I found this interesting article about How Social media are Amplifying Customer Outrage by author Chris Taylor. The examples in this article are of real life, on going, struggles between organizations and consumers. Some organizations are backing down from the public outrage. Some are not.


The first part of his article talks about Netflix who responded to social media customer outrage and recent steep stock declines on Wall Street by changing their business model.  The CEO of Netflix video announcement of the changed business model follows excerpts from the Chris Taylor Article. Notice that the Netflix CEO apologizes  for failing to explain better, but not for raising the price of his offerings. It will be interesting to see consumer and stock price reaction.

I have reproduced excerpts from the Chris Taylor article here for your convenience.

How social media are amplifying customer outrage

(CNN) — Chances are, last week wasn’t a great time to be working at Netflix.

After the company raised the price of its DVD and streaming media plan by 60%, it had to draft hundreds of extra customer service reps to handle the floods of irate callers.

Netflix rival Redbox briefly became one of the most popular searches on Google. The Netflix blog announcing the price increase filled with 4,000 comments, nearly all negative.

But that number was dwarfed by the 79,000-plus responses on Netflix’s Facebook page — and that was just on the brief announcement linking to the blog entry.

It was like angry graffiti, covering every inch of what is ostensibly a corporate wall. Netflix showed no sign of backing down, but the graffiti showed no sign of stopping, either.

On the phone, in e-mail, in the largely anonymous comments section of a blog — these are places where you generally vent your disapproval once and then slink away to be disgruntled alone.

But is a social network different? The comfortingly clear identities of people who share your outrage, reinforcing your opinion with camaraderie and conversation — do these things stoke anger that would have otherwise fizzled out?

Does this environment inherently encourage people to take the next step, to turn from commenters to protesters, to organize, to boycott? I believe it may well do that. Here’s why.

The cottage cheese protest

There’s a more prosaic but no less illustrative example in Israel, where the three main dairies all decided to increase the price of cottage cheese by 75% last month.

That seemed like just another grumble-inducing rise in the cost of living until 25-year-old Itzik Alrov started a Facebook campaign calling on his fellow Israelis to let cottage cheese “stay in the stores and spoil until the price comes down.”

The group gained 105,000 adherents by month’s end. (Not bad for a nation of 7 million.) Suddenly, opposition MPs were dumping tubs of the stuff on the prime minister’s desk, and the finance minister was talking about importing cheaper foreign cheese.

The dairy companies promptly cut their prices. Here’s a tellingly bemused quote from one of their CEOs: “Something happened here, and it changed the rules of the game.”

Changing rules

You can see those rules changing all over, if you watch closely. This month a woman in a Detroit suburb faced the prospect of 93 days in jail for growing vegetables in her front yard, in apparent violation of a local ordinance. Then a Facebook page supporting her went viral, thousands of strangers from across the U.S. signed her petition, and the town planners dropped the charges.

The week before, fashion giant Versace was forced to stop its 500,000 Facebook fans from posting on its wall in the wake of a protest over sandblasted jeans (made in a high-pressure process that has been known to kill workers).

And social media outrage added a dimension to the closure of the UK’s News of the World tabloid when axed staffers got into Twitter brawls with celebrities and ex-readers.

No, not every protest is successful. Not every angry tweet matters. Not every online petition will force a company or a country to back down. And it’s too early to tell whether companies such as Versace will be punished for simply deleting protests.

Maybe that will turn out to be the social media equivalent of hitting the mute button. It’s also the kind of gamble on a company’s reputation that can keep brand managers up at night.

Who wants to take that kind of chance? Far safer to let your customers vent and hope the storm will pass, as Netflix is doing. But that too carries the risk of a boycott — or a permanently damaged reputation.

The opinions expressed in this commentary are solely those of Chris Taylor.

Here’s a chart that shows the analysis of Netflix announcement. Notice the large red negative bar. 62% of the respondents were negative on the announcement.

 

Netflix responds

It remains to be seen if customers and Wall Street will accept this video and the new Netflix, Qwikster pricing.

 

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Adele Berenstein

Adele Berenstein is an Experienced Customer Satisfaction Executive, recently retired from a Large Global IT Organization after a long productive management career including Sales, Marketing, Services, teaching and education center management and most recently, 19 years in customer satisfaction management. She turned around divisions with customer satisfaction problems, implemented measurable improvements and management systems, and implemented programs to prevent problems from ever affecting customers.

2 Responses to “Netflix responds to customer social media outrage”

  1. Customer Ire forces Netflix business model change | Customer Satisfaction and Reputation Management Says:

    […] an earlier post titled Netflix responds to customer social media outrage, Netflix  addressed customer dissatisfaction with it’s  a newly announced business model […]

  2. The value of Customer Satisfaction? Netflix Case Study | Customer Satisfaction and Reputation Management Says:

    […] prior post Netflix responds to customer social media outrage, I told you about how Netflix had raised its prices significantly (60%). That led to consumer […]

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