technology doesn't solve problems, people do
One of my clients sent me this link to a very creative and useful reminder of how the web has evolved – especially in the interaction between browsers and various web technologies. I’d like to see them add the social element in as well in the next edition…
On Wednesday, Netflix raised prices from 25% to 60%, setting off a tweetstorm of protests from consumers, with many threatening to cancel their subscriptions.
So first a couple of comments on what they did, before I address how they did it and my personal response.
Although there is a lot of speculation on why Netflix leadership felt the need to impose such a high percentage increase, we really don’t know, and it really doesn’t matter. Netflix is entirely within its rights to raise prices. And it is a legitimate decision. I once led a consulting project for a bank where we helped their small business customers understand the impact of a price increase on their bottom line and what percentage of customers they could afford to lose and still be more profitable. It is quite an eye-opening experience that I highly recommend.
At the same time the consumers are entirely within their rights to protest the increase and/or cancel their subscriptions. This is the market responding – and what the market says isn’t always what the market does. Financially, Netflix could still walk away with increased profitability. I doubt they’ll walk away with increased good will.
The above quote comes directly from Brad Berens’ insightful post on the same topic. If you read the post announcing this price increase, you can practically smell the condescension and marketing speak. No honest explanation, no humility, no “we know we’ll lose some of you and are sorry to see you go.” It’s almost as bad as the CEO, Reed Hastings’ ill advised NYT’s op-ed piece from 2009 bragging about the “eye-popping amount of money” he is paid and pleading for higher taxes.
Then, when the backlash begins, the entire company collectively sticks its head in the sand. I predict that this is going to inspire dozens of “How not to do social media” case studies within weeks if not days.
“Dear Netflix” is a trending meme on Twitter and there are over 11k comments on Facebook and 5000 comments responding to their blog announcement. It’s been over 48 hours, and there hasn’t been a public response to the backlash on any social media outlet I can find. The last tweet was at 10:22 July 12 announcing the price increase.
In today’s WSJ, Steve Swasey
… a Netflix spokesman, said the company isn’t surprised by customers’ reaction, though he argues the service is still a good deal even with the price increase. “We anticipated hearing from members about their concerns,” he said.
Really? You anticipated this?
Despite his protests to the contrary, these guys clearly did not see this coming and 48 hours late still don’t have a plan to address it. They did do two smart things however.
The first was not turn off the comments. I’m not sure if that is an insightful approach to making sure they receive unfiltered feedback from their consumers, or just a byproduct of having too much sand in their ears. I have my suspicions, but either way it was the right thing to do.
The second thing they did was to make the price increase effective after September 1 for existing customers. There will be some percentage of customers that will wait to cancel their services (since they don’t allow pro-rated refunds) and forget to do so before the deadline. Not sure it’s a good customer service move, but it will probably help them save a few dollars.
After reflection, maybe one of those is just dumb luck and the other is just calculating. Time will tell.
I’ve been a Netflix customer for years; since shortly after they opened. Often with 2 DVD’s gathering dust for months on top of my VCR. I thought for a while that I would wait and see if there was a rollback on this decision before deciding if I would cancel or not. However, to Brad’s point, upon examining the value I receive vs. what I pay for, I’ll be canceling my account just as soon as this month is out. I already pay for Xfinity, HBO, and Amazon Prime and I barely use Netflix.
Thanks Netflix! Now that you’ve brought it to my attention, I can use that $180 a year somewhere else!
File under “it’s rarely too late to try to correct a mistake.” Especially if the mistake you are trying to correct is getting on the wrong side of people who make war for a living.
According to the Wall Street Journal:
Walt Disney Co. said Wednesday that it will withdraw its applications to trademark the term “SEAL Team 6″ for use on toys, games, and other consumer products.
A Disney spokesman said the company was withdrawing the applications “out of deference to the Navy.”
I’m glad to see Disney correct this, but I’ve not yet been disabused of the notion that our trademark and patent system is due for an overhaul.
photo credit: ussocom_ru
I recommended in my post on the 13th that those responsible for this mess be fired; if not for ethics violations, then at least for incompetence. And there are people responsible for this on the Facebook as well as the Burson-Marsteller side of this debacle.
It is quickly becoming a grand case study of “How-Not-To-Do-It.” Now Burson-Marsteller admits to removing a post critical of their behavior from their fan page. Although they immediately backtracked and promised to issue an apology to the poster, the immediate knee-jerk behavior is old-school controlling to the core.
Thanks to Wired we know that the two responsible (or at least the two that are going to take the blame) on the Burson-Marteller side are going to get off scot-free:
Instead, Mercurio and Goldman, both high-profile former journalists new to Burson, will receive additional ethics training, the company said.
Really? Journalists, high-profile at that, didn’t understand the ethics of this? Didn’t get the sleaze factor? Didn’t think about the potential blow-back?
In every company I’ve ever been in, if you don’t get the culture and ethic of the company pretty quick you get fired. The entire things feels like spin-control and a cover up for more senior decision makers to me. If it really was just these two former journalists involved, Burson could have resolved this in hours.
I don’t know these men (and possibly women) involved, and I don’t have to. It’s not about them – it’s about the possibility of salvaging a company. It was a reputation damaging action and if Burson wants to keep any shred of its reputation and dignity, it should clean house now, not next week.
At least the Brits get it:
… the former Chairman and CEO of Burson’s British business absolutely ripped apart the firm’s tactics, calling them “furtive and creepy.”
I predict a mass exodus of the best and brightest from Burson in 3, 2, …
In the mean time Facebook, as noted by Dan Lyons in Facebook Smear Blame Game,
…will do what it always does when it gets into trouble: refuse to apologize, admit no wrongdoing, stop talking and wait for the storm to blow over.
If so, that would be the first smart move they’ve made in this sorry episode.
It might be the first smart move Dan, but it won’t replace the trust they just squandered in this “sorry episode.”
There has been a lot of noise recently around the question of whether or not we are in another tech bubble, primarily I believe, because of some of the recent high valuations and high-priced acquisitions. The acquisition of Skype by Microsoft last week is only going to serve to highlight the discussion.
There are of course, strong voices on either side of the argument. After all, the definition of a bubble changes depending largely on where one stands, and where they’ve placed their bets. The reality is that contractions and expansions are going to occur. It’s part of the market making adjustments and identifying the “top” or “bottom” is always elusive. Here, The Economist takes a look at some of the ways the current state of economic affairs resembles the previous tech bubble, and some of the ways it does not.
Both articles on the subject are worth your time:
Update: WSJ dives into a specific example with Gilt:
