A Rebranding and Reputation Management Case Study Featuring Netflix

Sep 22, 2011   //   by Chris Help   //   blogging, Contests, SEO Blog  //  6 Comments

This is a guest post from Chris Help. It is part of The 2nd annual “Bad Ass” SEO Guest Blogging Contest.

Yesterday I got an email from my wife asking “what the hell is this?” with a long, personal sounding email attached. At first glance I thought it was from her ex-boyfriend (after 3 years of marriage I still hate that guy). But upon closer inspection I realized it was from Reed Hastings, the CEO of Netflix. My interest was captured.

In case you didn’t know, Netflix recently announced that they were changing their pricing structure. They were offering both online streaming and rental-by-mail services starting at around 10 bucks a month. However, they were now separating the 2 services and charging 8 dollars for each one.

Hey, it pissed me off. And apparently a lot of other people as well. In fact, there was quite the stir about it online.

Now usually in a situation like this, a company will choose one of the following courses of action:

  1. Ignore it and move on.
  2. Attempt to justify their actions.
  3. Issue a public apology.

Netflix chose option 3 and did so in quite the fashion. Did they make the right choice? And how well did they pull it off? I don’t know… let’s take a closer look.

Netflix Gets “Personal” Touch

Below I have pasted the exact email my wife received. The plan is to divide it up into sections and dissect each one to see what they did, how they did it, why they did it, and if I think it will be successful. The letter is in italics to keep it separate. Sound good? Let’s get started…

Subject Line: An Explanation and Some Reflections

Eh. To me this was week. To someone like my wife who pays very little attention to emails from people like Netflix, this subject line could easily have gotten lost in the mix. And it certainly didn’t help her understand who it was from or why. Too generic. Now you’re probably saying “didn’t it say it was from Netflix in your inbox? Not exactly…it said it was from Reed Hastings, CEO and Co-founder of Netflix. The last part of his title was easily lost in the “from” column in the inbox.

Dear Cori,

Here Mr. Hastings begins by directly addressing my wife by name. At this point, we don’t know who this is from but we think “hm, they must know me.” So we read on.

I messed up.  I owe you an explanation.

Okay, now you’ve got my attention. Not knowing who this is, I get that lump in my throat and am wondering:

  1. Who wronged me?
  2. What sort of bombshell are they about to drop on me?

So I read one—but with dread.

 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.   Let me explain what we are doing.

There’s a lot going on here. But first let me state, I still don’t know who the hell this is from. That said, once I start reading and I hit the word “members” I immediately realize this same email was sent to a group of other people. My next thought is “this is an advertising gimmick.” And quite frankly, if my wife hadn’t sent it to me wondering who it was from and what they were talking about, I would have stopped reading on the spot and deleted it.

But I kept reading. Anyway, this paragraph does a few things:

  • It lets us know the company is listening to their customers’ feedback.
  • It explains what the complaints are for those unaware.
  • It offers a personal apology.
  • It lets me know that Mr. Hastings plans to explain his earlier actions in the rest of the email.

Most of this is good, except I can’t help but think I’m about to read something full of excuses. You know, someone trying to dig their way out of a hole. How about just a straight up “sorry, we screwed up!” and leave it at that? Eh...moving on with skepticism.

For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming.   Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us).  So we moved quickly into streaming, but 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.

Hm, I’m starting to change my mind. Mr. Hastings states a very real problem for businesses like Borders that are collapsing. Keeping up with changing times is difficult. He also makes sure to stick by his guns in respect to the pricing change, which doesn’t sound as bad now that we realize his company was in danger of going under. That said, he makes sure to admit fault for what he believes he did wrong—not adequately explaining what was happening. Keeping me, the customer, out of the loop.

           So here is what we are doing and why.

The explanation he made me realize I have been waiting for all along is about to come. I like how he let this sentence stand alone. It created a nice breaking point for the email and helped place emphasis where it should be. A great copywriting technique.

               Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD.  DVD is a great option for those who want the huge and comprehensive selection of movies.

                    I also love our streaming service because it is integrated into my TV, and I can watch anytime I want.  The benefits of our streaming service are really quite different from the benefits of DVD by mail.  We need to focus on rapid improvement as streaming technology and the market evolves, without maintaining compatibility with our DVD by mail service.

Mr. Hastings first explains the benefits of each of their two services. This accomplishes 2 goals.

  1. It makes me realize they are offering 2 very different services, each with its own perks.
  2. It re-sells me on their service offerings. As someone who may have become disenchanted with the company after the big announcement, this is a chance for me to remember what’s in it for me if I continue doing business with them. Another good copywriting move.

So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.

Sounds logical now that he broke them down into 2 distinct categories. Darnit all if this guy isn’t winning me over!

         It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary:  In a few weeks, we will rename our DVD by mail service to “Qwikster”.  We chose the name Qwikster because it refers to quick delivery.  We will keep the name “Netflix” for streaming.

Here I picture Mr. Hastings getting teary-eyed. After all, who really likes change? The guy is tugging at my heart strings here. Meanwhile, he announces the rebranding of the original Netflix—somewhat reluctantly. And while he explains the name, which seems logical enough, I can’t help but feel like the DVD-by-mail thing is going to die a slow death. He doesn’t seem too amped on it and the streaming section gets to keep the original name. If I’m with Netflix mainly for the mail order, I’m not at all happy right now.

       Qwikster will be the same website and DVD service that everyone is used to.  It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies.  One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games.    Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done.  Other improvements will follow.  A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

Knowing that I’m unhappy with the announcement, Mr. Hastings tries to save himself here. He gives a half assed attempt at assuring me nothing will change. And he even tries to make me think it’s only going to get better. But I’m no fool, Mr. Hastings. Your heart is no longer in this. The writing is on the wall. Bye bye, Netfl…errr… Qwikster!

       There are no pricing changes (we’re done with that!).  If you subscribe to both services you will have two entries on your credit card statement, one for Qwikster and one for Netflix.  The total will be the same as your current charges.  We will let you know in a few weeks when the Qwikster.com website is up and ready.

If I were him, I would have put the first line of this paragraph in all bolds. Because after all, the price increase is the most annoying part of the whole thing. And now he’s saying it won’t go up…anymore. However, if I’m upset enough about the recent price change to unsubscribe, this won’t win me back. But if I’m on the fence, well--maybe.

       For me the Netflix red envelope has always been a source of joy.  The new envelope is still that lovely red, but now it will have a Qwikster logo.   I know that logo will grow on me over time, but still, it is hard.  I imagine it will be similar for many of you.

Rebranding without rebranding. New logo, yet still the same colors we connected with. Will the logo be enough to break that emotional attachment? He hopes not. But he puts himself in this again and explains his own emotional turmoil, bringing back that personal feeling and forcing me to put myself in his shoes… or is he trying to put himself in my shoes? Effective.

       I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly.

      Both the Qwikster and Netflix teams will work hard to regain your trust.  We know it will not be overnight.  Actions speak louder than words.  But words help people to understand actions.

And a closing apology. What’s done is done.

Respectfully yours, 

-Reed Hastings, Co-Founder and CEO, Netflix 

p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments.

Ah the P.S. One of the oldest direct mail copywriter tricks in the book. He knows I’ll read the P.S. and let’s me know I have an outlet to express my thoughts. Smart.

Brilliant or Bust?

Here’s what it comes down to. I think they made some mistakes (like I bet a bajillion people deleted this email before it was ever read) but the email itself is fairly effective overall. And when you have made as many customers upset as Netflix has, the worst thing you can do is nothing. That said, I think they made the right move. A “sincere” apology with a logical explanation and no backing down.

What will this mean for their business? Only time will tell…

What are your thoughts? Reputation management success? Rebranding fail? Tell me about it in the replies.

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Chris Help

Chris HELP started his own copywriting agency, HELP! Copy and Design, a few years back as a sort of side project to showcase his passions. But what ended up happening is it snowballed into full-fledged thriving business. So whether you need press releases, SEO articles, or good old fashioned high-conversion copy--he's ready, willing, and more than able.

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Comment Policy

  • David Leonhardt
    Twitter:
    says:

    Maybe Reed Hastings was her ex-boyfriend in disguise. After all, they both are trying to keep up with changing times and leap from a previous version to the next, right?

  • Gerald Weber
    Twitter:
    says:

    I think this idea on netflix’s part was a very bad idea.

    If it ain’t broke… don’t try to fix it!

  • Nick Harris says:

    I followed the Netflix story, what a disaster! It was working and they changed the fundamentals in ways customers DID NOT ASK FOR. People find comfort in things they like remaining the same, if they didn’t we wouldn’t have the same McDonalds restaurant and menu in so many cities. Great picture of the netflix bot with tape over his eyes, made me chuckle.

    If it’s not broken don’t give it more than a tune up!

  • Satrap
    Twitter:
    says:

    Hi Chris,

    I first heard about NetFlix’s crazy move on NPR and as soon as I heard it, I was like “why On earth would you wanna make it harder for your customers to access your products? Isn’t the first rule of a successful business is making it easy for your customer to access your product /service? Whatever happened to “user freindly”?…”

    Of course, it only took about 800.000 lost in customers for NF to figure out it was a disaster.

    I also think Reed Hastings made a bigger mistake by sending a public apology after realizing it was not a good move to make customers signup on 2 different sites to access services they could previously access on one site.