Business Book Summaries

Since my last post about Netflix’s split into two separate companies, they have called off their plans, and will remain the same company providing the same original service: “What we misjudged was how quickly to move there. We compounded the problem with our lack of explanation about the rising cost of the expansion of streaming content and steady DVD costs, so that…many perceived us as greedy. Finally, we announced and then retracted a separate brand for DVD…This branding incident further dented our reputation, and caused a temporary cancellation surge.”

They have claimed that this decision was based on the overwhelming customer reaction to their plans. Interestingly enough, this sort of behavior is constant throughout businesses inAmericaas of late. Similar to Netflix, Bank of America announced that they had decided to increase their fee for customers using their debit cards. This, like Netflix’s price increase, was not well received from their customers. The amount of customer backlash was enough to make Bank of America turn on its heels and retract their plans to increase their fees.

I suppose what seems most intriguing in these common situations is that companies do not take their customers into their decision-making processes, until their customer base completely turns against them. Do companies think that customer loyalty is not an important factor anymore? What will it take for companies to actually consult their customers before they make price increases or significant changes in service—an obvious backlash, or a considerable loss of customers?