Changes in Services: How to avoid a Backlash

When large companies change 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 some companies others make changes so abruptly and drastically that it can cause quite a stir.

The recent change Netflix has made is a great example of transition not going well. Netflix’s decision to separate their DVD and streaming services and raise the cost of both has affected most of us. The change happened so abruptly and with such little explanation that a great many people canceled their subscriptions, more than Netflix had anticipated, nearly half a million to be exact. To try to smooth this debacle over, on the 18th of this month, Reed Hastings, Netflix CEO, wrote an apology and posted it to the Netflix blog. In his statement, he acknowledged that he “… messed up. [And he owes] everyone an explanation.” While his intensions were good the result was not what he expected. There was again a considerable backlash to something he said within the apology. He announced that the DVD-by-mail services and the streaming would be split into completely separate services. The DVD-by-mail service will now be called Qwikster while the streaming services will remain Netflix. Unfortunately, Netflix may be learning that sometimes an apology is not enough.

In late June, AT&T changed their service plan to a tiered pricing plan and eliminated their unlimited data plan. While this upset many people, AT&T chose to honor those who already had the unlimited data as part of their plan.  This allowance for a grandfathered plan may have saved the company from  losing a great deal of customers to other carriers.

Regardless of why companies change the service they offer, the transition time is turbulent. When executing a massive change, companies should develop a strategy for notifying the public to reduce any backlash. Here are a couple strategies that companies should consider when employing major change.

  • 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!