The Netflix Mafia: How disastrous marketing changed perception overnight

Xenophon Strategies / PRGN, Washington, DC/USA, 17.08.2011

To może przydażyć się każdemu – operator telefoniczny, sieci kablowej, telewizji cyfrowej czy innych usług podnosi znienacka cenę. Jeśli nie mamy możliwości skorzystać z usług konkurencyjnej firmy...

Mark Hazlin

This is not a gripe session, but if you’re like me, yesterday you loved Netflix and today you hate them. It was a great service, for a reasonable price, that delivered movies to my mailbox. The website was easy to use, informative and really quite helpful. The company had thought of everything it took to deliver rented movies to me, even covering the postage stamp. It was a reputation that took years to develop.

Now, today, I’m not only angry at them, but I even fear them a little bit. This change in perception and reputation happened overnight and is the direct result of a disastrous marketing effort that put their communications in an unenviable position.

Yesterday, members got the email proclamation below that effectively made a Don Corleone-like offer they can’t refuse: Pay 27 percent more for the same exact service, or go try and find a better option (which doesn’t exist). My nagging fear is that they’re treating me the same way the cable and wireless phone companies do. 

The email from “The Netflix Team” was honest and straightforward. It was well written. It was not deceitful and explained their reasoning. I appreciated the message at the end that showed respect for the customer. And, it showed up before I saw a new charge on my bill.

I further appreciate, as a capitalist, that they have every right to do this. I have choices, as they noted…twice. I am not obligated to buy their product. And, it’s not like I’ll go hungry or die from lack of proper medication. This is not denying milk to babies. (Though, it’s close.)

But, after reading it, my attention could not be diverted from the fact that if I want to keep the same service, I have to send a bigger payment each month. Despite a well-delivered communication, I feel cheated and used. I am angry and even fired off an email reply to that effect. The message, of course, bounced and I might go find another way to send the company my thoughts on this move. But, I’m blogging about it today. And, a quick search of news coverage shows an overwhelming amount of negative consumer reaction as well.

And, what’s next? In a few months or a year are they going to try to lock me into a long-term contract like the phone company? Are they going to charge me the absolute highest price they can and sell me packages of things I don’t want while simultaneously delivering poor customer service, like the cable company? If Netflix can calculate that I won’t leave them to try other options, what kind of stranglehold must they project for themselves on their membership?

So, if the email was good, how did this reputation shift happen so quickly? And, how could it have been avoided by better communications?

It’s not a simple solution, to be sure. But, this type of problem can often be solved by giving communicators a stronger seat at the decision-making table. One of the most important parts of a communicator’s job is to anticipate issues to help avoid and manage risk. At very least, it is valuable for communicators to ask questions that critics might. This process is invaluable in thinking through all of the business issues that might occur.

In the case of Netflix, perhaps communicators could have helped better judge the level of negative reaction. And, a stronger warning by communicators about a nearly 60 percent increase for some members could have helped the company find a better pricing solution. For instance, the marketing department could have opted to step up the increases over time in a way that would be less noticeable and shocking. Or, the company could have offered members other added value to go with the added costs.

I don’t know what happened inside Netflix. Perhaps they considered every option and still determined this move was the best solution. Maybe they don’t want to earn a reputation as a company that constantly raises prices. Maybe they can’t afford to add any new value. Maybe they are just counting on members to have short memories. Or, maybe they wanted to get their stock price up (NFLX.O).

Regardless, the negative sentiment will doubtlessly have some tangible effect on the bottom line. Perhaps a decrease in revenue of $17.99, per month.   

source: Xenophon Strategies – PRGN member from USA