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What Netflix Can Do to Win Back Customers

NEW YORK (MainStreet) — After a string of controversial decisions in recent months, Netflix (Stock Quote: NFLX) now expects to have roughly one million fewer domestic subscribers in the third quarter of this year than it had predicted back in July, the company announced Thursday.

The revised subscription estimates follow a wave of consumer backlash caused most notably by the online movie service’s decision this summer to raise prices for those who stream movies and receive DVDs, as well as the news that Netflix lost its partnerships with Sony and Starz. Rumors also circulated that the company would limit how many videos customers could stream simultaneously depending on their subscription, something the company has since denied.

While the company had its reasons for each of these decisions, they have nonetheless caused many subscribers to think twice about their membership and, as the new projections show, have scared away thousands from the service all together. But even with the new pricing policies and fewer partnerships, there are several ways Netflix could attempt to win back customers.

Install Kiosks

Kiosks alone are not enough the win the movie wars as Blockbuster found out firsthand when it banked on this as its gateway into the 21st century, but having kiosks could nonetheless serve as a powerful incentive for Netflix customers. Ever since Netflix was launched, there has been one major inconvenience with its model: If you want a DVD, you have to wait at least a couple days to get it in the mail since there are no bricks-and-mortar locations. The streaming options have helped to mitigate this problem, but ultimately, if there is one movie you have your heart set on and it’s not streaming, you’re stuck waiting for it. Opening up store locations would likely prove too costly for the company, but the convenience of having kiosks at select locations (grocery stores, for example) might just entice customers.

Sponsored Ads

We know the last thing you probably want in a video service is more ads, but hear us out. Netflix is one of the rare online entertainment platforms out there that doesn’t bombard users with advertising (just compare it to what you have to endure on Hulu and YouTube.) Perhaps it’s time for Netflix to take a page from Amazon’s playbook and create a two-tiered pricing system for the service with and without ads. Those who really don’t want to see an advertisement could continue paying the same amount they do now – for what would be considered the premium ad-free version – while the rest could opt to pay a few bucks less each month and see some extra ads.

A little advertising at the beginning of a film or TV show wouldn’t be too distracting. After all, we endure much more just by watching the same content on TV.

Offer Rewards

Arguably the biggest mistake that Netflix made this year was asking customers to pay more money for the same service without throwing in any kind of value-add. If customers are going to be told to pay nearly twice the money, they need to feel that they are about to get twice the quality of service. In Netflix’s case, most of the content upgrades were added gradually in the time before they raised the price rather than after.

One simple way Netflix could incentivize customers to continue with the service would be to partner with credit card companies and the movie industry to offer targeted rewards opportunities. For example, every month Netflix could offer its customers points toward a gift card for a movie theater. Likewise, the company could send out raffles for movie screenings and DVD giveaways on a regular basis. It may seem like a small thing, but it’s always better to reward your customers for staying with your service than to penalize them.

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