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Netflix: Better Late than Never or Too Late to Matter?

October 10th, 2011

Netflix is at it again. In an attempt to make things less “difficult” for its customers, Netflix CEO Reed Hastings announced Monday morning that Netflix will abandon its plans for Qwikster and will keep both DVD and online streaming services under one company – Netflix.

In his blog post, Hastings made it clear that Qwikster is no more: “This means no change: one website, one account, one password… in other words, no Qwikster.” Sounds great, right?  But is this enough to win back the 1M+ customers his company has already lost?

In a previous blog post, we offered insight into why Hastings’ September apology backfired. One of them was his failure to take action. Well, he got the memo. He’s finally listening to the demands of Netflix’s many disgruntled users and he’s trying to make amends with them. But, from a business and PR standpoint, will it work?

From a business perspective, late is better than never. Since the announcement that the company will remain as one entity, Netflix’s stakeholders are feeling more confident in the company’s plan of action. By 10:11 a.m. EST, Netflix stocks increased $6.97, or 6 percent, to $124.182 after touching $128.50 for the biggest intraday gain since January 27. According to one analyst, Janney Capital Markets’ Tony Wible, the gain happened because management is showing it is determined to “break the negative momentum through positive catalysts,” and investors should “hedge positions into the upcoming earnings.”

But stakeholders aren’t the only side of the equation – and those on the other bench, the customers, aren’t playing nice. Even though Hastings emailed his customer base, he continues to practice poor communication skills and PR etiquette. In his very brief post, Hastings sounds tired and detached, as if he were beaten into submission by the constant pressures of trying to please all of his customers. Yes, he listened to Netflix users, but he did so pretty late in the game.

Hastings says that his company is moving too fast, but customers feel that his focus is on quickly improving his company’s service and not its customer relations. Many users are still frustrated not only because of the price hike, the lack of explanation on these changes, and the constant backtracking – but because there was still no real apology. And the frustrated users are giving Hastings ample feedback on his most recent executive decision:

“Here’s the problem. Hastings is only focused on his money. So he tries an idea that will make him more money, then has to “apply fixes” when he realizes that it made the customer mad. What he should be focusing on is how can he bring the most value to the customer. If that were his focus, his customer base would be increasing and profits would take care of themselves.”

“You’ve got to do more than this to win customers back. Cutting that price increase in half would be more like it. I’m offended you didn’t apologize in this statement for taking your customers on these silly rides … Resigning might be the best thing to gain the faith of your customers and stockholders to believe in this company again. Too many gaffs. I cant believe in this company with its egotism.”

 Hastings announcement opened up a can of worms on Netlfix’s blog, giving customers a reason to lash out even more harshly than they did in July, with complaints ranging from poor movie selections, to price increase, to Hastings competency as a CEO, to finding better services.

While the jury’s still out on whether former users will flock back to Netflix, the whole situation provides the perfect example of what not to do as a company in crisis, with perhaps the most important lesson being do your research.

Strategic business solutions should not be made on a whim. Take into consideration your customers needs, their likes and dislikes. Focus groups and interviews are a great way to mine information from those people whose opinions and attitudes should matter most in a company – the consumer. And please, learn how to give a heartfelt and eloquent apology. You never know when you might need to give one.

Think about it:Where does Netflix go from here? Is Hastings on the right path to redemption?

Posted Under: Crisis Communications, Storytelling
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