Netflix Needs to Hit the Refresh Button

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Netflix CEO Reed Hastings began his blog post Sunday with the words, “I messed up,” then proceeded to mess up even more. His business started out as a way to make renting movies easier and more affordable. Movies in your home when you want them. In one blog post, he threw 14 years of customer goodwill out the window.

Most know the story by now: Hastings wrote a blog post explaining why Netflix thought it was a good idea to hike their rates by 60 percent and then attempted to right that wrong by splitting their business in two: Netflix for streaming video and “Quikster” for DVDs by mail. Twice the price, twice the effort for the same service.

This well-meaning blog post has set off a firestorm. The blog post itself is up to nearly 25,000 comments, most of which state they will be canceling their Netflix membership. More than any company in recent history, Netflix has given us an example of what not to do with social media.

The Cardinal Rules of Social Media

There are three basic rules to building a good social media strategy: listen to your customers, listen to your customers and listen to your customers. If he had been listening instead of explaining, maybe his company’s stock wouldn’t be at a 52-week low right now.

While TechCrunch pointed out that Netflix failed to secure social media properties prior to making this announcement (oops), this is really the least of their worries. Although a boneheaded move for sure, they’ve got enough money at the moment to buy them back.

What they have here is a PR nightmare of BP proportions.

In order to be successful at social media — even just marketing in general — you need to develop tactic that revolve around listening and outreach that shows you are listening. This is the only way to build customer support.

There is a cavern between building understanding and building support. Understanding may get you a lead. Support will get you a customer.

Many businesses think if they explain themselves long enough, then customers will just understand what they do and will eagerly sign on for their products and services. They see social media as a great vehicle for building understanding, which is what Netflix was obviously trying to do with this blog post.

When you’re trying to build understanding, web page copy runs on for hundreds of words. Blog posts ramble. Facebook posts only mention products, events and trade show updates. This is not building customer advocates. This is just a different way to talk at your customers. It is really no different than buying a billboard over the freeway.

Successful marketing means joining conversations to listen to what your customers are saying they need and want. Then you evolve your business to adapt to these wants and needs. Not only are social media updates interactive, (and yes, you have to own these properties to distribute them) they create a sense of belonging for the customer; a shared value.

What was the value to the customer of Netflix’s blog post? To talk down to them? To tell them they just don’t understand how hard it is to run a business? What Hastings talked about was cost structure and marketing strategies. He made no attempt to reach out — just to stand at the podium and lecture.

You Know What They Say About Assuming

The real problem with Hastings blog post is that there were assumptions made about what the customers were thinking about their 60% price hike. He assumed that if he just explained that it made good business sense, then they would all slap themselves on the forehead and say, “Oh, NOW I get it! Learjets don’t pay for themselves!”

He forgot about making movie watching simple. He forgot what values his company once shared with his customers. In essence, Netflix forgot its customers altogether. In response, their customers are now forgetting about Netflix. Blockbuster and Redbox are happy to help them move on.

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