In a matter of months, Netflix went from beloved to beaten up.
Netflix customers have long raved about how easy it is to use its streaming and DVD services, and business leaders view its operations as a great model of a customer-centric approach to operations. (A client of mine, for example, recently referrenced Netflix in describing how she needed me to help her design and create a new initiative for her organization.)
This summer, however, Netflix made a series of missteps and bungled decisions, surely with all the best of intentions, that some (about a million) customers disliked. Really disliked. OK. Hated. It increased its pricing by 60 percent, separated its streaming video from its DVD shipping services, and then, the final wallup, announced a whole separate company for the DVD services, under the much maligned name, Qwikster. However, on Monday, the company hit the rewind button (except for the pricing changes), killed Qwikster, and announced to customers:
It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs.
This means no change: one website, one account, one password…in other words, no Qwikster.
While the July price change was necessary, we are now done with price changes.
We're constantly improving our streaming selection. We've recently added hundreds of movies from Paramount, Sony, Universal, Fox, Warner Bros., Lionsgate, MGM and Miramax. Plus, in the last couple of weeks alone, we've added over 3,500 TV episodes from ABC, NBC, FOX, CBS, USA, E!, Nickelodeon, Disney Channel, ABC Family, Discovery Channel, TLC, SyFy, A&E, History, and PBS.
We value you as a member, and we are committed to making Netflix the best place to get your movies & TV shows.
The Netflix Team
Clunky, awkward, uncomfortable, and very public, Netflix attempted to expand its services in ways it thought it was being valuable to customers. And it backfired. However, their reversal means they can begin again, regain customer confidence, and move forward.
Though no business wants to make mistakes so publicly, the Netflix case study is actually a great example of what hundreds of CMOs and CEOs are saying is "crucial" to their successes in the 21st century: "customer intimacy." That's according to a new study by IBM.
"The most proactive CMOs are trying to understand individuals as well as markets. Customer intimacy is crucial – and CEOs know it. In our last CEO study, we learned CEOs regard getting closer to customers as one of the three prerequisities for success in the twenty-first century. This sits squarely in the CMO's domain."
--IBM's From Stretched to Strenthened: Insights from the Global Chief Marketing Officer Study
Yes, of course, these leaders surely aspire to smoother, even more pleasant feelings of intimacy than this, but let's not forget, sometimes intimacy can be messy. Netflix deserves a lot of credit for putting its collective ego aside and responding to what its customers are saying. Er, screaming.
Let's also not forget another leader who encountered a similar situation: Steve Jobs and Apple. When the second iteration of the iPhone came out, customers who had most recently bought the first version received a $100 store credit for being early adopters of the new technology that had dropped in price by half. Mr. Jobs issued an open apology and made the correction.
Intimacy requires an openness, receptivity, back and forth. And this openness is a requirement that all businesses – even nonprofits – must grow more comfortable with. Its an exchange that corporate sponsorship is an ideal medium for fostering.
In contrast, intimacy is not about rebuffing customers. Unfortunately, that's what I read in a quote by a spokesperson for a breast cancer organization in an AP article this morning about whether painting October pink, in support of breast cancer awareness month, had run its course. I (and others) have been saying that it has for years. But more importantly some women who have battled breast cancer hate the reminder. One woman in the article is quoted as saying the pink "drives her nuts." Yet the organizational spokesperson remains, "unapologetic." Not exactly openness.
The shifts we're facing in how we market to customers affects all of us. Learn from the Netflix and Apple examples. Foster a sense of openness and dialogue with your communities. And if you goof, respond. Don't rebuff.