Following Up

Written by Bill Tanzer


Last month, I talked about the Netflix debacle. Customers were rightfully angry with the company’s split in service: partitioning off the movies by mail from the online streaming service, creating two divisions, two price plans and two separate websites. This came complete with a questionable name change (Qwikster), inconvenience and an unexpected price hike to its customers who balked en masse, sending stocks plummeting.

Within three weeks of the announcement, a half-hearted apology for the announcement, and consumer outrage burning up the internet, Netflix reneged. The company decided to keep its price increase for the two service plans but dumped the second website, kissing the separate brand Qwikster a hasty goodbye.

Did anyone cry?

Perhaps the user who squatted on @Qwickster on Twitter is crying. He was hoping for a huge payday because Netflix was not quick enough to grab the name. Anyone else shedding a tear? Unlikely.

It takes companies years to build trust. Brand destruction takes one bone-headed decision, a decision that fails to take into account the company’s core customers and mission for being in business in the first place.

Whether Netflix subscribers continue to stay with the service is still an ongoing decision. A number of subscribers opted out altogether and went with competitors after the initial announcement. Netflix is supposedly contracting with different content providers to beef up its offerings but many long-time customers are simply fed up and not impressed.

Is it simply the increased cost that annoyed consumers? Not really. It’s the perceived value. Am I paying for something that is worth the price of admission or is the entire process just a headache in return? If two stores located miles apart are offering the same product at the same price, but one is a hostile environment and unorganized mess, while the other is a clean, friendly store with attentive employees and easy to find items, I’d rather drive the few extra miles for the experience.

That is why small businesses are routinely advised not to compete on price but on value. Netflix customers saw no value in two separate websites which required different accounts and logins. Not to mention, there was a noticeable disparity in movie selection. (Online streaming for Netflix is simply not up to snuff, either in comparison to its own movies by mail service OR with fellow competitors.) Let’s see. Poor product selection, extra hassel, and higher service fees. Yeah, now that’s a winner.

Inconveniencing and alienating your customers is a surefire way of losing them.

Taking your customers seriously, on the other hand, will always separate your establishment from the rest. Packaging Specialties did not stay in business for more than six decades because we make it hard for customers to do business with us. Customer service is our priority, and our clients are never taken for granted. Never take your customers for granted! I think that is one of the biggest blunders Netflix made this year, and the costs for such a mistake are immense.

October 18, 2011

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