Archive for Customer Service

Strategy – NetFlix: Will it Work? PART 2

September 15, 2011 / Jon Wardle / No comments

Interesting update from NetFlix over the weekend. NetFlix’s CEO posted a blog post and video saying he was “sorry” and announced splitting of DVD only (Qwikster) and Internet Streaming only (NetFlix) services.

Netflix Splits DVD-Streaming Business, Rebrands With Qwikster, Adds Video Games | Fast Company.

In my previous post on September 2, 2011, (Strategy – Netflix: Will It Work?) I wondered what would happen with NetFlix’ existing customer base.

Netflix just reported adjustments to their subscriber base. And the the stock market has been very cool to those downward revisions. Netflix announced a 27% reduction in DVD only subscribers, but only a 2% reduction in streaming only customers.

NetFlix did state in their press release: “We remain convinced that the splitting of our services was the right long-term choice.” Perhaps the strategy will work longterm. However, for those in business that rely on a recurring customer base, the cost to acquire new customers and fight bad PR is always much higher than keeping existing customers happy.

I wonder if NetFlix ever considered a split pricing strategy:

  1. Legacy Customers.  Keep the same pricing, or slowly increase pricing so that the pain isn’t so abrupt.
  2. New Customers or Returning Customers.  Subject to a new pricing structure

This is what many of the phone companies do.

But I’m convinced that the loss of subscribers will continue to dog them in the short term.

Category: Customer Service, Strategy / Tags: , ,

Strategy – NetFlix: Will it Work?

September 2, 2011 / Jon Wardle / 3 comments

Much has already been made of NetFlix’s decision to change their pricing model.  But for those keeping score at home … NetFlix just increased the price to both receive DVDs by mail and to stream content over the internet.  Yes, the monthly fee will be only $6 per month.  But why would you want to pay for the fee?

Some things to consider:

  1. RedBox
  2. Hulu
  3. Amazon
  4. NetFlix Loses Starz

There are other options in the marketplace.  It really comes down to personal preference and convenience.

However, it is Item No. 4, which I believe will hurt NetFlix in the short term, and perhaps the long-term.  Starz has the “pay-cable” rights of movies from Walt Disney and Sony, which means that Starz controls the content.  Sony had already pulled their streaming content from NetFlix.  But now all of the Disney related movies will also walk from the NetFlix streaming archive when Starz agreement terminates in February 2012.  Other movie distributors, such as HBO, Warner Brothers, Twentieth Century Fox and Universal do not allow streaming of their content.

NetFlix has already signaled that they will pursue independent content

I’m sure the NetFlix PR machine will continue to put on a happy face and spin this as no big deal.  However, just like they underestimated the negative publicity they received from the change in subscription, I believe that this will also be another reason for consumers to expand their entertainment options.

Agree?  Disagree?

(Not that it matters, but I don’t own any stocks of the companies mentioned in this post, and have no intention of owning any in the future.)

Category: Customer Service, Strategy / Tags: , ,

Great Service

August 17, 2011 / Jon Wardle / 2 comments

I’m always looking for customer service experiences.  Recently, we needed to get an oil change.  We drove over to Einstein’s Oilery on Overland Road.  An oil change is an oil change.  Right?  When I pulled in, they handed me a newspaper, and told me I could stay in the car.  I noticed they had a couple of TV monitors (one was broadcasting their work, and the other had FOX TV on).  Then they brought me a soda.  Throughout the oil change, they kept telling me what was going on, and had me out very quickly.

It is interesting that Einstein’s Oilery has taken an industry that isn’t very flashy, and made the experience about the customer.  I’m a fan!

What extraordinary experiences have you had in ordinary places?

Category: Customer Service / Tags: , ,
 
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