As a CEO who founded a small start up 25 years ago, I know how important it is to constantly evolve your business model to keep up with changing technology and the needs of your customers and clients. But as a communications professional, I also know the equal importance of a defined communications plan to help inform those changes and then clearly explain them to stakeholders.
So when I read the email CEO Reed Hastings sent to Netflix subscribers Monday morning explaining the new changes to its core business – which includes dividing streaming and mail delivery services into two companies – I felt a mix of empathy and confusion. Empathy because Netflix is feeling the heat to maintain its position as a category leader, the kind of pressure that can make even the smartest companies (TiVo?) to leap before they look. Confusion, because the public relations strategy was so obviously wrong and damaging to the compnay. Frankly, one can only wonder whether it was terrible advice by their public relations professionals or just a CEO who decided to follow his own counsel without the listening to the experts around him.
A responsible agency or a seasoned PR professional would have sounded an alarm as soon as any company mentioned rebranding its flagship product. And, not just rebranding, but separating it from the brand early adopters and missionaries have been loyal to for more than a decade.
The debate over whether it was bad or brilliant business decision aside, Hastings’ email made a tenuous situation worse. Communication, even good communication, can’t substitute for planning, strategy and being tuned in to the customer. Being too late to react to emerging trends can’t be glossed over with communications gamesmanship. And it definitely can’t be fixed with a disingenuous apology followed by an email that reads more like a journal entry than executive correspondence.
For those who haven’t read it, Hastings kicks off the email by saying he messed up for not explaining the price changes that went into effect in August. But it was no true apology at all, and rather than then explaining those changes, he announces a few more: The streaming division would retain the Netflix brand, while mail delivery would now go by the name of Qwikster. From there, Hastings waxes nostalgic about his journey with the brand, self reflection that many feeling awkward and some angry.
For the most part, the email focuses on what Hastings loves about Netflix, but it’s not about what the CEO loves, it’s about what the customer loves, and it’s more than that red envelope. It’s the simple solution that revolutionized how we consume entertainment in our home. It’s the ease of an integrated interface, the convenience of streaming and mail delivery all in one price, and feeling valued and cared for by the usually superior customer service.
These are the qualities that gave Netflix its brand equity and allowed it to become a household name. It takes years to build the kind of trust Netflix had achieved. But that trust is fragile. It must be earned every day. It should never be used as a pawn in a rush for relevancy. You need both in order to drive action, and once one is lost, there’s no guarantee you can win it back.
Can Netflix and its new Qwikster brand survive the current backlash? Time will tell. But if they have a chance, they’ll need to enlist the help of a competent, experienced communications team to figure out a new narrative and fast. And that team needs to be invited back to every business strategy session from now on to ensure the story continues unfold in a way that stakeholders not only understand but believe in. This doesn’t have to be the end of Netflix’s fairytale rise to greatness, but it’s not an auspicious beginning for a new brand.