Netflix Customer Problem News – Did CEO Reed Hastings Do More Harm Than Good?

by on September 20, 2011

Whether you rent DVDs or enjoy streaming video, you can’t help but be fascinated at the recent Netflix news.   A blog post went up on the Netflix site Sunday night from their CEO Reed Hastings with an apology for their poor communication process with customers.

If you are not familiar with this story, for over ten years Netflix has offered an affordable solution to DVD rentals and had a loyal customer base.  Their process was good, quick and customer friendly. A while back Netflix decided to branch out into streaming video to meet customer demand for digital solutions.  Netflix made a decision a few months ago to raise prices but failed to communicate the significance of the price increase with their members.  Customers were angry and many canceled their membership.  The CEO blog post seems to have made matters worse.  There are so many things they could have done a little better.  

As I read this blog post, I was amazed at a few things.

Communication Process

I’m not sure who is steering the communication process behind the scenes but there are blatant issues with not only what is being communicated but with the delivery of the message.  It is great to have a CEO humble himself and admit mistakes – that gives credibility.  But the delivery of this message continues to have a tone of arrogance and lacks concern for the customer experience.

Customers are Angry

Increased prices and double billing is enough to set any customer off but couple that with a bad communication process and it is a recipe for disaster.  The CEO explanation seems to have done nothing more than enrage an already frustrated customer base.  As of the time I’m writing this post, there are more than 22,000 comments on the Netflix Blog - one customer more angry than the next.

Customer Input (or lack thereof)

When I see organizations make these kinds of mistakes it makes me wonder if there is anyone raising their hand behind the scenes and advocating for the customer.  Someone who thinks customer representation and input into decision making is important  What happened to market research and maybe a customer focus group?

Unexplained Price Increases

Everyone knows price increases are inevitable in this economy but well communicated and fair increases are important.  It makes me wonder if anyone is thinking about competition, although limited, and how increased prices may lead to member defection.  It seems to me it would be better to have more members who might pay a little less than a few members who pay more.

Netflix Built on Service

Netflix is one of those businesses that is known for great customer service.  It is a shame that these recent events are enough to tarnish that reputation because serving the customer is what it’s about, right?

Streaming Technology

Since streaming technology is still evolving, could it be that the investment in that technology should have been done to create a great product before launching it?

Two Distinct Products – Two Websites

Wow, this one really got my attention. Part of what was communicated to customers was the fact that there will now be two separate websites for two distinct product lines.  One for Netflix (streaming service for TV and movies) and one for the newly named Qwikster (DVD mail service).  Asking customers to go to two different websites and pay two bills is almost laughable.  It is too easy to have a great website that offers two distinct product lines and streamlined billing.  It is unfortunate that there aren’t better process improvement and quality management structures behind the scenes to help with this.

I have to say that corporate debacles like this make me really sad.  There are just too many things that could have and should have been done differently.  It will be fascinating to watch how Netflix recovers from this one.   The saga continues…….

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