Netflix Fails the Empathy Test
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Comment: Even great companies stumble once in a while, but how they respond is critical. Netflix blew this one...
For years now, Netflix has been among the Web's most loved companies, scoring tops (or, this past year, second) in customer satisfaction for online retail.
Netflix deserves this respect because it delivers a complex service that, 99 times out of 100, just works. DVDs arrive remarkably quickly. Streaming is synchronized across your many devices. And, prices match or beat competitive options.
So it was surprising that such a firestorm sprang up when Netflix announced its pricing changes for DVD streaming. On the face of it, Netflix's move was totally reasonable — initially, streaming was a throw-in to the DVD service, and, as it evolved to be the dominant reason to join, it needed to separate as its own line of business.
It's not surprising that a company whose raison d'etre was the abolition of video rental late fees would incur such customer wrath when introducing a (higher) fee structure. Still, it's clear Netflix handled this roll-out quite poorly. The company nailed the functional aspects of its service, but doesn't understand that the service is also a relationship between it and its customers.
Netflix's announcement shows a distinct lack of empathy. The argument made perfect sense to those who worked there — it was a rational explanation of the realities of their evolving business. But the company didn't see how customers would view this new pricing as a betrayal.
Perhaps Netflix assumed its customers thought like the company. A while ago, Netflix CEO Reed Hasting posted an immensely popular presentation on its corporate culture. It's a remarkable document, demonstrating among other things, a rational focus on results.
The only response from Netflix I've seen is in David Pogue's piece on his conversation with Netflix spokesman, Steve Swasey. And that job title about says it all. Companies who understand the emotional character of customer experience do not use corporate spokespeople. Apple had a similar blow up around what became known as Antenna-gate. Though it took them a little while to do so, when they responded, it was complete, thoughtful, generous, and final. Steve Jobs became the point person. Where is Reed Hastings in all this?
While there are no viable competitors to Netflix' offering currently, that won't always be the case. And the arrogance and tone-deafness demonstrated in handling this situation will give customers a reason to jump ship once another offering proves satisfactory (most likely from Amazon, who scored highest in online retailer customer satisfaction and has a burgeoning streaming media offering). Services businesses need to realize that their success is ultimately predicated on the trust built over time in their relationships with customers, and that such trust is affected not just by rational considerations, but emotional ones as well.
