Meanwhile, the dust is still settling on last week’s “Netflix raises prices and splits its business in two” disaster. Despite differences between the two players, the situation poses lessons to Facebook and others that disrupt the user experience in the name of improvement. Netflix will become a classic case of how to stumble – badly – by ignoring the role a strategic marketing focus should play in shaping critical business decisions. Facebook’s fate will soon unfold.
Strategic marketing goes beyond the “marcom” orientation that typifies too many organizations. It’s multi-dimensional, factoring in the brand and its power, grounded in a strong sense of P&L implications, and, above all, ensures the customer experience is the lens through which decisions are viewed.
Consider some principles (in no particular order) for smart, customer-driven marketing (and business practices) that Netflix, Facebook, and many others would be wise to heed:
Relevance trumps. Netflix established its relevance as the anti-Blockbuster – devising an interesting way (low cost, no late charges, easy accessibility) to deliver DVDs, no muss, no fuss. When digital advances made video streaming the next new thing – simpler, cheaper and even more convenient yet – others entered the fray with growing credibility, flexibility, currency and visibility. Netflix’s missteps on bundled services and pricing made it more irrelevant yet. For Facebook, this will be less of an issue. It’s long since rendered other communities in the “mass” space pretty irrelevant.
The “Easy” Button. There’s a reason why Staples’ “that was easy” campaign resonated so hugely with the public. Life is complicated. We’re bombarded with more choices through more channels than ever before. Physically separating Netflix into two, with separate access points and passwords, unduly complicates what’s really a fairly simple transaction and delivery platform. It will also likely discourage customers from choosing Netflix as a single source for both DVD rentals and video streams – if, that is, they can get over their ire at the price increases. For Facebook, a prospective major revamp of its timeline is likely going to put the onus on users to more closely manage what and how they share, further complicating what was a fairly simple relationship.
The Elasticity Factor. The amount of stretch in a customer’s relationship with a brand is finite. And pricing is one of its most sensitive points. If the value exchange is deemed worthwhile, the stretch can be fairly amazing. But if there are no new or added benefits, the snap can be painful. Netflix found that out after bleeding over 1 million customers. For Facebook, pricing is not an issue unless you’re an advertiser. But the relationship people have with the community is just as sensitive, given its intensively emotional nature as a public showcase of our lives.
Know Thy Customer. It’s hard to imagine that Netflix’s recent actions were predicated on a deep dive into customer sentiments. In most instances, major changes to Facebook tend to be based on ways its engineers think greater interactivity can be fostered and less on customer demand. If there’s a lesson from Netflix, as The Financial Times’ John Gapper wrote last week, it’s in going by the traditional business strategy playbook without any sort of lip service to marketing or brand consequences. Put simply, he said, “…subscribers liked both DVDs and streaming and saw them as complementary…Even if it made sense to split the two in financial reports and…separate business divisions, there was no need to force Netflix customers to snap to the organizational chart.”
Any time you mess with the user experience, you’re going to risk backlash. If change is based on a solid understanding of your customers and the extent to which this disruption will – eventually – work for them, the effects will be not just survivable, but allow you to thrive.
