Netflix Did the Wrong Thing

The flood of articles alternately condemning the stupidity of Qwikster and praising the Netflix reversal missed the point entirely. Comparing Qwikster to New Coke would be like comparing eBay to garage sales circa 1985. Reed Hastings had an entirely different set of tools with which to make decisions than The Coca-Cola Company did twenty-five years ago. And he missed them. Entirely.

The first tool is online research. Netflix has some 25 million subscribers in the U.S. and Canada, which means that the marketing team could have used an Internet omnibus panel survey to complete their market research in about a week and still expect to get in the range of 300 responses (20 million estimated U.S. subscribers divided by 112 million households times 2000 respondents per panel fielding).  They would have spent perhaps $8000 for a short set of questions.

Ones I would have asked:

1. Do you currently subscribe to Netflix?
2. Do you get your movies or shows from Netflix by mail, by downloading or streaming movies from the Internet, or both?
3. If Netflix were to separate the DVDs-by-mail Website and service from the download/streaming Website and service, how much would you like or dislike this change?
4. If Netflix were to separate the DVDs-by-mail Website and service from the download/streaming Website and service, would you:
1. Subscribe to the DVDs-by-mail service
2. Subscribe to the download/streaming service
3. Subscribe to both
4. Cancel your subscription to Netflix

I'm guessing by the flood of criticism and defections that this research would have easily identified this idea as a big, fat loser.

The second tool is online media monitoring. Many of the Honomichl 50 offer this kind of analysis, such as Synovate's BlogBase. It would have been pretty straightforward to comb the Web for information on why people like Netflix these days as opposed to why they hate it. And Netflix would have found (duh) that a major reason people like the service is the one Website for both mailed DVDs and streaming.

The third tool is customer advisory panels. Many new and exciting vendors (I'll mention CrowdScience and Vovici as just two) allow discrete and relatively unobtrusive research into a company's own customer base, often the best source on which to try these ideas. It helps to have an active website with lots of customers visiting this site for this approach to be extremely successful...

Hello, Reed! You have a website Use it!

Thank you, Advertising Age, for pointing out how critical it is to listen to your customer and for reminding us why tech companies don't listen very often.  R.I.P. Steve Jobs indeed.