Today’s post comes from Bridgz account managers Julie Bittner and Janell Lathauer.
It’s fair to say that this hasn’t been a dream year for Netflix. The online movie rental service reportedly lost 800,000 subscribers in the third quarter of 2011, and while this was undoubtedly attributable in large part to a significant price hike, the company didn’t help itself by implementing a confusing separation of services and name change around the same time.
There are a number of considerations to be taken into account when rebranding your company, and the customer should be top-of-mind throughout this process. Here are four important areas where Netflix went wrong:
1) Walk in your customer’s shoes.
The idea of turning the DVD-by-mail service into a separate entity with a different name – “Qwikster” – might have sounded good in theory, but you have to wonder if Netflix took the time to look at it from a subscriber’s perspective and recognize potential points of confusion or frustration. They could have better anticipated the backlash through focus groups and customer surveys.
2) Establish a firm plan and stick to it.
If Netflix had a strategy department guiding this process, it’s difficult to tell. The entire ordeal was a hodgepodge, with company CEO Reed Hastings sending out emails to customers apologizing for the handling of both the price hike and the name change.
3) Leverage brand equity.
After spending years climbing to the top of the industry, Netflix made the very curious decision to change the identity of the DVD-by-mail segment of its service, which was the very offering that brought the company where it’s at. Wouldn’t it have made more sense to rebrand the newer instant streaming service?
4) Communicate effectively with customers.
This is probably the area where Netflix erred most, and really it’s a combination of everything mentioned above. Throughout the entire process, they just didn’t do an effective job of clearly communicating to customers what was going on and why.
The rebranding process was intended to spur company growth and meet the evolving needs of customers, but in execution the company failed to put their No. 1 asset – current subscribers – at the forefront of their planning. It clearly demonstrates that even an industry leader can falter when it forgets to put customers first. Hopefully this hard-learned lesson is helpful not only to Netflix, but to any other company following a similar path.
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