For anyone who has been living under a rock lately, Netflix is giving marketers a lesson in how to take a really good product and essentially play Russian Roulette with it . The advice to B2B marketers is quiet simple, don't be too quick to entirely duplicate the Netflix sales and marketing plan of recent months or your efforts to script a successful business plan could get shot down.
In the event you have not been staying up to date on the soap opera that is "As the Netflix Turns," here's a look at some of the data:
Netflix's third quarter reportings include:
- Drops in domestic streaming subscriptions, DVD subscriptions, unique domestic subscription
- 810,000: Subscriber losses in the U.S.
- Declines in operating margins
Now don't for a second think that Netflix is closing up shop and laying everyone off anytime soon.
The company, which has been tremendously successful for the most part, reported its profits went from $38 million in Q3 2010 to $62.5 million for the same time period in 2011.
Despite those numbers, Netflix stubbed its toes earlier this year with its now infamous announcement to raise prices and make customers who wanted both DVDs and online streaming to have to pay for a pair of plans instead of one. The proposed plan would have led to Qwikster, which died a quick death.
Needless to say, the outrage over such a move meant countless subscribers saying they would not renew their plans. The fallout from the proposed split and price increase led to the company doing spin control in a variety of mediums, including on its company blog.
According to Netflix CEO Reed Hastings, "We think that $7.99 for unlimited streaming and $7.99 for unlimited DVD are both very aggressively low prices ... and they are the right place for Netflix to be in the long term. What we misjudged was how quickly to move there ... Our primary issue is many of our long-term members felt shocked by the pricing changes, and more of them have expressed that by canceling Netflix than we expected."
So as a B2B marketer, what exactly can you learn from the decisions of Netflix as of late?
Among the things to consider are:
- Any major price changes should be well thought out, especially during these financial times;
- Communication with your base is important. While you're not going to ask customers if they'd like a raise in fees, float it out there that your costs are rising, i.e. what can we possibly do to avert passing these along to you. There could be an amicable trade-off of services/costs in order to make everyone happy;
- Do as much market research/surveys before pulling a major move like Netflix did with wanting to split off services. Feedback AHEAD of time from customers would have shown them that this was truly a bad idea;
- Use social media to dispel any rumors, any incorrect facts or statements etc. It seems Netflix was late to the party when it came to defending itself on different SM platforms when all heck broke loose;
- Market with the idea that your competitors will very likely take advantage of a negative situation you're putting yourself in, so how will you be ready to deal with that?
Any price increases or major alterations to product and/or service, both too much and too fast, are bound to come back and get you.
In fact, they could cause people to leave in the middle of your production. Tell us how you've handled price changes in your business.
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