Netflix is not only in the movie business, it is also turning into this year’s biggest corporate horror story. Having increased its price by 60% earlier this summer, Netflix has lost 800,000 customers and $12 billion in 90 days – including $2.3 billion in one day earlier this week. So should we feel sorry for founder and CEO Reed Hastings, whose has gone from Silicon Valley hero to corporate goat in just a nightmarish three months?
No, we shouldn’t. According to John Tschohl, the so-called “guru of customer service”, Hastings deserves all the ridicule and criticism that he is now getting. As Tschohl told me when I caught up with him on Skype, Hastings has behaved with supreme arrogance and disregard for the customer. Indeed, Tschohl is so horrified with Hastings’ continued failure to forget the voice of the customer, that he is predicting Netflix will lose another million subscribers and their stock will plummet from its current $83 down to $50.
So what should Netflix have done in response to its big mistake earlier this summer? Tschohl offers four words for responding to crisis in today’s real-time customer-centric economy: Speed, Responsibility, Empowerment, Compensation. He may well be right. Anyone who runs a company needs to learn from the Netflix horror movie. After all, its sequel could easily star you and your company.
With more than 23.3 million members in the United States and Canada, Netflix, Inc. is the world’s leading Internet subscription service for enjoying movies and TV shows. For $7.99 a month, Netflix members in the U.S. can instantly watch unlimited movies and TV episodes streaming right to their TVs and computers and can receive unlimited DVDs delivered quickly to their homes. In Canada, streaming unlimited movies and TV shows from Netflix is available for $7.99 a month. There are…
Reed Hastings co-founded Netflix in 1997 with then CEO Marc Randolph and launched the subscription service in 1999. He currently serves as Chairman and CEO of the movie-rental company.
In 2005, Time magazine added Reed to its “Time 100” list of the one hundred most influential global citizens. In March 2007 Reed was appointed to Microsoft’s board of directors.
Earlier in his career, Reed founded Pure Software, which was acquired by Rational Software in 1997 after a successful IPO and numerous…
John Tschohl, a customer service strategist, nicknamed the “Guru of Customer Service” by USA Today, Time, and Entrepreneur magazines,author and president of Service Quality Institute. Focused solely on customer service for the last 28 years.