Buzz Builder: Netflix Price Increase: An Unnecessary PR Fiasco

September 2011

July 15, 2011

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Netflix Price Increase: An Unnecessary PR Fiasco

I always enjoy reading David Pogue's technology columns in The New York Times. His recent piece weighing in on Netflix's 60% price increase for its "unlimited online streaming + one DVD out at a time" package prolvided a balanced perspective in a week of tough PR for Netflix. The blogosphere and mainstream media have been dominated with disgruntled Netflix customers saying that they couldn't believe the company had jacked up prices so quickly and that they would cancel their subscriptions.

While a 60% price increase sounds large, the new charge for the unlimited online streaming + one DVD is still a bargain at $16/month when compared to other services (check out this PC World post comparing Netflix to its competitors).

What really hurt Netflix wasn't so much the price increase but how it was presented to the public. Its PR chief did such a poor job justifying the sudden price increase to Pogue that I read the column a couple of times and still couldn't understand the reason behind the sudden change. Perhaps the Netflix official that Pogue interviewed did a poor job, I thought. Nope. After reading articles about the price increase in a variety of respected publications, I became even more confused about the rationale. My conclusion: Netflix's PR people simply didn't have adequate information to explain the price increase to consumers.

I've been a satisfied Netflix customer for almost ten years, and I will continue with the service since it remains a relative bargain. But, I'm not so sanguine about what other Netflix customers will do. In February 2011, the results of Brand Keys' annual survey of customer loyalty were released and in its first year of inclusion, Netflix came out on top of the list of all 528 brands, beating out reigning champ Apple. I'll be very curious to see how Netflix fares in the 2012 survey. I'm guessing that they'll drop in rank. In short, it's a lot easier to lose loyalty than build it in the first place.

July 15, 2011 in Creating Buzz, Current Affairs, Customer Service, Managing Buzz, Negative Buzz, Sales, Web/Tech | Permalink

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Websites

Galvin Communications
The website for my word of mouth marketing and PR firm. Sign up for The Buzz Bulletin, a free monthly eNewsletter.
WOMMA: Word of Mouth Marketing Association
An outstanding resource for word of mouth marketing information. This respected organization also puts on a variety of well-organized and information-rich events and conferences which are worth attending.

Books

Bella the Boxer: Secrets of a Working Dog: Unleash Your Potential and Create Success
Bella, a boxer dog and my company's director of goodwill (D.O.G.), teaches overworked and overstressed humans how to live successful and meaningful lives by thinking like a dog. Bella has improved our family's life so much since we brought her home five years ago. Read this book and you'll wonder why it has taken you so long to listen to the wisdom of dogs.
Richard Fenton & Andrea Waltz: Go for No!
A great parable about a salesman who learns that every "no" brings him closer to "yes" - an important lesson for anybody who wants to create buzz.
Chip Heath: Made to Stick
This is the best business book that I've read since The Tipping Point since it provides a new way at looking at how you try to tell people about your products or services. You'll have lots of new ideas for promoting your business when you've finished reading this book. And, you'll discover that the best way to promote yourself doesn't involve spending money on marketing rather its all about learning how to tell your business stories better.
T. J. Walker: Media Training A-Z
Walker, an accomplished media trainer, provides great practical insight into maximizing the value of the media spotlight. By following his simple suggestions, you'll go into interviews much more confident and come out of them with much better results for your business.
Andy Sernovitz: Word of Mouth Marketing: How Smart Companies Get People Talking
This is the perfect book for an entrepreneur looking for a "how-to" on word of mouth marketing rather than a theoretical or academic overview. Andy Sernovitz built the Word of Mouth Marketing Association using many of the intriguing word of mouth marketing tactics he describes. His strategies are practical for both small and large businesses as his interesting case studies demonstrate. You may put this book down a few times while reading it so you can start implementing some of its excellent ideas.
Fred Reichheld: The Ultimate Question: Driving Good Profits and True Growth
Too many companies are addicted to bad profits. These corporate steroids boost short-term earnings but burn out employees and alienate customers. Learn why the answer to one simple question can determine your company's future: Would you recommend us to a friend?
Ben McConnell: Creating Customer Evangelists: How Loyal Customers Become a Volunteer Sales Force
An interesting look at how to develop evangelism marketing strategies and programs that will create communities of influencers who will drive sales for your company.
Mark Hughes: Buzzmarketing
This book contains some great stories from an experienced buzz marketer that illustrate the importance of finding angles that make you stand apart from the competition. I loved the story of how getting the town of Halfway, Oregon to change its name to Half.com generated a flood of publicity. You'll learn some great practical tips from this book.
EMANUEL ROSEN: The Anatomy of Buzz : How to Create Word of Mouth Marketing
Rosen pinpoints the products and services that benefit the most from buzz and offers strategies for creating and sustaining effective word-of-marketing campaigns.
Malcolm Gladwell: The Tipping Point: How Little Things Can Make a Big Difference
Why do major changes in our society so often happen suddenly and unexpectedly? Ideas, behaviour, messages, and products often spread like outbreaks of infectious disease. This book will help you understand how social epidemics take off and reach critical mass.
Al Ries: The Fall of Advertising and the Rise of PR
Credibility is the crucial ingredient in brand building. This book explains why PR should be used to launch a brand while advertising should be used only once major PR opportunities have been realized.