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Announcing Services Changes: Soften the Blow

Business Technology | September 23, 2011

When large companies adjust their service plan it usually comes as a surprise to the consumer. They may change pricing, put new limitations, or get rid of certain services altogether. While these transitions go smoothly for many companies other companies make changes so abruptly and drastically that it can cause quite a stir.

The way in which Netflix handled its recent service changes is a perfect example of this sort of news being received poorly. Netflix decided to separate their services, DVD-by-mail and streaming, and raise their prices considerably for both. Customers viewed the execution of the change as abrupt and confusing. In the brief time since the initial announcement, many of Netflix’s subscribers have canceled their accounts altogether. In fact, the number was significantly more than Reed Hastings, the CEO of Netflix, was expecting.  In effort to apologize for the way Netflix handled the reorganization announcement, Hastings emailed all subscribers and posted a letter on the Netflix blog. He acknowledged that he “… messed up. [And owes] everyone an explanation,” but then proceeded to announce yet another change!  Netflix is separating the services even further into Qwikster, for DVD-by-mail, while the streaming services will remain as Netflix. This surprise did not have the designed effect and in fact elicited even more backlash. We will have to wait and see how Netflix deals with this new PR debacle and they may be realizing that sometimes an apology isn’t enough.

AT&T changed their services in late June, getting rid of their unlimited data plan, and announcing tiered pricing. This upset a lot of people, but AT&T had a plan. People whom already had unlimited data plans on their phones remained grandfathered into the service. This quelled what might have been a drastic decrease in customers, as it only affected new clients and not those already using the service they were changing.

When companies announce changes to their service plans it can be a tricky situation. Before doing so they should discuss how they are going to announce it and consider the possibility of an unfavorable reaction that could lose them customers. Proper planning will provide a plan of action if a negative backlash occurs. Here are a few ideas to help soften the blow.

  • Notice, and Lots of It:  Give the public plenty of notice and utilize a forum where customers, particularly those directly affected, can express questions and concerns.
  • Grandfathered Services:  Honor services and prices current clients have prior to the change.
  • Details:  Explain the change in detail! The more transparent you are with your announcement, the more your clients will trust your decision.
  • Discounts: Offer a free month of service or some other type of coupon if clients take advantage of multiple services

If you have any more ideas of ways companies could make the news of service plan changes easier, we’d love to hear from you!


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