October 11, 2011

In my September 15th blog I commented on Netflix’s decision to split their DVD and online business. Now, they have decided to reverse their decision.

CEO Hastings knows that Netflix needs to get rid of their DVD business long-term. Snail mailing DVDs to subscribers is expensive and with the Post Office cutting service, it’s a fading business model. It’s far more profitable streaming videos online. But Hastings has made a hasty retreat for now. 

“There is a difference between moving quickly—which Netflix has done very well for years—and moving too fast, which is what we did in this case,” Mr. Hastings said in a statement, as reported by the Wall St. Journal. This corporate double speak means that Hastings made the right corporate (money) decision in September; he just forgot that he had customers. 

Raising prices and creating two websites, for the same customer base, was a BIG hassle for customers. Because the two sites wouldn’t be linked, customers would have to check both to see if a movie was available on DVD or online, plus recommendations from one site wouldn’t be available on the other site.

Making it harder for customers to do business with you certainly requires a marketing do-over. Don’t be surprised if you see Bank of America reversing their decision on debit card monthly fees.

You would think that after Coca-Cola’s 1985 marketing debacle in getting rid of old Coke for new Coke, everyone would understand that satisfied customers drive your business. Unfortunately, everyone talks about being “customer driven,” but the new reality is that the bottom-line is often more important. This gives you a significant advantage if you are a company that really is focused on your customer.  Try it and you’ll see a difference.

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