Retaining Customers when Making Service Changes

Sometimes companies have to alter the way they do business and change their service plans. As these changes often center around a price increase, new limitations, or dismissal of services altogether, customers can have a negative reaction to the news. For some companies, breaking the news goes smoothly as they take measures to soften the blow, while others spring the news to the clients with very little warning or explanation.

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 came about so unexpectedly 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 impact was not what he expected. There was again a large backlash to something he said within the apology. He announced that the DVD-by-mail services and the streaming would be split into completely independent 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.

AT&T changed their services in late June, getting rid of their unlimited data plan, and announcing tiered pricing. This upset a number of people, but AT&T had a plan. People whom already had unlimited data plans on their phones remained grandfathered into the service. This quelled what may have been a drastic decrease in customers, as it only affected new clients and not those already using the service they were changing.

When companies change their services plans, regardless of the reasons for the decision, they inherently tread dangerous waters. Before alerting their customers and the world, they should think of a course of action that will minimize the backlash. If there is a drastic price increase or another product change equally undesirable from a customer’s viewpoint, here are a few strategies companies could consider to soften the effect:

  • 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!

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