A Reversal of Fortune   Leave a comment

There’s been a rush to exit for Netflix customers. The company lost 800,000 customers in 3rd quarter this year, the first time ever its customer base shrank instead of grew. The reason for the slump is simple. They chose to ignore the KISS rule – Keep It Simple Stupid – by first raising prices and then splitting its business into 2 companies. Customers who used both DVD and streaming services would need to manage two accounts at two different websites.

Why would a well defined brand with loyalists galore make it more difficult for customers to use their product?  Some days I can barely remember my own name let alone one more online account. Smart loyalty marketers focus on me and how to make my life simpler, easier, better. Anything else is just a complication I don’t need.

So the Netflix got the backlash it deserved. Twitter and Facebook went a buzz and the stock took a dive. And Netflix got the message loud and clear. Qwikster, the newly formed company, quickly went away. CEO Reed Hastings, to his credit, sent an email in August to customers apologizing for moving too quickly.  You got to give the guy some credit for admitting he screwed up.

“There is a difference,” he said, “between moving quickly – which Netflix has done very well for years – and moving too fast…” As my 7 year old would say, “Duh!”

Anytime you ask me to do more to access the same services I’ve known, and possibly loved, you’ve lost my loyalty and potentially a customer. What shocks me is Netflix had such a strongly defined brand of super servicing the customer and then came greed and inconvenience. And there went loads of customers flocking to the door. What were they thinking? Clearly not about loyalty.

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Posted November 14, 2011 by Amy Blum in Loyalty Programs

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