Avoid Your Own Netflix Moment
If you subscribe to Netflix, the DVD-by-mail and movie-streaming service, you and millions of your fellow customers last month received an email from CEO Reed Hastings that attempted to explain the company’s poorly communicated price hikes.
Here’s how the message began:
I messed up. I owe you an explanation. It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.
So far, so good. Hastings appears to be setting up the reader for an about-face and, from what we’ve read online, many Netflix subscribers expected a return to the old plans and pricing.
Not so fast. Hastings continued:
For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us). So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.
Instead of making things right, Hastings told his customers that he heard their feedback loud and clear, but it wouldn’t change anything. Making matters worse, he muddled the communication even further by introducing a new brand for the DVD service (Qwikster) which would require customers to create a new account on a second website and have to manage two queues for streaming and DVDs – thus requiring two bills.
Hastings’ intentions were good, of course. But the execution was poor and it drove nearly a million customers to cancel their Netflix accounts. Presumably, Netflix gave serious consideration to communicating an apology, a firm stance on an unpopular change, and the carving up of a wildly popular service into two convoluted offerings.
But when you’re bleeding customers and leave the remaining ones confused and frustrated, we think you should spend more time pinpointing one crisp message – not a handful of flimsy ones.
Hastings also created a YouTube video for the announcement, in which he repeats what's in his email message, and introduces the new head of Qwikster.