Corporate blunders take toll on Netflix customer satisfactionEditor ©RapidTVNews | 29-12-2011
The full effect of the disastrous decisions by Netflix’s management in mid-2011 has been clearly shown in the Holiday E-Retail satisfaction survey by customer experience analytics firm ForeSee.
Indeed the lasts in the annual Holiday E-Retail Satisfaction Index shows that after spending seven years jousting with Amazon for first place in the Index, Netflix’s popularity is falling sharply.
At the heart of the fall was the leading over the top (OTT) video firm’s decision in July 2011 to separate streaming video and DVD-by-mail services and to raise basic tariffs by up to 60% in some cases. Two months later, CEO was faced to issue a blog post admitting that that he owes “everyone an explanation”, conceding that the company’s actions “lacked respect and humility” in the way it announced the changes. Yet even though he apologised to members who may have felt that they had been treated them thoughtlessly, Hastings was unremitting in his defence of the price rises themselves.
The effects of this have been clear with Netflix’s customer satisfaction falling by seven points and the company also saw scores drop in every single element of the website that ForeSee measures, including site content, site functionality, merchandise, and prices. Moreover after years of being separated by a point or two from Amazon who is moving rapidly into its streaming video and rentals territory, Netflix is now nine points behind its rival in terms of satisfaction. ForeSee added that this gap may be too wide for Netflix to overcome anytime soon.
“Netflix totally misread its customer base and is paying the price, damaging its brand among both consumers and investors,” said Larry Freed, president and CEO of ForeSee. “Raising prices by 60% and splitting the baby into separate DVD and streaming services totally undermines Netflix’s cost and convenience advantages. Customer satisfaction is predictive, which means that Netflix’s financial woes may be just beginning.”