If someone asked me about Netflix 3 months ago I would say "great business model, giving people what they want, when they want it for a fair price". Then this happened. Readers digest version: Netflix provides movies two ways 1) sending movies in the mail, as many as you can watch for a monthly previously fee $8.99 and 2) Streaming movies to your computer or tv if you're savvy enough to hook it up. I've been a huge netflix fan for 3 years now although the streaming is usually class D movies or your favorites from the 80's that you only want to watch when...well there's nothing else you want to watch. Two months ago Netflix announced they were raising their prices to $15.99 for delivery. Um, okay....raise your price by almost 50%, what's the benefit? None.

I think Netflix did a few things wrong which we can all (vendor, solution provider, service provider) learn from.

1. Pricing: They came out of the gate pretty inexpensively. Here you are delivering to my door something I used to have to jump in the car, go to store that would sometimes be "out" of what I wanted, and to return it I just have to throw it in the mail (postage paid)? Not only that but if I'm diligent at watching movies and returning them immediately I could watch 5-6 movies per month. I'd have paid $15.99 when that first came out. But Netflix priced too low. You never want to price yourself out of the market but know your worth, know the service you're providing and what you're saving your customers from having to do by providing that service.
2. Branding: Netflix announced they were splitting the company in two (one for online and one for delivery). Why when you've built such a great brand around Netflix? People are still doing the same thing with both...watching movies. While your operations internally may change, people still see it as the same service. Not only that but the announcement was buried in an apology letter from the CEO. Really? Customers have stood by you and the first time they hear about this change it's after you get reamed by the media?
3. Service Level: Okay you changed the pricing but give customers a chance to decide if they want to continue service. Our Netflix video delivery just stopped. We have this whole queue of movies we're waiting to appear and now they're telling us we have to get them on streaming if we want to keep paying the $8.99. Only problem? They aren't available on streaming! So if we want THOSE movies, the ones we've been waiting for for 3 months, we have to pay more.
4. Customer Service: I know it's not the person on the phone I talked to who made the decision to raise the price or stop my videos, but they do represent the company. Maybe the customer service reps should have been prepared for the customers that were going to be calling.

Overall, companies can deal with change like this well or very poorly. As a small business owner, I like seeing huge companies like this completely screw up. Makes me feel better. Make sure you are not falling into the Netflix trap of poor management decisions and no thinking about your partners or customers.

Any stories of companies that have screwed up well? In other words, they made a huge mistake but came through like champs in the end?