Change in Service: A Lesson Learned

Sometimes companies need to alter the way they do business and change their service plans. As these changes often center around a price increase, new limitations, or dismissal of services altogether, customers can have a negative reaction to the news. For some companies, breaking the news goes smoothly as they take measures to soften the blow, while others spring the news to the clients with very little warning or explanation.

A perfect example of the latter is the recent Netflix debacle. Netflix, seemingly overnight, raised their prices and changed their service offering significantly. Because of this, more than a half million people dropped the service completely, a number significantly higher than they had anticipated. Last Sunday, Reed Hastings, CEO of Netflix, sent out emails to every customer and posted an apology on their blog for the way the company handled the announcement of the recent reorganization. For many of us his acknowledgement that he “… messed up. [And he owes] everyone an explanation,” was not enough. Within the apology he dropped another bomb that the streaming and DVD-by-mail services will be separated into separate services altogether. The DVD service will now be called Qwikster and the streaming services will continue to be Netflix. This triggered even more backlash. Apart from the letter and video apology, no effort was made to “make it up” to their customers.

AT&T changed their services in late June, getting rid of their unlimited data plan, and announcing tiered pricing. This upset many 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 profound reduction of customers, as it only affected new customers and not those already using the service they were changing.

When companies change their services plans, regardless of the reasons behind the decision, they inherently tread dangerous waters. Before alerting their customers and the world, they should develop a plan of action that will minimize the backlash. If there is a drastic price increase or another product change equally undesirable from a customer’s viewpoint, here are a few strategies companies could consider to soften the effect:

  • 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!