By now you have heard about the new Netflix rates scheduled to hit this fall. Most likely you heard about it from angry friends and colleagues, and all of the bad press slamming Netflix for how they relayed the message to their customers. There were many customers who simply balked and terminated their service.
Slow Your Roll
The problem for many customers was that the news was sudden and without context. There had been no rumors, no preparation for the news. It was as if the break-up occurred without any argument or discussion of “what went wrong” beforehand. Netflix should have let customers know earlier that this was a possibility, and given reasons why. The news should have been communicated early and often, so people had a chance to digest it and understand the reasoning. Netflix could have used the time to utilize its social networks to find some online ambassadors and community members to support them through this challenging time.
So, they’re raising prices. Why? What do you gain from paying more? The message simply stated that you could keep your same services but at a new higher price and some messages stated that it just didn’t make “financial sense” to keep DVD and streaming services bundled together. Are you getting better service or more streaming choices by separating packages? No. Are you helping to keep Netflix alive, and standing up for the service you enjoy and support? Maybe. By positioning the price increase in a positive way that actually provides a benefit to customers, you’ll continue to keep customers. That said…
It would have been easy for Netflix to grandfather in current pricing plans. Some people haven’t changed their plan in years, others shift it every few months or so when they want or need additional services. Giving people the option to go to streaming only or DVD only is a good idea, but raising the price to do so is a bad call. For new customers, the new pricing makes sense, but for those who have to come to expect a certain level of service and accountability from the company, perhaps it’s best to reward those customers for being loyal and cut your losses.
Gain New Momentum
A perfect opportunity to sign up current DVD only customers to streaming services was lost here. How about offering a deal for $5 unlimited streaming for 1 month (or 3, or 6 months), then move to the $7.99 monthly fee?
Social media could have killed it here. And it did, just not in the way Netflix wanted it to. Within days there were thousands of angry Facebook wall posts and Twitter #dearnetflix messages. Maybe Netflix didn’t want to pay for a big campaign to roll this news out, but last time I checked, Facebook and Twitter were free. It’s true, you can’t control the message anymore, but you can control how that message gets out and what is communicated. You can’t force people to speak positively or negatively about something they feel strongly about, but you can own up to your mistakes and change your tune – which gives you a lot more social points for the future.
Other companies can learn from this negative roller coaster ride, including competitors (Blockbuster is already stepping in on the Netflix wounds). The sad news is that perhaps this price increase could not have been avoided due to financial reasons, but instead of thinking of their loyal customers, communicating early reasons why and benefits, sharing positive thoughts, and responding with an open mind; Netflix only thought about the bottom line which resulted in feelings of betrayal and deceit. That is perhaps what adds insult to injury.
What do you think? What could Netflix have done better to communicate before and after the price increase announcement? Are you planning to stay with Netflix?