CommPro.Biz excerpted The Power of Communication, focusing on last summer’s Netflix fiasco

Posted on Tuesday May 22, 2012 in | 423 Comment(s) excerpted the Power of Communication, focusing on the need to take audiences seriously:

Will We See a Netflix Summer Sequel? How Brands Can Rebuild Trust and Inspire Loyalty

Posted on May 21, 2012 in Crisis Communications, Public Relations

By Helio Fred Garcia, Author, The Power of Communication: Skills to Build Trust, Inspire Loyalty, and Lead Effectively

Let’s hope Netflix doesn’t see a summer sequel this year. While it was easy to critique the company during its Qwikster fiasco a year ago, it’s looking like a third of its new customers are actually returning customers who were angered and disgusted.

Forgive and forget? Maybe for Netflix’ subscribers—but its shareholders aren’t yet hopping on the bandwagon, according to Daily Finance and other media sources. There’s a reason for that—and a lesson for all other companies.

Let’s dig into it here:

The Fiasco Revisited: What Went Wrong

Netflix changed a fundamental part of its service and pricing last summer with a very confusing note to its customers. In essence, Netflix said it would stop offering both unlimited one-at-a-time DVDs and unlimited streaming videos in a single plan for $9.99 per month, Customers would now have to choose either the DVD-alone plan, or the streaming video-alone plan, each for $7.99. They would no longer have a single plan with both DVDs and streaming. Unless they bought both plans, which would cost $15.98.  But that price – a 60 percent increase – was no-where in the e-mail.

Customers had to do the math themselves. Worse, the explanation for the change focused completely on the company’s own operations: not about customers, or about customer desires, behavior, or preferences. Nothing about customer convenience, ensuring quality service, or broadening its selection. It was all about the internal operations of Netflix and its view of the viability of the DVD business. Customers reacted angrily, and hundreds of thousands abandoned Netflix.

Two months later the CEO sent a note apologizing for his insensitivity. And then he told them that customers who wanted both DVDs and streaming would have additional burdens: The DVD business was being renamed Qwikster, with its own website. Unstated in his note was the impact on customers: they would now need to visit two separate websites, maintain two accounts, pay two separate credit card bills, view separate movie catalogs, deal with two different order lists—in other words, lots of inconvenience for the customer, all the while costing more. Customers weighing the inconvenience against the stated reason—the new name—didn’t understand how the trade-off benefited them.

Hundreds of thousands more abandoned the company.

Several weeks later, the company dropped its Qwikster plan and sent customers a curt note without any apology. By then it had lost nearly a million customers and its stock had lost nearly two-thirds of its market value: from $300 per share on the day of the announcement to $113 three months later. (For more on the faux apology, see: “Video Mae Culpas,” “Netflix to Customers: Up Yours – Why Phony Corporate Apologies Backfire.”)

Netflix fell into a trap many companies and leaders often find hard to avoid: It communicated at its stakeholders, not with them. Its leaders saw the world through the perspective of their own operations, and simply conveyed their business decision to stakeholders using their own frame of reference. But that frame of reference almost never succeeds in winning stakeholders’ hearts and minds, especially when there’s a potentially negative impact on them.
The Lessons: Taking Audiences Seriously

If we are to influence audiences we need to speak with them on terms they value. Netflix spoke to them in its audience of its own business operations. But audiences don’t care about a company’s operations. They don’t have sympathy for the business challenges or logistical issues a company may face. They care only about the impact on them. Audiences don’t know — and don’t want or need to know — about a company’s internal operations in order to be customers. To get an audience to care, a company and its leaders need to begin with the audience’s concerns and then link those concerns to what the company is doing.

For leaders who live and breathe the company’s operations, this common-sense observation is hard to grasp. Audiences have their own ideas, their own concerns, their own frames of reference. And if we want to maintain their trust and confidence, we need to start by taking those ideas, concerns, and frames of reference seriously. We can’t move them if we don’t meet them where they are. But that means knowing where they are, knowing how to meet them there, and then meeting them. But the first step is even caring about where they are.

Netflix didn’t meet its customers where they were. Rather, it asked its customers to meet the company where it was.  Netflix failed to anticipate the emotional reaction its customers had—both to the price increase and to the manner in which it was conveyed.

And Netflix seemed to be blindsided by the anger.

Taking stakeholders seriously requires respecting the point of view of those whom we would engage. It requires curiosity about what matters to them, about what it takes to win them over and to keep their trust and confidence.

Effective leaders connect with audiences by understanding what matters to them, and by speaking in ways that resonate with them.

What to Do: Audience Checklist

Here’s a simple checklist with three sets of questions that help communicators and their bosses or clients to understand an audience. Over the years I have used it with clients and students to help them assess their own level of understanding and readiness to engage stakeholders. For any given stakeholder group, a we need to understand three basic things, by asking three basic categories of questiona:

1. What we know about the audience. This creates an inventory of our current knowledge.

2. How the audience behaves. This gives us sufficient grounding to predict future behavior.

3. How the audience relates to us. This allows us to figure out the link between the audience and the outcomes we want.

Mastering these three categories of consideration is a good starting point to communicating effectively. Here are the questions to ask:

1. The audience:

  • Which audience(s) matter(s)?
  • What do we know about the audience’s values, experiences, and level of sophistication?
  • What don’t we know that we should?

2. The audience’s behavior:

  • What are the audience’s hopes, aspirations, and desires?
  • What are the audience’s worries, concerns, and fears?
  • How does the audience (or its individual members) make decisions?

3. The audience’s relationship to us:

  • What does the audience currently do, think, feel, or know in relation to us?
  • What changes in the audience’s actions, thoughts, feelings, or knowledge are we trying to affect with by communicating with it?
  • What are the opportunities and barriers for those changes to take place?

Ask these questions and you’re less likely to fall into a Netflix-like blunder.


For more than 30 years Helio Fred Garcia has helped leaders build trust, inspire loyalty, and lead effectively.  He is a coach, counselor, teacher, writer, and speaker whose clients include some of the largest and best-known companies and organizations in the world.  He tweets at @garciahf.

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