Netflix’s human touch and rebrand – the good, bad and ugly

Netflix recently sent their customer base into a tizzy by charging more (and separately) for DVD mailings and streaming movies. As a customer, my husband received this email below from Netflix CEO Reed Hastings that was both good (apologies, human voice) and bad (what’s up with the confusing brand spinoff?). Below, I share my thoughts on the good bad, and ugly of what will surely become a case study for the ages:

First, the email: (annotated: full letter appears on the Netflix blog)

I messed up. I owe you an explanation.

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.

Then it gets to their decision to create a separate brand for the DVD service and the streaming service:

It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. 

(annotated)

Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.

So what works?

1. Human frailty: The CEO speaks plain English and acknowledges his customers’ anger and painand that they may not have handled the price increase announcement well at all
2. We’re part of the team: By explaining why the company did what it did, he makes you as a customer feel like you are part of the team, the tribe. The tone makes you feel like it’s not something being “done” to you (even though it is) but something we’re in together.
3. What’s in it for me: The email talks about these changes and how the offerings and services will improve for customers as a result.
4. Human voice: This reads like a personal letter in a conversational tone, not a formal, stuffy automated business letter. He also talks about his own experiences and feelings. Yes, it may have been written and carefully edited by the marketing and corp comm teams, and yes, it was blasted out to thousands. But the tone is on-brand with Netflix’s very friendly and approachable image.
5. Part of a larger effort: The email went out, but so did Netflix’s PR blitz, and stories appeared in several media outlets in conjunction with this news

What doesn’t work?

1. Confusing branding: Really? A whole separate brand  called Qwikster for a company delivering the same product in two separate formats? That’s like a retail store creating a whole separate brand for eCommerce.  Seems to dilute the power of a single brand dedicated to getting you the content you want. And it’s not even remotely linked to Netflix by association. Seems “Qwikflix” is already in use bya  DVD firm already.
2. Customer inconvenience: Again, really? I now have to have two line items on my credit card statement from two different companies depending on if I ordered a film DVD by mail or streamed it over the internet? That just seems silly. Not like it really inconveniences me per se, but anything clunky like that just makes me feel like it’s a hassle. And it’s how a customer feels that matters, not the reality.
3. Baring your flaws to the world: As this MSNBC article states, this effort just showed to the world that Netflix has a less than stellar offering when it comes to streaming content. At least before, they were able to hide behind the total content umbrella of Netflix. When I advise clients on messaging, I often advise them to downplay or at least address and reframe their weaknesses  so there is more value for the customer.
4. Customers are even more unhappy: Read some of the comments at the blog. I’m sure they did not imagine they could piss off customers any more than they have but for the three reasons cited above, they did.

What is your thought about how to handle a price increase and their decision to create a new brand? Do you agree with the decision to break things apart? Anything you learned from the “apology note?” Please share in the Comments.