A lot can happen in a year. When Blockbuster filed for bankruptcy protection in September 2010, Netflix shares hit an all-time high of $163.72. The weight of all of Blockbuster’s brick-and-mortar stores left them unable to compete with Netflix, or even Redbox, who quickly eked out 25% market share.
Netflix was one of the first to offer video streaming, and their partnerships with Starz, Paramount and others gave them a competitive advantage in terms of content. By July 2011, Netflix shares were trading at around $300. And it looked like they could do no wrong.
But then a series of missteps—the restructuring of their rental plans accompanied by a big price hike, the decision to separate their streaming and DVD businesses, and then the reversal of that decision—left Netflix looking completely inept.
Today, they closed at $111.
So how did a company that was once noted for being innovative, foresighted, and well managed get so many things so wrong?
When CEO Reed Hastings announced on Monday that they were abandoning their plans for Qwikster, he said, “There is a difference between moving quickly—which Netflix has done very well for years—and moving too fast, which is what we did in this case.”
But to this observer, that’s not the problem. The problem is that Netflix was so eager to do what was right for Netflix that they forgot about the vital importance of doing what’s right for their customers.
For consumers viewing any change through the prism of “what’s in it for me?”, creating a separate company for DVDs was nothing but a huge inconvenience. I understand why it was a good business decision for Netflix. But why didn’t they at least put the benefits to subscribers front and center? The tone of Reed’s original announcement was “Trust us. It’ll be better this way.”
When British Airways emailed me that they were making their frequent flyer program “even better,” my first thought was, “Oh no. What are they taking away now?” But at least they acted like they were doing it for my benefit.
The other thing I don’t get is how Netflix could have ignored the damage that disgruntled customers can do in the age of social media. Didn’t they learn their lesson with the price increase? Not only have large numbers of subscribers left the service, their vocal unhappiness is preventing potential new customers from signing up. This, in turn, has re-energized Blockbuster, who has emerged from bankruptcy as part of Dish Network as a formidable new competitor in the space.
To me, there are three lessons to be learned here:
Do your homework. Nothing makes you look worse than changing horses midstream. Know what the impact will be on every aspect of your business before you pull the trigger. Netflix’s stock price is evidence that they didn’t understand all the ramifications of their actions.
Ask yourself how everything will play out in social media. Be sure you can live with the consequences—and the damage to your brand—before you move forward.
Dance with them that brung ya. Never forget that your customers are your greatest asset, and that their loyalty is conditional on yours. Talk with them. Solicit their feedback. And make sure that as your business model evolves, they remain your top consideration. A 5% increase in customer retention produces more than a 25% increase in profit.*
*Bain & Company. “Cost-Cutting Ideas for Now That Won’t Impair Clients Later.” Tennessee Society of CPAs. Accounting Office Management & Administration Report, June 2009.
The 2011 Mid-Year Marketing Trend Study is out and it reveals the top three marketing challenges facing marketers today.
Los Angeles, California (September 27, 2011) — The top marketing challenge for marketers is: “Acquiring a large number of new customers,” which was followed closely by “Increasing retention rates and revenues from current customers,” as “Increasing the quality and quantity of leads for field sales forces” was third.
The Kern Organization’s 2011 Mid-Year Marketing Trends Survey was conducted in July 2011, with 396 top marketing executives (CMOs, VPs, and Directors) responding from various industries. Watch the video above and download the 2011 Mid-Year Marketing Trend Study whitepaper to see what your peers are saying here: http://www.thekernorg.com/2011MidYearTrendStudyResults
Direct mail still works well today. But few people want to discuss it as a channel because it’s seen as “old school.” In fact, some direct mail proponents are even shunned within their organizations. However, any marketer who isn’t using direct mail as part of their media mix, is missing major opportunities.
The Kern Organization mails more than 750MM pieces a year for its B2B and B2C clients. Direct mail marketing is crucial to building business, driving call volume, opening new marketplaces, attacking competition, and creating opportunities that couldn’t be found otherwise. Simply stated, direct mail is a scalable channel for driving ongoing revenue and profit – month after month.
There aren’t many digital channels that marketers can say do that, with much consistency.
Every channel has its place in the media mix.
It’s clear that today social marketing communications needs to be part of every marketer’s arsenal. And due to its low cost, email marketing will continue to be a foundational marketing channel. But when you consider that only 20% of people open emails, you need to ask yourself what you’re doing to reach the other 80% of customers and prospects who don’t.
When done right, direct mail can be an important marketing tool that can really move your business forward.
But there are some obstacles for marketers using direct mail that need to be considered:
Few marketers these days have had the training required to produce winning packages time after time
Unlike digital channels, mail is expensive and comes with inherent risk
Poorly executed mail programs can lead to severe consequences
Today, many marketers lack the experience and confidence needed to design an effective testing strategy – which is an essential component of any successful direct mail program. Inexperience marketers should partner with a direct marketing agency who really understands mail
Direct mail brings the following to a marketer:
It is highly targetable – Mail remains an efficient, high performance channel. B2B and B2C marketers have hundreds of thousands of lists with sophisticated target audience selection criteria that can help you reach the right audience with no waste.
Mail gives you room to tell a story – One of the few media that readers actually touch, direct mail can appeal to prospects on a highly personal level. With direct mail, there’s enough “real estate” to tell readers a story that engages them emotionally and also provide them with the rational benefits they need to feel comfortable making a decision.
It is scalable and controllable – If a company needs to make their monthly or quarterly sales numbers, direct mail allows for immediate scalability. Few other channels offer marketers the control to dial up (or down) volume based on company sales needs.
It is personal and “unexpected” – In today’s highly electronic environment, direct mail is actually unexpected. Consumers, accustomed to communicating purely through digital and social channels, haven’t evolved that much as human beings. They still don’t want to miss out on something important – as anything addressed to them that arrives in an envelope is assumed to be. Even today, there is still real joy in opening a piece of mail. Just be careful not to make your package so promotional that it turns the reader off.
On September 8, 2001 my husband and I welcomed our daughter into the world. It was one of the best days of our lives. We already knew that sleepless nights and diaper changes were in our immediate future. What we didn’t foresee is the fury that would materialize in the days ahead.
On the early morning of September 11, 2001, I walked to the hospital nursery to get my newborn daughter. On my way I saw all the nurses on the floor gathered around a television, crying and gasping in shock. I slowed down to see what the commotion was and a nurse told me that an airplane crashed into one of the Twin Towers in New York. Within seconds of hearing this I ran to get my daughter and didn’t let her go.
In the days following, we watched our television set with heavy hearts. We looked down at our newborn, wondering if it was a good idea to bring a life into this turbulent world. It was a bittersweet time for us, but we felt that we should count our blessings regardless.
10 years later, the sting of that terrifying day still lingers. I watch my now 10 year old daughter, as she rummages through her emerging social media world, and wonder how different that disastrous day would have been if Twitter existed. In today’s world, news travels faster via social media than any newspaper or television station can keep up with. Traditional media outlets are being trumped by people tweeting breaking news on the scene and using their smart phones to capture real time videos and images, blasting them out within seconds.
Social media is the new normal. We can thank Twitter for recent breaking news of Osama bin Laden’s death, the uprising in Egypt, the tsunami in Japan, and the riots in London and let’s not forget the wrath of Hurricane Irene and how it’s path was tracked online. The appeal is not just getting the breaking news before anyone else, but also getting the firsthand accounts and experiences of those involved. There are even news outlets using social media reports as legitimate sources. Further, the ability to experience news via social media channels, that can be accessed on a mobile device, makes it that much more addictive.
And so I pose the question, how would Twitter have changed the face of events on September 11, 2001? What if Twitter was around on that tragic day? Would there have been fewer casualties if there had been more warning? If people tweeted about the disaster in real-time, could rescue workers have been able to better pinpoint the locations of possible survivors? How many lives could have been saved? How could social media have changed that one moment in time? Unfortunately, we can only imagine based on how social media has affected more recent tragedies. September 11, 2001 is forever a part of our history. Our hearts will remember those lost, and we will continue to grow from our experiences.
Today I’ll hold my 10 year old baby girl and tell her how much I love her. But, if she’s not around, I’ll tweet it to her! It’s not breaking news, but it is my own personal real-time reporting.
How do you think the events of September 11, 2001 would have been different if social media were around and people were tweeting? Join us on Twitter @TheKernOrg and tell us what you think.
