Tuesday, September 20, 2011
NETFLIX has to be one of the more serious marketing disasters of the decade. Most Netflix customers held Reed Hastings and Netflix in very high regard for his business model of providing DVD's to customers without those ugly late fees charged by brick and mortar competitors. Most customers saw the future of the business as streaming via the Internet and went along with the first round of price changes that incorporated streaming and DVD rentals for $10 and up depending upon how many DVD's you wanted.
The price increases this past Summer offended a lot of loyal customers of Netflix. Not that customers had anything against Mr. Hastings making a profit but the magnitude of the increase at 60% was over the top for a lot of Netflix customers. Mr. Hastings had a great product, great service, and great attention to meeting and exceeding customer expectations when problems came to the fore. The good will even extended to customers who talked to friends about the great deal and service Netflix provided...grass roots and word of mouth worked for Netflix success and everyone was happy.
The price increase was a catalyst for over a million customers to drop the mail service but what is really irksome was the choice left. You can't get recent movies and TV shows via the streaming service, the "suggestions" for customers on the website are unavailable unless you have DVD's by mail. The streaming service works fine but the selection stinks. And now customers face two bills posted to their credit cards with QWIKSTER. Netflix stock is now down to around $130/share from a recent high of over $300/share.
Reed Hastings has taken his customer base for granted and is now paying the price of arrogance. Everyone expect businesses to make a profit but all this bungling and the goofy blog posts along with business analysis and articles in the Wall Street Journal critical of Hastings and Netflix makes one wonder what the next marketing blunder will be for Netflix customers. Too many other choices are out there for customers fed up with the "in your face" marketing from Mr. Hastings. Sorry Reed... No warm feelings in our hearts for you...
Posted by Paul Alldredge at 11:41 AM