Sometimes companies must alter the way they do business and change their service plans. As these changes often revolve around a price increase, new limitations, or dismissal of services altogether, customers can have a negative reaction to the news. For some companies, breaking the news goes smoothly as they take measures to soften the blow, while others spring the news to the clients with very little warning or explanation.
The way in which Netflix handled its recent service changes is a perfect example of this sort of news being received poorly. Netflix decided to separate their services, DVD-by-mail and streaming, and raise their prices significantly for both. Customers viewed the execution of the change as abrupt and confusing. In the brief time since the initial announcement, many of Netflix’s subscribers have canceled their accounts altogether. In fact, the number was a lot more than Reed Hastings, the CEO of Netflix, was expecting. In effort to apologize for the way Netflix handled the reorganization announcement, Hastings emailed all subscribers and posted a letter on the Netflix blog. He acknowledged that he “… messed up. [And owes] everyone an explanation,” but then continued to announce yet another change! Netflix is separating the services even more into Qwikster, for DVD-by-mail, while the streaming services will remain as Netflix. This surprise did not have the intended effect and in fact elicited even more backlash. We will have to wait and see how Netflix deals with this new PR debacle and they may be realizing that sometimes an apology isn’t enough.
In late June, AT&T changed their service plan to a tiered pricing plan and eliminated their unlimited data plan. While this upset many people, AT&T chose to honor those who already had the unlimited data as part of their plan. This allowance for a grandfathered plan may have saved the company from losing a lot of customers to other carriers.
When companies change their services plans, regardless of the reasons behind the decision, they inherently tread dangerous waters. Before alerting their customers and the world, they should think of a strategy that will minimize the backlash. If there is a drastic price increase or another product change equally undesirable from a customer’s viewpoint, here are a few strategies companies could consider to soften the effect:
- Notice, and Lots of It: Give the public plenty of notice and utilize a forum where customers, particularly those directly affected, can express questions and concerns.
- Grandfathered Services: Honor services and prices current clients have prior to the change.
- Details: Explain the change in detail! The more transparent you are with your announcement, the more your clients will trust your decision.
- Discounts: Offer a free month of service or some other type of coupon if clients take advantage of multiple services
If you have any more ideas of ways companies could make the news of service plan changes easier, we’d love to hear from you!