I’ll admit that Netflix has always been one of my favorite companies. They broke the mold with a game-changing business model: no need for a brick-and-mortar video store, and the all-important “No Late Fees” policy. They set the longstanding leader in the industry (Blockbuster) reeling and essentially out of business. They’ve traditionally represented a company that “gets it”; from the way they hire, their company culture, their algorithms that provide a customized experience for each user and so on and so forth.
Well, they’re getting close to screwing it all up.
Last week, Netflix announced a new pricing plan that will take effect on September 1st. Long story short, prices are going up.
Raising prices is always a risky and dangerous move (and despite how Netflix spins it, make no mistake, that’s what’s happening). Dangerous especially given the space they’re operating in, where several players have been making huge strides in their direction, namely Hulu, Apple, RedBox and soon maybe even Facebook.
But that aside, if raising prices is indeed what they deemed the proper move, they have wholeheartedly botched this from a customer service standpoint! “Responding to someone who’s threatening to cancel and saying nasty things – there’s no value in that.”
Studies show that upset customers cost companies a ton of money. We live in a society where users have all the power. They have access to more information than ever when making purchasing decisions, and they have a lot of options- particularly when consuming media. Appeasing upset customers should be priority number one! Just look at the success that customer service-oriented companies like Zappos, Southwest Airlines and Four Seasons have had.
The problem is not only that attitude though. They had no strategy for how to handle this move and the undoubted uproar that would arise from their users! Their call centers weren’t prepared to handle the volume of calls coming in, leading to huge wait times; not to mention that agents weren’t prepared on how to answer the issue at all. They placed no priority on the users and how they would feel as a result of the move.
And as a result, they’ll probably lose a whole bunch of them. For a company that has always valued the user experience and being innovative, they sure are well on their way to screwing it all up by September 1st.