Last year when Netflix’s CEO Reed Hastings suddenly announced that the company was spinning off its DVD rental business entirely under the name Qwikster, it quickly resembled a scene in ‘Dead Man Walking‘ as over 11,000 home-movie buffs blasted the decision on the companies’ blog.
“Had Netflix bothered to listen, it might have avoided shattering its credibility, hurting the value of its stock price and losing more than 800,000 subscribers in the last three months,” said VentureBeat.
The ill-fated announcement came approximately 60 days after Netflix announced that it would change its pricing structure from $7.99 a month for streaming alone and $7.99 a month for 1-DVD-at-a-time rather than offering a bundled price, a 60 percent increase.
“While there are some interesting elements to Netflix’s latest plan, the company botched any chance of making its customers sympathetic to Qwikster by failing to communicate why the offshoot business was necessary in the first place,” said VentureBeat. “That gaff, coupled with the announcement’s close proximity to Netflix’s recent pricing change, was a recipe for disaster.”
In 90 days, Netflix lost more than 800,000 subscribers. But despite Netflix’s public path to destruction, many companies are still failing to pay attention to its customers. According to October 2011 study conducted by Conversocial, retailers Costco (COST), Kmart and Kroger (KR) missed 100 percent of their consumers’ complaints on social networking sites during September 2011, and Wal-Mart (WMT) ignored 40 percent. Out of the 10 major retailers examined over a five-day period in September, Safeway (SWY) provided superior customer service by responding to 95 percent of complaints on their Facebook page.
“I’ve found that many companies have a tendency to focus so much on selling their product or service that they forget to listen to what their customers are telling them,” said Bloomberg BusinessWeek. “The goal for any business is to make money, but that goal is more easily attained when you listen to your customers and know and understand what their needs are.”
But according to the folks at PRNews, consumer feedback is still “falling on deaf ears.” On their website, they posted a Customer Contact Association study that found 89 percent of consumers are likely to tell organizations when they receive poor customer service, yet almost 44 percent do not believe companies read their feedback. A third of CCA member organizations polled indicated that they overlooked social media feedback completely; and that they reviewed less than 2 percent of customer interactions across Web-based channels.
The Customer Contact Association also found that customers (44 percent) preferred to provide feedback via mail or e-mail. But companies (65 percent) only paid attention to less than a quarter of customer’s e-mails. Two-thirds of customers used social media to post bad experiences, while 61 percent used social to post positive ones.
- Ticker: Netflix, Inc. (NFLX) Raise Prices. Is this good for Coinstar Inc. (CSTR)? (optionsanimal.com)
- 6 Customer Experience Lessons to Learn From Netflix (mpdailyfix.com)
- Netflix Loses 800,000 Subscribers After Qwikster Gaffe (slashdot.org)
- Should Investors Renew Their Love for Netfilx? (wire.kapitall.com)
- Does HBO’s investment in Netflix-like firm strategy shift? (news.cnet.com)
- A look at Netflix since much-hated price hike (seattlepi.com)