Price increase (Netflix)

Netflix changes their pricing plan. While Wall Street is happy, the natives are not and they are very restless. That begs the question is which stakeholder is more important: Shareholders or customers. While the answer should be obvious, one has to wonder if companies always go for the ‘obvious.’

For subscribers who want unlimited streaming (I wish I could just download a film on my hard drive) and one DVD one at a time plan, you will have to pay $7.99 a month for each or $15.98 a month for both. That’s a big jump from $9.99 per month. Almost double. Ouch!

Any this decision seems to come out of nowhere.

Netflix says they need the money to pay for content. But double ouch? And even worse, this decision seems to have come out of nowhere. At least for the common man, like myself. And they also try to easy my pain stating this a ‘terrific value.’ For Wall Street, Yes. For the consumer, ‘No’

Lessons Learned:

  • Solve for the customer, not the shareholders.. .(easier said then done, but it should always be about the customer)
  • Get feedback from customers with extensive research (it would be hard to believe that their research said this wasok)
  • Stick to brand core values — (by doubling the price, Netflix has eroded their preceived lower price value)
  • Set up your monitoring tools and do real-time audits of what users are saying
  • Provide info on home page about price changes (and on social networks) (be explicit — don’t just make it seem like you are marketing a new pricing scheme for me)
  • Don’t try and be clever — again, it goes back to the home page where they say ‘you can instantly watch any movie you want for $7.99 a month’
  • Default users to the lower plan (Netflix did this with me because they changed my fee from $9.95, which was for DVD in the mail and online, to $7.99, which is just online now).
  • Provide updates on Facebook, etc. (Netflix did this)
  • Never delete comments — even if they are negative on social networks — unless they are legally threatening someone or are using profanity… (according to one person on Facebook, Netflix is doing this “Why are you deleting comments netflix? That is a really boneheaded thing to do. Social media 101: Never piss off your customer base. And… you are really pissing people off and making it worse by deleting their comments!!!!

As of 12:32 PST this afternoon, there are 33,000 comments on Facebook — containing some interesting comments, such as:

  • “Bad, bad move Netflix…especially with the crappy selection of streaming. Thank God the public library has an awesome selection of DVD’s and they’re FREE”.(Good comment here about the selection not being equal for DVDs and Streaming).
  • “Flood the HQ Phone Lines: (408) 540-3700. Ask them “What do I get for paying 60% more?” (Good comment here about not discussing the ‘value’ customers are getting and backing up the value with good info).

You can read more comments here…

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