Banks, Learn from Netflix’s Mistake
Banks can learn a lesson from Netflix’s recent massive misstep in losing touch with its customers.
Announcing it would split its movie rental service into two different properties, the company lost hundreds of thousands of subscribers and even ended up reneging on its plan. The moral, put succinctly: In business planning, customer emotions can be as substantial as data.
In an article yesterday, The New York Times investigates what went wrong with once-loved Netflix’s recent business plans as well as sheds insights into what companies shouldn’t do when transforming to new media from old. Nick Wingfield and Brian Stelter of the Times write:
“Like many other companies built in Silicon Valley, Netflix prides itself on its analytical, data-driven approach to making decisions. But it made a classic business misstep. In its reliance on data and long-term strategy, the company underestimated the unquantifiable emotions of subscribers who still want those little red envelopes, even if they forget to ever watch the DVDs inside.”
To me, this lesson translates well when applied to the banking industry. While all the glow is shining on mobile banking and mobile payments, banks must remember their customers who don’t want to go digital or just like having all options available. Why? In business, customer emotions play a role, too. And right now, they aren’t pretty.
In the Times’s interview, Reed Hasting, Netflix’s chief executive, credited the hostile reaction to Netflix’s plans to the country’s overall mad mood, citing Occupy Wall Street as tangible evidence of angry Americans. If the Occupy Wall Street mood is damaging a brand that consumers once loved, we can only imagine what that pervasive fed-up attitude means for banks.
Plus, according to the article, Hastings attributes subscribers fleeing Netflix more toward a recent price hike that it had announced earlier than to the business planning to cut itself in two. With new debit card fees popping up, banks should watch out for departing customers. Perhaps new debit card fees will also inspire some banking customers to bolt.
