Why Did NetFlix & Facebook Forget the Customer?

I’m not even a NetFlix customer and I’m baffled by what’s going on. I read the the press, the blogs, the Tweets and talk to loyal subscribers. I hear the rage. As an outsider, the most interesting thing has been this excerpt from a letter by the NetFlix CEO which telegraphs what’s really going on:

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.

Say what? You’re changing because your two lines of business have different cost structures? I’m betting that this is code for some boardroom compromise and/or pressure from investors to align its capital structure in a new way. The problem is that none of NetFlix’s changes are coming as a result of customer demand. And that explains the outrage.

And Facebook has done it too. Yet again it has insulted its customers by making a surprise and radical adjustment to the most important feature the company offers, the Newsfeed, which now works differently and has a new name. Forgive me, but I don’t recall it being broken nor any customer outcry to fix it.

How is it that it’s so easy to forget that your business should to be driven by demands of your customers, not your finance department, marketing department or even your own ego?

Thank goodness there was something positive this week. Pandora.com got it right. An upgrade that really is an upgrade. What a week!

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3 responses to “Why Did NetFlix & Facebook Forget the Customer?

  1. It is interesting to note, though, that the introduction of the News Feed 3-4 years ago was met with an outcry of anger. The fact that we’re now calling it the most important feature on Facebook just shows how quickly consumer preferences can change.

  2. I was on the verge of becoming a DVD by mail Netflix customer when I saw the first ad for their streaming service. My gut told me they’d promote streaming and hamstring their happy “by mail” audience. Glad I stayed away. And Facebook, which I use more for business than for personal use, is a continual disappointment in regard to customer service or customer education. I am surprised that they don’t see the value in “courtesy messages” regarding changes when so many of their users are on the site multiple times each day.

  3. Facebook changes it’s UI constantly, people always complain. Then they get over it and continue. Netflix has created a huge mob of annoyed customers.
    The problem, especially with Netflix, is that these businesses are market leaders… and big enough to get away with it. They can mess with their product or service, but it ultimately fills a need people have so customers will come back.
    The demand for one specific restaurant or arts organization for that matter is more inelastic. If I go to a food joint and they piss me off real bad, I won’t go back. There are plenty of other restaurants in town. There’s only one Facebook.

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