Netflix: What Worked and What isn't Working

THE SITUATION: Netflix announced a new pricing plan over the summer that resulted in a substantial increase for most of its customers. CEO Reed Hastings recently sent customers an email acknowledging that he "slid into arrogance," and apologizing for the fact that "many members felt we lacked respect and humility" in making the pricing change. Yet the company did not reverse its price increase. Instead, Hastings announced that Netflix would be split into two companies, with a new entity, Qwikster, assuming DVD distribution, and Netflix focusing exclusively on video streaming. Social media feedback suggests that many customers are still feeling alienated and hostile, due to the changes. The company's stock price is way down. THE MARKETING TAKEAWAYS: 3 best practices to emulate and 3 mistakes to avoid. BEST PRACTICE #1: Apologize when it's clear that the Voice of the Customer is signaling broad dissatisfaction with something you did. Netflix did this, and even though many customers felt that Hastings's apology didn't go far enough, the company deserves credit for issuing it. BEST PRACTICE #2: Offer a human face when you apologize. Netflix did this too, and Hastings should be commended for putting himself front and center, rather than hiding behind a committee or logo. BEST PRACTICE #3: Give customers the chance to keep the dialogue going. Although much of the feedback is still strongly negative, Netflix appears to be doing a good job of letting people express themselves. It is not, for instance, trying to lecture, or censor visitors to its Facebook page, like Nestle did. MISTAKE TO AVOID #1: Not building the Voice of the Customer into the planning process. It is obvious that Netflix wasn't listening to its customers when it set up its new pricing. If they had been listening, then (at the very least) they wouldn't have been caught flatfooted by the intensity of the consumer anger. MISTAKE TO AVOID #2: Not acting promptly when customers have identified a problem. Netflix took far too long to provide a high-visibility response to the immediate, widespread customer dissatisfaction. The months of inaction cost the company dearly, in terms of customer losses and stock value. MISTAKE TO AVOID #3: Making up a strategic plan as you go along. There are disturbing signs that the huge new branding decision, namely splitting Netflix in two, was not thought through. The Qwikster web site is, as I write these words, a holding page with no content, and an embarrassing series of Twitter posts have spotlighted Netfix's failure to figure out who actually owned the handle @Qwikster. The company has been firing off initiatives with major strategic implications, but appears to be supporting them with minor-league planning. As a result, Netflix is creating, and then having to manage, a series of PR nightmares. CONCLUSION: Netflix still enjoys a huge, largely loyal customer base. The current turmoil is not necessarily representative of all Netflix customers, but this sure isn’t helping the brand! The alienation, frustration, and hostility the company is currently navigating may be a short-term problem that eventually dissipates ... or it may signal a deeper disengagement from customers that creates major openings for the competition. Stay tuned.

Help Your Customer Service Reps Engage with Customers

MARKETING SITUATION: Recently, a client for whom we were developing Customer Engagement strategies asked for help in identifying the reasons for low customer satisfaction scores. Voice of Customer research determined that a major reason for dissatisfaction was a recent company initiative to limit “talk time” in the Customer Service center. The CSR’s had been told to limit talk time to 90 seconds. The emphasis on talk time made the CSR’s feel pressured to wrap up calls quickly. As a result, they began to rush customers off the phone and in their haste, began to miss key steps in the customer service process. This created an increase in call backs by customers who were now irate because they had to place an extra call to fully resolve their needs. The mandate to "wrap calls up" within a short time was also causing CSR morale problems. Things had to change quickly. We started by changing management’s view that you can increase customer engagement and impose tight "talk time" limits on your CSR’s. You can’t have it both ways. This doesn’t mean that customer engagement necessarily drives significant increases in talk time, but you can’t insist on greater engagement and shorter talk time. TWO QUESTIONS TO CONSIDER: 1. Do your CSR’s have the autonomy and authority to engage customers, create rapport, and deliver win-win outcomes, or, are they bound by talk time limits? 2. Are your CSR’s receiving poor performance reviews because of occasional lengthy calls, which exceed talk time limits, but solve problems and build good will? THREE RECOMMENDED ACTIONS: Create a Customer Engagement Plan for your CSR’s that will encourage customer centric behavior and reduce stress by: 1. Identifying what is causing increases in talk time and stressful exchanges with customers. Talk about those root causes with your people, not the end-result "talk time" number you want. For instance: Do your front-line service people have to put customers on hold so they can track down a manager to authorize a (common) solution to a problem? Could the team solve more of those problems on their own? 2. Giving your team the autonomy and authority to provide value in every call. Let your people know that you trust them. Remind them that you hired them and trained them to connect with people and solve problems. Ask them to critique their own calls. This level of respect builds trust and allows for calls which truly serve customer’s needs. 3. Creating meaningful individual and team rewards. Don't dish out rewards based solely on "talk time" metrics. Reward your people for providing exceptional service to your customers. THE TAKEAWAY FOR MARKETERS: Implementing the three action items will: Increase both customer and employee satisfaction scores. Reduce callbacks. Reduce average call handling times!

Facebook Coupons: Money In The Bank?

MARKETING SITUATION: Could coupons shared via Facebook add a powerful dimension to your marketing programs? This intriguing case study from Social Media Jungle, which profiles an on-line loyalty program from the specialty ice cream producer and retailer Cold Stone Creamery, suggests that the answer could be "yes" ... IF. As In: IF you listen to your customers, IF you create engaging content that motivates people to opt-in, and IF you can identify a compelling program that will engage on-line fans. If you can do that, you may be able to pull off what Cold Stone Creamery did: dramatically higher redemption rates (14% vs. 0.2%) at dramatically lower costs per redemption (39 cents vs. $3.60). QUESTIONS TO CONSIDER: Do your best customers have the opportunity to "like" your company, product, service, or brand via a Facebook page? Could you leverage that interest with a targeted eGift campaign, enabling a fan of your page to send a discounted present to someone in his or her network? FOUR RECOMMENDED ACTIONS: The four best practices Cold Stone Creamery followed appear below. 1. Create a strong reciprocal value exchange. By "liking" the company's Facebook page, customers and prospective customers receive a stream of engaging, regularly updated content. Over 1.6 million people now follow Cold Stone Creamery on Facebook. 2. Listen to your fans. The initial idea for an on-line coupon campaign came from Cold Stone Creamery fans. 3. Give Facebook users a simple, memorable way to interact with each other. If Jack sees that his friend Maria is having a difficult day, he can send her an on-line coupon for Cold Stone Creamery ice cream from the company's fan page. A staggering 14% of those encountering the offer redeemed the coupon, as compared with 0.2% of previous on-line coupon campaigns. The low-cost campaign generated $10,000 in incremental sales. 4. Make on-line friends look good. Jack's thoughtful gift to Maria shows up in Maria's News Feed, which means Maria's whole network of Facebook friends sees it. The coupon campaign generated 66,000 new fans for Cold Stone Creamery in just eight weeks. THE TAKEAWAY FOR MARKETERS: Consider building a loyalty program on Facebook that is based on a strong reciprocal value exchange, that gives users the opportunity to send a memorable gift, and that makes the sender of that gift look good.

Twitter Fatigue? Or Irrelevance Fatigue?

MARKETING SITUATION: There has been a lot of talk recently (here for instance) about "Twitter fatigue" and "social media fatigue." Actually, I think what we are looking at is isolated pockets of "irrelevance fatigue," based on using old thinking to drive the deployment of new interactive media. Twitter is by far the most personalized of these new media. 3 QUESTIONS TO CONSIDER: How customized is your tweetstream to topics raised by individual users? Do you send untargeted messages without names of individual users? How often do you use Twitter to communicate with specific, named followers, one at a time? Twitter's strength for marketers lies in one-on-one exchanges with individual users, and specifically with users who are having problems or who want to share insights with your company. Don't try to use it as a platform for mass communication.

Click to read our article The Voice of Your Customer: GPS for your Company During Tough Times as posted by The Marketing Forum.

RECOMMENDED ACTION: Create a Twitter Messaging Customization Plan that will: → ensure 50% (or preferably more) of your tweets use "at signs" (this symbol: @) to have conversations with individual users. This means using Twitter to communicate with one user at a time. This is one of the best practices followed by companies like Comcast, Zappos, and Dell. → minimize or eliminate broad, unfocused messaging that is meant to be read by "the world at large" like this one from an on-line billing system: "We are looking for new payment gateways to integrate. Tell your gateway to get in touch!" Unless you are a celebrity with millions of followers who hang on your every word, your message will be ignored. THE TAKEAWAY FOR MARKETERS: Don’t damage your social media strategies by doing “spray and pray” tweet blasts. These will alienate your followers. Use Twitter to connect one-on-one.