Wednesday, September 21, 2011

Lessons in Branding and Reputation Management - Make or Break Your Business


After the announcement from Netflix founder, Reed Hastings, earlier this week regarding the future of Netflix I couldn't help but think about how important branding and reputation management really are to ANY business. Now I think we all have the same question on our minds - "how could a company like Netflix make such a bonehead move?"

For those of you who need a timeline of the "series of unfortunate events", let's start from the beginning...
    • As of July, the company announced that they would be separating their DVD and Streaming video combo
    • Public backlash ensues - Netflix goes quiet
    • Hastings releases personal video to console Netflix users... by announcing same pricing but a division of the company. Streaming video will remain Netflix, and mail-order videos will be from their new company, the awfully named, "Qwikster"
    • More public backlash - Netflix needs a cave to hide in

So let's talk about the state of Netflix.
As of July, Netflix turned from a heroic video-rental slayer that was adored by the public into exactly what it always has been. A business. The hostile response to their increase in price was really just consumers opening their eyes to the product they were already buying (yea, and the price and combo split matters a bit too.) What really got the web buzzing was the "greed" Netflix exposed though. Were they not still providing an awesome service, and for a good price?

This all comes down to reputation management, or in this case, simply keeping your happy customers happy. While it's hard to say exactly what they should have done otherwise, the folks at Netflix shouldn't have announced their premium changes the way that they did. (The simple “pay more, get less” model doesn’t tend to work very well.)

This is a prime example of why proper reputation and brand management is key! Completely alienating the majority of their customer base clearly means they weren’t taking their reputation to heart.

Now we have the company (brand) split.

The only two services that Netflix provided to their customers, the services that they themselves are famous for, are getting a divorce. Qwikster, which I can never seem to remember how to spell, will be handling the DVD delivery service now. The main question this raises for me is, “why would Netflix split up the two services that have made their brand so well respected?” Unfortunately for the company, many customers and stockholders are wondering the same thing. Netflix is now projecting massive losses in the coming year.  

Even after all of these major mess-ups, I highly doubt Netflix will be going anywhere anytime soon. Too many people enjoy the streaming services alone, and would be willing to pony up the extra money for it. As for the fate of Qwikster, only time will tell.

All in all, this makes for a great real world lesson in reputation and brand management. With most cases, brand management means to help a troubled brand, or to simply help define one. In this case, Netflix simply lacked the care needed to protect their brand’s image, and to maintain their once spotless reputation.

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