Last Updated Aug 20, 2007 12:46 PM EDT
Netflix, faced with stiff competition from Blockbuster's new DVD mailing service, has opted to locate its call centers near Portland, Oregon and eliminate e-mail based customer service, directing all customers to the 24-hour call centers instead.
In the Times article Matt Mani, a senior associate at Booz Allen, notes that, "this is a unique strategy for Netflix. There's so much more competition, this is something they've done to get closer to the customer." Tom Adams, president of Adams Media Research comments: "It's very interesting and counter to everything anybody else is doing... Everyone else is making it almost impossible to find a human."
The call centers stress this human touch. "The company has tried to give the service representatives more discretion in deciding when to assuage disgruntled callers with bonus discs and account credits -- and they are allowed to err on the side of generosity." The real time interaction also allows company representatives to help customers who are having difficulty using their computers and to attempt to dissuade callers from canceling a subscription.
Which has been happening a lot lately. The Times reports:
By the first quarter this year, after years of outstripping Blockbuster in subscriber growth, Netflix added 480,000 new subscribers while Blockbuster signed up 780,000 new members. And in the second quarter of this year, Netflix, which prides itself on customer loyalty, lost 55,000 customers. Blockbuster added 525,000, bringing its total to 3.6 million.If the company's research is correct and customers do strongly prefer to communicate with a real human, Netflix's decision gives movie lovers an opportunity to vote with their mouse. For managers, Netflix's strategy is worth watching . If the new policy succeeds in attracting and retaining customers, perhaps it is worth considering whether the additional cost of quality customer service at your company might be offset by increased customer loyalty, retention and positive word-of-mouth.