Recently, Netflix surprised its customers with a 60 percent 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 5,000+ comments posted to the Netflix blog after the announcement:
"Would have been nice to have some advance 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 per month. 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 dialogue between Netflix and its customers, resulting in a better gauge of potential reactions and best communications strategies prior to the announcement. By continually gathering customer feedback, Netflix could have better prepared its customer service department, and perhaps better understood what it needed to do to introduce the pricing changes in a more acceptable way.
Secondly, by powering its VOC program with an enterprise feedback management solution with action management capabilities for the call center, Netflix 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 a high volume of customer feedback lead to more confusion, the company could have used that feedback as a springboard for better agent training. Netflix could have shared best practices for responding effectively to customer complaints, which would go a long way toward saving more customer relationships.
Third and final point: Netflix has already upset customers by making them feel blindsided by the price increase, and by providing confusing information. Now the company has taken it a step further by not responding consistently to unsolicited feedback. I'll be curious to watch its 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.
Greg Marek is vice president of corporate marketing at MarketTools, where he leads marketing communications and product marketing activities. Previously, he held senior-level marketing roles at leading companies including Citrix Systems, Intuit, and Oracle.