towards understanding. Be proactive with the message.
Recommendation Number Two: Be Honest
The blog message that Netflix used to announce the pricing changes was informational in nature but I’m still questioning if the “Lowest Price Ever” angle is the best way to go. Consumers in this digital age are smart, and if they aren’t all smart, they’re probably friends with somebody that is. So let’s not try to spin this in such a positive light. Let’s be honest. What if Netflix were to lead off by saying thank you to all the customers for the tremendous growth. Then explain that in order to continue offering a strong selection and incredible service, we have to make changes. The low price angle just doesn’t resonate when, for most customers, it’s actually a price hike (to continue the same service(s)).
Recommendation Number Three: The Customer Always Comes First (and Last)
Now, let’s consider how Netflix is implementing these pricing changes. They go into effect immediately for new customers and in September for existing. Most of the posts I’ve read felt like this treatment was a slap in the face for existing, heretofore, loyal customers. These customers have helped fuel the company’s meteoric growth and they get a 60 percent price hike and a 45 day respite for their efforts? Why not reward those that have been with the company by grandfathering them in or offering special loyalty rates? In an age where competition is high and switching services is as easy as downloading a new app, customer appreciation is key. Verizon recently moved to tiered data plans but avoided similar outrage by grandfathering in current unlimited plans.
The Bottom Line
The bottom line is that Netflix has built its brand around convenience. A price hike is not convenient and finding out about it from second-hand sources is also not convenient. Be proactive, be honest, be consistent, and always think of the customer – or someone else will.
You start out with the best intentions. Everything is in order. Everything has a reason for being there. But somewhere down the road, it happens. You stop getting the same results. Sometimes you take out more than you put in. Sometimes you add new things in to the mix without taking out the old.
Demand Generation Consulting 