Price increase do's and don'ts (thanks to Netflix)
On Tuesday of this week, Netflix announced a change in their pricing policies.
Instead of paying $9.99 for unlimited streaming video AND unlimited DVD via mail, now you can opt for the new unlimited streaming only for $7.99 or the unlimited DVD via mail for $7.99 but if you want to duplicate your current $9.99 plan -- it will cost you $15.98.
However, this post isn't to debate the price increase.
I want us to look at how Netflix handled both the announcement and the reaction online.
Let me give you an overview.
This morning around 10 am Netflix emailed their customers, put up a blog post about the pricing change and mentioned the blog post - with a link - on their Facebook fan page. As of midnight on Tuesday, the Facebook post had almost 20,000 comments and the blog post had well over 5,000. I have no idea how many e-mails they got in response to theirs. But bottom line -- they created quite a stir.
As you can imagine...99 percent of the comments were not in favor of the change. And they expressed themselves with vigor and sailor-like language. Over and over again. And from what I could tell (I have to confess, I did not read all 25,000 comments). Netflix is not responding to anyone on either Facebook or their own blog.
What lessons can we learn from the firestorm that Netflix is experiencing?
Don't spread bad news any wider than you have to: This was a pricing increase that only impacts their current customers. New customers will immediately see the new prices and either buy or not. There was no reason to broadcast it all over Facebook and their blog.
People react very differently to situations like this when they're by themselves. They don't have anyone to work them up or egg them on. It should have been dealt with in a way that did not incite a riot.
Respect the relationship hierarchy: If they felt they needed to make a public announcement, it shouldn't have been done on the same day as they informed their customers. The customers deserved to hear it first.
Even if there would have been a 12 hour delay before going public, it probably would have taken a lot of the wind from everyone's sails.
Don't drop the bomb and run: Obviously, they cannot reply to 25,000 comments. But injecting themselves back into the conversation now and again would remind the people who are spewing their anger that there are real people on the other side. It's much tougher to rant and rave when you're talking to a real person.
Handling a price increase always requires some sensitivity and common sense. And you need to be very mindful of respecting the relationships you have in place. Assuming you are providing a value and can demonstrate why the hike is needed, you'll probably be just fine.
But when in doubt just ask yourself "what would Netflix do" and seriously consider the alternative!