Earlier this week Netflix, changing a decision made three weeks ago, killed its plans to turn its DVD service into a separate business named "Qwikster." That was a really good idea because customers hated the idea.
The brand, which had been rated highest in "delighting" customers in the January 2011 Customer Loyalty Engagement Index, was then able to meet consumer expectations by 99%, a considerable feat in these days of heightened customer anticipation for, well, virtually, everything.
The brand’s equity changed for the worse when it raised prices this summer, but given the then-available options, consumers griped but the brand held up somewhat, although the stock did take a hit. The weird proposed break up really slammed the brand, which fell to an historic low of 87% in meeting what consumers really desired from their Ideal provider. Since the Brand Keys’s metrics are predictive of consumer behavior, that change was accompanied by a defection of nearly 1 million customers.
Wall Street apparently agreed with consumers (and our metrics) because after Netflix unveiled its Qwikster plans, the company's stock changed too. It fell in July, and fell another 30%, from $155 in September to a low of $108. At its best, Netflix was trading at $300 a share. Big change. You do the math.
Presumably the recent announcement not to separate off its DVD operation was supposed to change the opinions of disgruntled customers and investors. The stock was slightly higher yesterday but it has also been noted in the press and blogosphere that the about-face was a bit hasty and inconsistent with the buttoned-up, leading-edge, forward-thinking aura that used to surround the brand.
Brand history has shown that sometimes it’s the smallest decisions that can change a brand’s life forever. But brands that don’t take customer expectations into account can count on losing customers, their reputation, and their value. And those aren’t changes that any brand wants to watch.
