Bad News? Communicate It Carefully!

It seems like Netflix is often in trouble with us customers. This post from my archives talks about one of the reasons why, as summarized in two New York Times headlines:

• 7/12/11: “Netflix Raises Price of DVD and Online Movies Package by 60%“
• 7/25/11: “Netflix Sees Angry Clients Cutting Profits.“

The second story included a statement that Netflix was “lowering its outlook” and that its share price had dropped 10%.

So what happened?

Customers Take Bad News Personally, Particularly When It Costs Them Money

Millions of people opened a routine-looking email this week, and discovered that their current Netflix plans would soon cost almost twice as much.  And, apparently, millions of people were furious.

Now, Netflix has probably been underpriced for years.  Presumably it takes real labor to stuff DVDs into those little envelopes, and I’m in favor of people getting paid.  But did the price change email inspire me to fork over an additional $8 (the cost of half a movie theater ticket!) to keep unlimited streaming and those cute DVD’s?

It did not.  It inspired me to cut my service in half!  Even my daughter, a Netflix fanatic who streams at least 8 movies a week, was angry.  She said, “I hope they lose money.”

When the News is Bad, Your Messaging Must Be… Good!

Though I can’t tell you exactly what the Netflix email said (because I trashed it almost immediately!), I can tell you that it  didn’t contain any of the elements that a “bad news” letter to customers should contain.

If you find yourself in the Netflix position, be sure that you:

• Explain why the change is necessary
• Discuss how this decision was reached
• Apologize for inconveniencing your customers
  
• Request that they “stay the course”
• Describe a real benefit that will eventually come to them through this change.  [NOTE TO NETFLIX:  Keeping your same service at twice the price is not a benefit!]

How Netflix Could Have Communicated the Bad News with Empathy

The ironic thing is that Netflix could easily have done all that, by saying:

Dear Valued Customer,

Since Netflix first began shipping DVDs, the cost of doing so has grown by __%.   At the same time, the cost of licensing the streaming video that more and more of you are choosing has also gone up by more than __%.

So, after much deliberation and debate, we’re taking a step that we hoped could be avoided.  We are changing the prices of our plans to reflect the real cost of providing you with millions of movies and TV shows, both by streaming and on DVD.

We are very sorry that prices are going up, but there is no other way to keep offering you more.  More videos, more quality, and greatly expanded choices for streaming.  So please stick with us through this transition, and let us prove that we’re worth the higher price!

With ongoing appreciation for your business,

The Employees and Executives of Netflix

(That wasn’t so hard, was it?)