MarketTools Blog

Last week, Netflix surprised their customers with a 60% price increase that was met with significant outrage – which was expressed on the company’s blog, Facebook page and Twitter account. Here’s just one example from the 5000+ comments posted to the Netflix blog after the announcement:

"Would have been nice to have some advanced notification… Thanks Netflix for again taking the time to look out for your customers… I used to brag about you but now I wouldn’t recommend your service to anybody."  – Anonymous poster

Ouch! No need to send this person a customer loyalty survey – he’s clearly changed from a promoter to a detractor in one fell swoop. But in addition to the thousands of very visible blog comments, Netflix’s customer service phone lines were clogged with customers calling in with questions and complaints. And to make matters worse, it seems no one at Netflix was on the same page in terms of explaining the changes.

According to an analyst referenced in an article in the Hollywood Reporter:  “Netflix management had to anticipate an uptick in churn from this major step-up in pricing and the changes to subscription plan packaging,” which raised the price for a combined subscription with DVDs by mail plus video streaming from $9.99 to $15.98.  But, he said, “There was literally no (rhyme) or reason to the responses we got” from Netflix customer service.  Some of their customer service representatives told him to cancel the video streaming half of the package, while some told him to cancel DVDs by mail in order to keep the monthly subscription price down. Other agents advised him to alternate between the two plans month-to-month.

Where do we begin? First off, a comprehensive Voice of the Customer (VOC) program would have created ongoing dialog between Netflix and their customers so they could have gotten a better gauge of potential reactions and best communications strategies prior to the announcement. By continually gathering customer feedback, Netflix could have better prepared their customer service department, and perhaps better understood what they needed to do to introduce the pricing changes in a more acceptable way.

Secondly, by powering their VOC program with an enterprise feedback management solution with action management capabilities for the call center, they could easily keep track of customer complaints and quickly pinpoint common areas of dissatisfaction in order to immediately get all agents on the same page. Rather than having high volumes of customer feedback lead to more confusion, they could have used that feedback as a springboard for better agent training.  They could have shared best practices for responding effectively to customer complaints, which would go a long way in saving more customer relationships.

Third and final point:  As I wrote this post, Netflix still hadn’t posted a public response to their customers on their blog. They’ve already upset customers by making them feel blindsided by the price increase, and by providing confusing information.  Now they’ve taken it a step further by not responding consistently to unsolicited feedback. I’ll be curious to watch their retention rates over the next year and see how other companies in the DVD/video streaming space step in with perhaps similar pricing but a more collaborative customer attitude.