Over 93% of Netflix customers recommend them.  Here’s why…

In 1999, Netflix introduced what was then a landmark product when they began offering DVD rentals by mail. Prior to that, everyone trudged to the video store for rentals. Netflix gave consumers an option to go online, make selections, read reviews, and get the DVDs for viewing via their mailboxes. Service and “delighting” customers has been the backbone of the company’s offering, and service has fueled their growth. As the market has changed, and Netflix’s easy delivery method has faced heavy competition from digital delivery services such as iTunes and the Comcast cable box, they continued to differentiate with service.

Netflix is so popular that last week they outranked Apple in the 2011 edition of a highly regarded survey of the brand loyalty of American consumers, coming in at No. 1 among the 530 brands tracked in the latest edition of the Brand Keys Customer Loyalty Engagement Index.

Overcoming Growing Pains

Netflix didn’t rise to this level of esteem without some growing pains, but relying on their core values, and standing tall despite occasional setbacks, Netflix has clearly made great strides in gaining their customers’ trust and loyalty.

For example, in August 2008, Netflix experienced a severe technology glitch that interrupted and halted shipping of DVDs to subscribers. Netflix confessed immediately on their Web site, saying, “IMPORTANT: Your DVD Shipments Have Likely Been Delayed.” They didn’t sweep the problem under the rug and didn’t try to hide from the blame. Netflix followed up with emails to make sure all customers heard the news. Not all customers even knew that there was a delay. Didn’t matter. Netflix was honest in telling everyone and swift in extending an olive branch, automatically applying a credit to subscribers’ next billing statements. New Netflix subscribers who had their first shipments delayed received this message, “We recognize that this is not a good way to begin your Netflix membership and we’ll automatically extend your free trial.” When this glitch occurred, Netflix knew they needed to recover quickly, honestly, and in their own unique way to prove that they were worthy of having customers stick around.

Decide to Say Sorry

Netflix “End of Week” blog update after the shipping debacle posted the message. “Apologies to all once again and thanks for hanging in there with us.” A customer responded with: “Forget all those whiney haters. You guys did your best. You deserve praise for getting through it, not hatred for having some hiccups.” It’s estimated that Netflix's recovery cost it $6 million. Because they communicated directly with customers, their decision and actions were applauded and fueled their growth. And that growth has skyrocketed, placing Netflix, as of February 14, 2011, in the top five companies in the Internet Retail industry as measured by relative performance, ranking first with a gain of 3.78%.

Do You Confess to Customers When Something Happens?

Netflix, the DVD-by-mail subscription service, let all customers know that they were experiencing a technology glitch holding up requested DVD shipments. They didn’t wait for customers to notice; they were proactive in admitting the error, apologizing for it, and making up for it.

• Do you openly explain to customers when something goes wrong?
• Do you wait for customers to complain or do you proactively offer a resolution for everyone?
• Which direction is the natural instinct inside your company?