It seems that Netflix is getting things wrong left and right these days. First, they decide to raise prices during an economic decline. Second, they haven’t been listening to their customers who are leaving in droves to other services like HuluPlus and Amazon Instant Video. Third, the separate entities that subscribers will now have to deal with are not integrated into one another – meaning there will be two completely separate sites with zero cross-functionality and zero benefit for using both services. And if that weren’t enough, Hastings apology to Netflix’s users was half-hearted and misguided to say the least.
Instead of apologizing for the 60% price increase, Hastings apologized for not communicating the changes to his users more clearly. The backlash was instantaneous, generating 18,000+ comments on the blog. Consumers felt that his apology was thoughtless and insincere.
Hastings showed especially poor crisis communication skills when he wrote,
“When Netflix is evolving rapidly…I need to be extra-communicative…This is the key thing I got wrong…I messed up.”
When an individual feels the need to apologize, he should consider the person/people he’s harmed, the action that caused the harm and the healing process when all is said and done. Apologies are meant to be used as a way to express genuine regret; however, Hastings’ apology backfired. His apology came off as a promotional tool for a service that customers aren’t sure they really want. Instead of apologizing outright to Netflix users and asking for forgiveness, he tries to sell them on the idea that two companies are better than one and that the price increase is for the companies’ own good.
Industry leaders like Hastings need to know that apologies should be used sparingly, not as selling tools. Hastings failed to realize this, which is why we’re offering a few extra points on how Hastings’ apology caused more harm than good:
1. His apology came a little too late. Hastings should have issued some statement justifying the price increase when it was first announced in July instead of giving customers two months to stew in their own anger.
2. He never fully explained why Netflix had to increase its price, leaving customers scratching their heads and closing their accounts. And his justification was geared more toward investors, not customers.
3. And to add insult to injury, he offers his current customers nothing for the inconvenience of the changes. Nothing to retain the users Netflix has, nothing to solidify the actions of his apology, such as a free movie rental, a discount, a free month of service. Nothing…
The only thing he did do was admit that he failed to communicate. But that isn’t enough to prove to your audience that you are a customer-oriented company and that you do care about having their business and keeping them happy.
Here at Braithwaite, we pride ourselves in having over 25 years of providing our clients with hands-on, crisis communication planning. Our three principles when handling a crisis and dealing with the media are: Validate the Concern, Control the Narrative, and Take Action. In Hastings apology, he does acknowledge that there has been a concern brewing for two months. What he doesn’t do is specify the right concern which is the price hike, not the failure to communicate. Also, he failed to control the narrative through his own blog. Netflix users have had time to think about the recent changes and were at the helm of their keyboards to give Hastings much needed feedback. And as was pointed out in #3, he took no action. He is leaving his customers high and dry, ignoring their anger and eagerly charging ahead with the DVD/streaming split.
Speak Up: What do you think the future holds for Netflix? How should have Reed Hastings broken the news to his customers?