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?