marketing

How to lose a million customers in one simple move

Are you feeling dumb over a mistake you recently made? I know what that’s like, but not to the degree Reed Hastings, the current CEO of Netflix, does. WOW, what a mess!

The changes to these red envelopes had a lot of people seeing red.

Netflix started in 1999 and, in many ways, pioneered the modern method for renting movies. Much as Napster did with music, these guys started to disrupt an entire distribution system where the traditional path was to go to your local Blockbuster and pick out a few flicks for the weekend. (That is a whole other story that you can read about here.) By 2011, Netflix grew to 23.6 million subscribers and had a lot of those raving fans I keep talking about. If they had such a large, loyal following why did a million customers cancel their accounts?

Netflix decided to leave its streaming service intact at Netflix.com and separate DVD rentals into a different website called Qwikster. To top it off, Netflix was planning to raise prices from $10 to $16 as the base price for using both services. Its customers went nuts and one million of them said, “Thanks, but no thanks.” What can we learn from this? Glad you asked.

  1. Ego is a funny thing that can get you into a lot of trouble. It doesn’t matter how good you think you are. If you take your customers for granted and start pushing people around, you are going to get into some trouble. I have seen it happen in our industry and it might be happening right now. You better have people wanting you to win. I really think that Netflix was so confident in how things were going that they believed they could do just about anything and get away with it. This leads me to my next point.
  2. Why in the world wouldn’t you just ask your customers if they thought this was a good idea? Is it your ego? If you are going to make a major move in your business, either with a product or a service, I strongly suggest that you float that idea around before pulling the trigger. If they did gather feedback, they asked the wrong customers.
  3. Keep it simple, STUPID! Netflix had a great thing going and they went and made it complicated by creating another site and increasing costs. MORE expensive and MORE complicated? That’s not a good combination. Simplicity wins big with consumers and Netflix put a wet blanket on some of the magic they’d created.

On a positive note, the Netflix team put a stop to their plans and reversed course. A word to the wise: If you have a bad idea, call it that, admit fault, and move on! I hate being too hard on Netflix because they have done a lot of things right. To go from zero members to 23.6 million in 12 years is very impressive, so I hope they get back on track because they have a good thing going.

So stop reading Q’s Views, update your Netflix Queue, and go back to checking the mailbox for those little red envelopes.

Did you cancel your Netflix account? If so, tell me why in the comments section. Are you going to rejoin?

DISCLAIMER: The views and opinions expressed in this blog are mine and mine alone. They do not represent the thinking of the company I work for, or anyone else with whom I am affiliated. Except my wife of course, who is good at telling me what not to say.

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