Online Survey Basics

Most people know about Netflix's decision to raise its prices and the backlash that ensued. For those who might have missed it, Netflix announced on July 12, 2011 that it would no longer offer customers unlimited DVDs and video streaming for the single monthly price of $10. New customers will have the option of paying $8 a month for either unlimited DVDs (delivered one at a time) OR unlimited video streaming. If they want both services, it will cost them $16 a month. Existing customers who are receiving both services have until September to decide whether they want to continue getting both unlimited DVDs and video streaming or opt for one or the other. 

A previous post discussed how Netflix made changes to accommodate its customers' needs and wants. This raises the question, if Netflix didn't conduct a customer survey before going forward with raising prices, should it have?

Of the nine people who participated in an email interview, two said yes, and two said no. The remaining five gave a conditional yes to the question of whether or not Netflix should have conducted a customer survey prior to raising its rates. 

For Netflix, a survey would only be successful to the extent that people believe that their "vote" counts," said financial management consultant and writer for The Behaviorist, Michael Friedmann.  

Sheila Hibbard of The Marketing Bit, thinks that Netflix could have used a survey of its customers to do more than just find out what they thought about a price increase. Rather than just asking how current or potential customers might feel about a 60% hike in price, they could have explored various pricing option alternatives, different pricing payment plans, product bundles, etc.

Every customer touchpoint and form of communication is a chance to enhance brand loyalty and to demonstrate transparency, said performance consultant John Brubaker, who thinks that Netflix should have surveyed all of its customers before going forward with raising prices.

While most would disagree that Netflix should absolutely have asked their customers what they thought of the impending price increases, some agree that Netflix made a mistake when it sandbagged its customers by announcing the increase after the deed was done.

[Allowing them to] read about a change in the paper is not a good way to show your customers you care about them, said Rick Maurer of Maurer & Associates. If your customers begin to wonder what will happen next, then you risk eroding their confidence in you.

Companies are wise to communicate with and learn from their customers on a regular basis, said Ann Middleman, principal at ADM Marketing & Research Consulting. This ties customers to the company in a way that no special offers can. It makes them partners in the venture. 

Bram Kleppner, CEO of Danforth Pewter, shares Middleman's opinion. If Netflix had let all of their customers know they were going to raise prices and given customers some options at the current price (i.e. you can switch to unlimited streaming and manintain your current pricing), I suspect there would have been little or no backlash.

While Cliff Courtney, executive vice-president and chief strategy officer of Zimmerman Advertizing agrees with Dan Steele, vice-president of social media for Silly Brandz Global, that it would have been a bad idea for Netflix to survey its customers before implementing the price increase, Courtney also believes that Netflix could have strengthened its position by reminding customers just how much they would get for their $16 each month.

The average American spends more than 151 hours per month watching TV, said Courtney. For Netflix, the announcement of "What you pay," should have been balanced with a more elevated "What you get," [which is roughly] 20,000 shows and movies [to stream] to their computers, phones or Blu-ray players, plus movies in their DVD players that [Netflix] sends through the mail.

Professional certified marketer for Strategic Communications, LLC and author of The Complete Idiot's Guide to Strategic Planning (Penguin, 2011), Linda Pophal, offered the most generous opinion. My suspicion is that if Netflix did not survey their customers, the reason was that they intended to make this change whether or not customers would respond favorably. I'd further guess that they did quite a bit of financial modeling to determine their level of risk for customers defecting with or without the price change and at various pricing levels. Another point here is that pricing decisions are challenging (and risky) to make based on survey results.

Sure, some people will go in search of more affordable options like Redbox, but as Courtney pointed out, even with the price increase, Netflix customers still get a lot of bang for their bucks. While Netflix may still opt against conducting customer surveys about future changes, they'll score major customer satisfaction points if they at least let their customers know what to expect.