Netflix: 3 Marketing Takeaways We Can Apply

Posted by Ernan Roman on October 17, 2011

0 comments | 942 reads

It is hard to say whether, during its short lifespan, Netflix's recently abandoned Qwikster spinoff was more loathed or ridiculed among customers. The reversal of plans to split Netflix the company in two (following a similarly unpopular price hike), resulted in Netflix's second global PR meltdown in less than a month. Yet I see, in the decision to abandon Qwikster, three "silver lining" signs that the company is hopefully getting back on the right track.

Silver Lining #1: Netflix is listening to the customer. Qwikster would have required millions of customers who wanted both streaming and video access to maintain two separate accounts and field two sets of bills. The (belated) recognition that this would cause major inconvenience to customers suggests that management listened, finally, to the growing chorus of discontent and made the right decision.

Silver Lining #2: Those customers angry enough to leave due to the controversial price hike have already left. The company can now focus on keeping its remaining 20 million-plus customers happy. It is better positioned to do that, I believe, than much of the coverage of the current furor has suggested. Netflix still offers a great on-line viewing experience and a huge array of DVD choices.

Silver Lining #3: "Core" customers appear to have finally stopped shouting. Significant portions of the Netflix user base either never took part in the on-line complaint frenzy, or have settled back into a less-furious routine with the company. As one user wrote on the Netflix blog,

"Finally, someone at Netflix listened to reason and to the customers. I was telling my mom yesterday that I was going to cancel after a 6-year relationship. Now it looks like I will be staying, at least for now."

The Netflix 3rd quarter earnings report is due on October 24. It will be interesting to hear the latest trends.

Three marketing takeaways from this extraordinary story.

Marketing Takeway #1: Maintain open channels for customer feedback. Netflix has definitely done this with its blog, and deserves recognition for that.

Marketing Takeway #2: When you drop the ball (and Qwikster was a major dropped ball), admit it. Netflix not only did this, it changed course quickly based on the Voice of the Customer feedback it received.

Marketing Takeway #3: Don't mistake the (loud) minority for the Voice of the Customer. Yes, there has been a good deal of shouting on-line, and there will be more. Sometimes, though, shouting is background noise.

Republished with author's permission from original post by Ernan Roman.

Ernan Roman

Ernan Roman is President of Ernan Roman Direct Marketing and the industry pioneer who created 3 transformational methodologies: Integrated Direct Marketing, Opt-In Marketing, and Voice of Customer Relationship Research. Ernan was recently inducted into the Marketing Hall of Fame. Clients include Microsoft, NBC Universal, Disney, Hewlett-Packard and IBM. His fourth and latest book on marketing best practices is titled: Voice of the Customer Marketing: A Proven 5-Step Process to Create Customers Who Care, Spend, and Stay.

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