Thursday, July 14, 2011
One of the quickest ways to tamper with a company's reputation is to raise prices. Netflix is experimenting with that now. The company has apparently decided after doing its research to live with the outrage of customers who are swamping its call center. From this distance, it is impossible to say whether Netflix's decision was the right one, but it was instructive for communicators. Never raise prices without thorough grounding of key customers into the reasons why. Today, especially, customers have many avenues for expressing dissatisfaction and for organizing to pressure a company. Perhaps it would have been better had Netflix given advanced warning of what it was planning to do and why, but on the other hand, the company might have reasoned that it would stir opposition before it had a chance to act. I would have "set the table" before making the pricing announcement, but then, I don't have Netflix's information.
Netflix is a company that has successfully found its niche in the market in terms of the products and services they offer. That being said, since it is already fairly affordable and offers a wallet-friendly option to having an at-home movie night versus spending much more by going to a movie theatre directly. That being said, should they want to raise their prices a bit more I think that it would not have a huge impact on its consumer base. However, keeping your key publics in the loop of whats happening, especially when they are bound to you as a subscription, is more than essential for successful business tactics. Netflix should have released a public statement explaining why they needed to raise their prices (ex: increase in shipping costs, increase in employee salaries, etc) would have ensured they received a more positive public relations response on the change.