Netflix has a bit of a public relations nightmare on their hands at the moment. You may have heard about it. The internet has been ablaze following an email sent to all of their subscribers and this blog post by the company:
Netflix has now added themselves to the cases discussed at marketing, public relations and social media conferences as an example of how to get it wrong – horribly wrong – when communicating with customers and then ignoring their outrage.
In my mind, this really isn’t about a simple matter of a price increase. Sure, no one wants to pay more for anything than they were yesterday. Why would we? If, on the other hand, either I was getting more for my money or the company took the time to intelligently explain to me why this change was necessary, I might feel differently. Neither of these things has happened here.
It isn’t about the what. It’s about the how.
An excerpt of the blog post illustrates part of the reason I think they screwed up the how.
Now we offer a choice: Unlimited Streaming for $7.99 a month, Unlimited DVDs for $7.99 a month, or both for $15.98 a month ($7.99 + $7.99). We think $7.99 is a terrific value for our unlimited streaming plan and $7.99 a terrific value for our unlimited DVD plan. We hope one, or both, of these plans makes sense for our members and their entertainment needs. As always, our members can easily choose to change or cancel their unlimited streaming plan, unlimited DVD plan, or both by visiting Your Account.
“Now we offer a choice.” Really? As a longtime customer, it never crossed my mind that I wanted a choice. It’s patronizing to play up the fact that there is now a choice between one-half of what I was getting before and the other half. Neither half is better than it was before, they’re just separate and more expensive.
Perhaps I missed the part where Netflix explained that they’re interested in how their customers define “terrific value.” It’s not only that prices are being increased; presenting this as a “terrific value” has left many feeling talked down to, as if the company doesn’t realize they can do the math.
More how: Announce, duck and cover.
Once the announcement of the price increase was made, people flooded Netflix with feedback. Many thousands of customers posted messages on the company’s blog post, Facebook page and Twitter, only to be met with deafening silence. Failing to acknowledge or respond to people’s feedback only further enrages them. One imagines them huddled in the executive conference room, underneath the long table, waiting out the storm. “Is it safe to go out yet?” “I don’t know, you go see if they’re still posting angry comments. I’m not going.”
That poor blogger and one more thing
Since this broke yesterday, I had been feeling bad for the blogger, the woman who had the unenviable duty to post that now infamous blog post. “She’s probably on their social media team and contributes to their blog,” I thought, “She’s probably feeling really awful right about now.” Today, I was still concerned about her and went to look her up on LinkedIn.
The good news is that I don’t feel bad anymore. She’s the V.P. of Marketing at Netflix. The surprising “one more thing” news is that I also saw this on her LinkedIn page:
I’m guessing the intent of this recruitment campaign on LinkedIn was not to engage people drawn in by a firestorm. As an addition to the long list of lessons learned, I’d suggest that while huddled under the conference room table, the team might also want to consider other, unrelated campaigns running and whether to put them on hold in the short run.
Two other pieces which provide valuable perspective on this situation:
Why Netflixgate Is More Interesting Than Google+ (To Me)
7 Reasons Why Netflix’s Price Hike Is a Bonehead Move
If you enjoyed this post, sign up to receive free updates by email here to be sure you don’t miss any future Almost Savvy news. You are also invited to connect with others interested in social media on the friendly folks on the Almost Savvy page on Facebook where we share news and tips.
Irene, you raise so many great points here and there are lessons for companies to learn from this mess. Participation in social media is not a one-way street for push marketing and blast notifications. Companies must be prepared to talk, listen and RESPOND. Every company should have a solid crisis communications plan that integrates social media platforms. It is horrifying to believe that Netflix did not plan for the fallout and have “troops” ready to respond to customer concerns. Not to mention the poorly thought out plan itself. I am a Netflix subscriber and did not receive an email so learned of the increase via social media. I logged into my account and was horrified by the new “choices.” Great post Irene, keep em coming!
Or, maybe this *was* their plan? Raise prices, announce, seek shelter and wait it out. Maybe fewer, higher-paying customers works for them? I don’t really think this was their plan, but I can’t imagine how they thought this would go over well. I’m right there with you wondering how they couldn’t have had a plan in place to respond to PR crises.
I did receive the email. It was very short – just the price changes.
So Irene, did you apply for the position?
I do have to hand it to Netflix – at least they did it in one fell swoop instead of nickel and dime-ing every few months like AT&T and DirecTV.
I do agree that it appears to be a PR nightmare.
Right, Susan. PR nightmare without a response. They’re not doing themselves any favors. And, I’m quite sure I’m not qualified for the position. 🙂
Well, since I am already a Amazon Prime customer as well as an HBO & Xfinity customer, I think I’ll be dropping my Netflix subscription immediately. No value here anymore.
Sounds like you can easily do without Netflix, Bill.
Touche’, my friend. Not what, how.
Companies need to raise prices sometimes, people get that. The big-boy-long-pants (or big-vp-of-marketing-girl) approach is to dialogue…even if your news is unpopular.
BTW, as a streaming subscriber, the one reason I stay a subscriber is because it’s cheap. Their search/sort functionality really sucks. As we used to say in the software biz, though…”If you want a perfect product are you willing to pay for it?” (I’d pay more for something that worked better)
Love it or leave it, Netflix needs to wake up and smell the caramel foofiato (with an extra shot). Talking with people, even if you part in disagreement, is how relationships are built and sustained. In today’s world you can do nothing less.
Important point, Roger. While business is about dollars and cents, it is also about relationships. Focus on one without the other and there may be consequences. Thanks for the comment!
The more they hide the more angry their clients get. They are afraid to face the issue, what they’re doing though is destroying their image
Hi Irene, Great article, we share very similar feelings about this issue. I wrote a guest post for WaxingUnlyrical suggesting that they should have just maintained their pricing for their current customers and raised it for new subscribers. Either way it was a DUMB move and I am wondering who it is that actually signed off on it. Are they still huddling under a table? I am really surprised…
Absolutely! Why they didn’t grandfather in their existing customers in some way is a mystery. Surely, they must have considered it.
I think, Netflix has made the situation much worse by not responding to the outraged customers. The customers surely deserve some kind of response from the company. There is nothing more worse than losing your loyal customers. And what was that job advertisement for?