Angry Customers = Not Good
I know a Netflix user or two — they’re a bit like evangelists: try it, you’ll be hooked. They deliver videos and you watch ‘em. Then you return them. Sure, that seems simple enough, until I calculate the actual number of DVDs I slip into the player on a regular basis. Let’s just say I’m more likely to borrow from friends who don’t mind* that it could be weeks or months before I find the time to watch, much less return, their DVDs.
I would not be a good Netflix customer. Of course, being a loyal customer isn’t always what it seems. Customers defined as “frequent” renters are discovering that avid movie-watching habits are pushing them to the back of the line. Major movie watching by customers isn’t profitable for Netflix (though the company acknowledges that this is a relatively small number of its customers). The money is made on those who only watch a few movies — because everyone pays the same price.
“In determining priority for shipping and inventory allocation, we give priority to those members who receive the fewest DVDs through our service,” Netflix’s revised policy now reads. The statement specifically warns that heavy renters are more likely to encounter shipping delays and less likely to immediately be sent their top choices.
The problem for Netflix, of course, is that despite the policy change, the perception received by customers is “unlimited”. And as the service grows, demand will increase for certain films. I’m already hearing “I’ve been waiting forever to get it from Netflix” grumbles from friends. These aren’t complaints, per se, but resignatio. And that can turn to discontent if more customers realize that they’re being penalized.
Since the numbers are currently on the small side, it doesn’t seem to be in Netflix’s best interest to penalize fast renters, especially since there’s been a lawsuit and major press on the issue. It seem to me that these are the customers most likely to walk if they can get a better deal — like direct downloads.
* - Or at least pretend not to mind
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1 Comment(s) so far
1. Medialoper » More Troubles for Netflix wrote on February 17th, 2006 at 1:29 pm
[...] It’s perhaps not the best month for Netflix. Recently, they’ve been publicly spanked (and sued, of course) for what may be one of the more dumbass policies in recent retail history: willfully ignoring their best customers for their worst customers. I mean, come on, do they know anything about the cost of acquiring a customer vs. keeping a customer or how repeat customers drive a business or did they literally stumble across their model in a cave? (Gee, Tennesee, we can use the Internet to rent videos.” “Good one, Chumley”).  [...]