Tag Archives: Netflix

Qwikster – Right Idea Just Poorly Executed?

Netflix knows its future is in video streaming, but its roots exist in DVDs. So how do you nudge consumers to wean themselves off of lower margin DVDs to the higher margin streaming videos?

Introducing Qwikster, a knee-jerk reaction to a disastrous price increase announcement that was met with even greater consumer disdain.  Many people put Qwikster up there with New Coke – but it might have been the right idea – just poorly executed.

Creating a separate business for DVDs will allow Netflix to buffer itself from a business model that (over the long-haul) will most likely decline. In creating this new division, however, they didn’t connect the old Netflix to the new Qwikster, so a consumer had to set up their preferences, waitlists, cues and billing data all over again. It makes you wonder if they were following the online banking model, which makes it so cumbersome to switch banks, that they expected subscribers to begrudgingly switch to streaming Netflix over setting up a new DVD account…)

All Netflix had to do was allow customers to conduct a simple transfer for a limited period of time, and they would have been less likely bothered by the change. Furthermore, providing an incentive to try the new technology (following the lead of the airlines when they introduced online booking) would have helped ease the pain.

So what can you learn from Netflix?

  • Think about all the ramifications of significant changes in your business
  • If the initial reaction to a major change is negative, take time to let it sink in. Sometimes it just takes time for people to adjust to change.
  • Limit the knee-jerk reactions – they never seem to work out as you’d like.

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Hey Netflix – Just Tell Me You Want Me Back

Six months ago I canceled my Netflix account, simply because we weren’t using it.  I like the service, but since we weren’t watching movies, the $4.99 monthly fee was adding up.

Last week I received a direct mail solicitation from Netflix asking me to come back. It was a traditional “win back” offer targeting cancelled customers.

The piece encouraged me to use my Priority Code by February 28, 2010 to get “so much for only $4.99 a month”.  Secondarily, it mentioned Netflix’s newest feature, the ability to download movies to my Tivo or computer, as well as their competitive advantages: no due dates, no late fees, and no need to rush to a kiosk (the latter being a direct shot at RedBox).

I thought the six-month follow-up from Netflix was terrific, as cancelled customers are highly responsive, but the meaningless priority code seemed a bit deceptive and the heavy-handed focus on price seemed off base.  I would have preferred a simple letter saying “we want you back and here are some new things you can do with Netflix.”

If you want to win a customer back, be open and honest.  Tell them why you want them back and what they have been missing.  Former customers chose you once so they know who you are. As a result, your sales pitch should be more transparent.

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