What Contractors Can Learn from Netflix

Posted by David Chism | Thu, Oct 6, 2011

 What Contractors Can Learn from Netflix
Ever since Net­flix made its debut a few years ago, I’ve enjoyed their mar­ket­ing. It is always fun to see a start­up thrive. I was so impressed when the 2008 mar­ket crash hit and Net­flix did­n’t even flinch, but con­tin­ued to grow. I also thought they did a great job con­nect­ing with their cus­tomers—ear­ly on. Those two words are key. I think Net­flix became so suc­cess­ful overnight, they were too busy count­ing their prof­its and their cus­tomer engage­ment began to slow­ly slip away. Google TV, Ama­zon and Apple began to creep up on them. Their stock prices had climbed quick­ly for over three years, and sud­den­ly the bot­tom fell out. I’m glad I sold my Net­flix stock ear­li­er this year, because I just saw that they went from about $300 down to $123 in just two months! So what hap­pened to Net­flix, and what can a con­trac­tor do to avoid the same mis­take? Rolling Out The New Net­flix Plan This past July I received a notice from Net­flix about their new plan and pric­ing start­ing in Sep­tem­ber. I did­n’t see this com­ing at all. I was a month­ly sub­scriber yet found myself watch­ing the Instant Watch more often (old TV shows). The notice I received said they were split­ting the DVD rentals and Instant Watch into two com­plete­ly sep­a­rate pro­grams with a bun­dle option. The bot­tom line was Net­flix was dou­bling their prices with lit­tle notice to the con­sumer. Sure, I liked the con­ve­nience of Net­flix, yet their Instant Watch fea­tures real­ly were not good unless you only want­ed to watch old TV episodes. This new plan hit me and many oth­er cus­tomers by sur­prise. Every­thing was good with Net­flix, so I thought. I felt they liked me, and I liked them. Then, We are dou­bling your prices or cut­ting your fea­tures in half. How do you like that, you spe­cial cus­tomer? Oh and by the way, thank you for your busi­ness! We love our cus­tomers.” My feel­ing is that Net­flix did not real­ly lis­ten to what their cus­tomers liked about them and did not deliv­er. Their com­pe­ti­tion, Apple, Ama­zon & co, on the oth­er hand, are lis­ten­ing. They use social media to con­tin­ue grow­ing despite a poor econ­o­my. These are the com­pa­nies who are cre­at­ing bet­ter selec­tions and eas­i­er ways to access movies online. The fun­ny thing is, Apple and Ama­zon are not nec­es­sar­i­ly cheap­er either. No, their rental prices are some­times $2.99 – 4.99. So why did Net­flix stocks plum­met almost $200 in 2 months when for over 3 years…their stock looks like the trail up to Mt. Ever­est? I believe it is because they made some quick deci­sions on what they felt was best for their cus­tomers, instead of ask­ing their cus­tomers what they real­ly want­ed. They had a loy­al audi­ence for the last 3 – 5 years, but now they are los­ing mar­ket share, and fast. Peo­ple are not always con­cerned about price. They don’t like to be tak­en by sur­prise. Net­flix and the Contractor So what can a con­trac­tor learn from the mis­take Net­flix made this year? Most peo­ple are typ­i­cal­ly pret­ty loy­al by nature. Your clients hired you for a rea­son and will stay with you if you stay in con­tact with them. This should not always be an auto­mat­ed thing either. I love tech­nol­o­gy prob­a­bly more than most of you read­ing this blog, but some things just can’t be accom­plished elec­tron­i­cal­ly. Few of you have thou­sands upon thou­sands of clients. You can do it! If you engage with your cus­tomers and keep in touch with them on a more per­son­al lev­el, your busi­ness will be suc­cess­ful. You’ll keep a cus­tomer for life. It is the lit­tle things that mat­ter most. Take time this fall sea­son to con­sid­er how you can engage with your cus­tomers more. Ask for their advice on how you can grow your busi­ness, or improve your ser­vices. Your cus­tomers do not bite. Many wel­come you to stop by and talk to them. Write a hand writ­ten note, swing by their home to say hi, and drop off a sim­ple gift, just because.” Do you agree about Net­flix or did I miss some­thing? How do you engage with your cus­tomers now? What works best?

About David Chism

David Chism started his business out of a passion for helping small contracting businesses grow, be more profitable and become better known to their target clients. One lifelong hobby of David is using techie gadgets. So this blog is a place where he writes about technology, marketing ideas, just for fun (humor), personal thoughts on small business and more.


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