Netflix Stumbles Again with Qwikster Rebranding

Netflix Stumbles Again with Qwikster Rebranding

This morning I got an email and saw a blog post from Netflix CEO, Reed Hastings, that started with the words “I messed up. I owe you an explanation.” Well, Reed, strike two. After reading your blog post, I’d say you messed up again. Let me explain.

Reed was emailing the Netflix subscriber base (it initially appeared) to apologize for the price increase fiasco that happened a short time ago:

“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.”

Instead, Reed was really writing to announce that Netflix would be spinning off its DVD-by-mail service into a new company called “Qwikster” (Horrible name by the way). Reed says they chose the name because “it refers to quick delivery.” Um, more likely because there are slim pickins’ out there for  dot com domains and you took the best of worst available. Anyway, this is where I think Netflix made a huge PR and marketing faux pax.

Why would anyone choose to birth a new brand under the dark cloud of an apology? It’s bad enough that the apology was flat and showed no remorse for their recent actions:

“I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.”

In fact, it wasn’t an apology at all, but instead a bait and switch. Netflix didn’t understand then, and still doesn’t seem to get it now, that people aren’t upset over the way the price increase announcement was made. Customers are pissed because Netflix doubled the cost of their service overnight without providing any extra value. In fact, when you take into account the Starz debacle, Netflix has actually starting charging much more, for much less. Notice how that massive decimation of their streaming catalog wasn’t even mentioned in this morning’s apology/rebranding announcement. My guess is that this is going to inflame the situation even more. Not only did they tear the Band-Aid off an already raw wound, they did it under the celebratory shish-boom-bah of launching Qwikster.

So, if I could, I’d like to boil this down to a few key takeaways that are applicable to all brands:

1. Don’t apologize if you’re not willing to fix the problem. Doing so just refocuses the spotlight on your screw-up.

2. Understand why your customers are upset before you make a ham-handed attempt at fixing it. The Netflix team thinks that this announcement is going to appease their irked customers – it won’t. Today’s parade was all about Netflix – not about their users. That tells me that Netflix doesn’t understand the core issue.

3. Never announce an unrelated new initiative under the cloud of a mistake. Netflix would have us believe that Qwikster is their answer, their “make good” on the mistake they made a couple of months back. Not only does this not address customers’ frustrations, but it taints the launch of a new brand  birthed in the wake of controversy.

4. Communicate things to your customers that are of valuable to them, not just because they’re valuable to you. While Netflix basks in the glory of their new DVD-by-mail brand, their customers are still choking down that massive price increase. To make matters worse, they’ll now have to decipher two separate charges on their credit card statement from two different companies. That sounds like a value-add, right?

In closing I want to say I’ve long been a fan of Netflix. In fact, I’ve praised their customer service on this blog before. But, their actions as of late puzzle me and make me wonder what’s really going on over at HQ. It seems to me that the time for a competitor to step up and eat their lunch is upon us. Any takers?