Netflix is taking a public flogging for raising fees 60% – to $16/month from $10/month. 50,000 customers have posted angry comments to Netflix’s Facebook page and the assault continues on the Netflix.com site with thousands of additional rants.
The problem is the “story” that customers have constructed: Netflix has raised rates a monstrous 60%! We had no choice; they just forced those changes on us! NETFUX is plain greedy! Well, I’m not going to just be a victim. I’m outta here!
Netflix’s response has been to trivialize the change, saying “It’s the cost of a couple of lattes. Chillax.” That’s a mistake.
The only way to combat a story that is burning out of control is with a better story. There are at least three elements of storytelling that could help Netflix turn this heat into light:
1. A different hero. Netflix, the “little guy” that vanquished Blockbuster’s late fees, has become NETFUX, the Big Greedy Business. Netflix must go back to talking about themselves as the little guys by pointing out their prices are just “catching up” or “still lower” than Blockbuster, that they are still a “young and growing” company and “can’t grow” without “more mature” pricing. And that message should come straight from CEO Reed Hastings as a YouTube video, not their VP of Corporate Communications as a press release, which just reinforces the idea of a big corporation.
2. A different goal. All stories have heroes with a goal. In this story, Netflix’s goal is – well – it’s profit. It’s to transfer money out of your wallet and into theirs. Instead, they need a goal customers can root for: by investing in more DVD’s, the movies you want will always be available without lengthy waits. Or, our long-term goal is to deliver the same service as the $50/month cable companies at a fraction of the cost.
3. A different enemy. In the past, Netflix’s enemy was Blockbuster. In this new story, however, it’s NETFUX vs. its customers. Netflix needs to change the story by introducing a new enemy. Maybe it’s “some customers are over-using the streaming service, driving up costs for everyone”. Or “The fees we pay movie studios and ISP’s continue to rise and are expected to keep rising.” They need to create an us-versus-them mentality, with Netflix and customers together in the “us” category.
Netflix has responded arrogantly because they know they will weather this storm quite well, even without a better story. Assuming the same cost structure, an extra $6/customer will probably double or triple net income so they can afford to lose half their customers without losing money on the price change. Most people won’t leave – Netflix will do fine.
The real question is, with the world watching and talking about Netflix, how will they turn this heat into glow? They have an opportunity to use storytelling to set themselves up for their next phase of growth, by declaring their identity and naming new enemies and new goals. Let’s see what they do with that opportunity. Image (c) Pablo Luebert.
About the author: Bruce Gabrielle is author of Speaking PowerPoint: the new language of business, showing a 12-step method for creating clearer and more persuasive PowerPoint slides for boardroom presentations. Subscribe to this blog or join my LinkedIn group to get new posts sent to your inbox.