Netflix Nixes Qwikster: But Can the Damage Be Repaired?

Qwikster, we never even knew you and now you're gone! Only twenty-two short days after Netflix Chief Executive Officer, Reed Hastings, announced plans to open a separate website to take over Netflix's DVD-by-mail video-rental service; the plan was trashed because of angry reaction from the company's customers. In July, Netflix announced it would no longer offer free streaming video services to its members that paid for its DVD-by-mail service. If that wasn't bad enough, in September the company announced it was splitting it's DVD and streaming services into two companies, Netflix and Qwikster. Confusion ensued and angry customers became even angrier. Netflix shares fell five percent on Tuesday, continuing the stock's steady decline for the last three months.

Qwikster was quick to fail and has significantly damaged the company's brand name. The mistakes Netflix made with Qwikster were numerous and could be costly for the company. Any organization thinking of launching a new product line or making other major changes without gathering significant feedback from its customer base would be prudent to learn from Netflix's numerous mistakes:

• Increasing Prices Without Offering Any Additional Services - What was Reed Hastings thinking here? Monthly prices increased by as much as 60 percent for some customers with no additional services offered. No wonder your customers were angry, Mr. Hastings.

• Making Doing Business More Difficult - By opening the Qwikster website, customers would now have to deal with two separate websites, two different accounts, and two passwords. Who wants to go through all this hassle to be entertained? Netflix should have been looking for ways to may the customer experience hassle-free, not the other way around...

• Changes Without Explanation - People seldom readily accept change and that goes double for changes without explanation. No explanation was forthcoming to customers as to why Netflix felt it necessary to separate services and charge fees for both. Customers were rightly confused and disappointed in the changes. Why not gather a little customer feedback here before doing something so drastic? The company would have soon learned customers were not willing to have to subscribe to two services and pay twice for a service that should have been combined.

Reed Hastings now says there will be one website, one account, one password, one bill, and no Qwikster. Analysts have cut Netflix's 2012 earnings estimate because of the Qwikster episode. It is unclear what the future holds in store for Netflix. Perhaps they still have time to start listening to their customers and reach their previously forecasted 62 million global streaming subscribers by the year 2016.