Netflix is not only in the movie business, it is also turning into this year’s biggest corporate horror story. Having increased its price by 60% earlier this summer, Netflix has lost 800,000 customers and $12 billion in 90 days – including $2.3 billion in one day earlier this week. So should we feel sorry for founder and CEO Reed Hastings, whose has gone from Silicon Valley hero to corporate goat in just a nightmarish three months?
No, we shouldn’t. According to John Tschohl, the so-called “guru of customer service”, Hastings deserves all the ridicule and criticism that he is now getting. As Tschohl told me when I caught up with him on Skype, Hastings has behaved with supreme arrogance and disregard for the customer. Indeed, Tschohl is so horrified with Hastings’ continued failure to forget the voice of the customer, that he is predicting Netflix will lose another million subscribers and their stock will plummet from its current $83 down to $50.
So what should Netflix have done in response to its big mistake earlier this summer? Tschohl offers four words for responding to crisis in today’s real-time customer-centric economy: Speed, Responsibility, Empowerment, Compensation. He may well be right. Anyone who runs a company needs to learn from the Netflix horror movie. After all, its sequel could easily star you and your company.