Since its fee increase and the short-lived Qwikster service, Netflix has been an example of what not to do in the world of business. But has Netflix set itself up to have the last laugh?
When customers hastily abandoned Netflix in anticipation of fee increases and the separation of streaming and DVD services, the company paid the price. During the third quarter of 2011 alone the company lost over 800,000 subscribers, and during the fourth quarter of 2011 the company had 24.4 million customers (down from its reported 25 million prior to the price increase).
Now that Qwikster has been abandoned and the price increase has settled in, Netflix is seeing an increase in subscribers, surpassing its pre-Q3 2011 numbers. The company ended March with an impressive 26.1 million subscribers. The free month-long trial is, no doubt, appealing to new customers, but the company recently revealed that many of these ‘new’ subscribers are actually returning customers.
Netflix CFO David Wells said at a recent conference, “Rejoined or folks rejoining the service still remain about a third of our new subscribers that are coming in.”
So, what is it that has brought these ex-customers back? An increase in selection? The revamped Just For Kids section? Updates to the mobile apps and web player? The answer appears to be in the company’s customer relationship management. The abandonment of Qwikster and the increase in new and old material (despite the loss felt by the break up with Starz) all seems to indicate the company is listening to its customers and taking their concerns seriously.
“I think we’re feeling really good about the brand, the progression that we had from last year. We think there’s room to grow, but the improvements in retention and our growth in Q1 and Q2 since Q3 and Q4 of last year make us feel pretty good. […] We think, we’ve said before that the brand hit will take years to recover from and I think that’s still true, with the bulk of the recovery coming in the full year and I think we still feel that way,” Wells said.
What are your thoughts? Is it luck or lack of choice that has brought returning customers back to Netflix? Is the company more aware of users’ needs and more open in communicating with them? Share your thoughts with us!