Netflix CEO to Customers: Allow me to dig this hole even deeper!

One bit of advice I frequently give to clients is that there is a lot of value in simply owning up to your mistakes and apologizing. Humility goes a long way with the public. An excellent example of that is when Toyota’s CEO gave a heartfelt apology for product defects in the Prius. But there is nothing worse for a company’s relationship with consumers and shareholders  than what I call an “Apology-but…”

That’s what Netflix CEO Reed Hastings did when he apologized in an email to customers for the ham-fisted way the company announced an implemented its new pricing structure for online movies and DVD by mail rentals. So far so good. But then Hastings continued in a rambling  voice to announce further sweeping changes that will alienate and inconvenience even more customers.

It’s pretty obvious what is going on from a business angle: Netflix loses money on the DVD by mail business. It wants that side of things to wither away but it wants to migrate those customers to the online streaming subscription model, which is profitable and, even more important, scalable.

Call me a radical but I think consumers would be more understanding if Hastings just said that: “We can’t afford to keep losing money on mailing out DVDs so we have to raise the price of that. However, if you want to subscribe to our online streaming product, that is only $6 per month for all the movies and TV you can watch.”

That’s what I would have advised. There would still be an outcry from the DVD-only customers, but they aren’t the people Netflix wants to keep anyway.

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