I read the email from Netflix Co-Founder and CEO Reed Hastings this morning with a mixture of disbelief and amusement. A lot of people have summed up the new changes, which include dividing the company into two entities, with Netflix responsible for streaming video, and the new unfortunately named Qwikster responsible for DVDs. Despite Mr. Hastings' emotional admission that he "messed up", his statement remains almost as tone deaf as the one he made earlier this year when he announced controversial new price structures. Which is why I think the Netflix debacle holds a great lesson for nonprofits.
A lot of nonprofits have had to reinvent, restructure and reassess over the last few years of economic turmoil. Some have cut back on donor newsletters and magazines, others have laid off staff, sold assets, and consolidated services. A lot of the time, you can get away with making big changes without informing donors. But when financial or other concerns force you to make big public changes, how do you communicate that to your loyal donors?
Not like Netflix.
The big mistake the Internet media company made wasn't raising its prices or splitting its business -- or even lacking "respect and humility". It was not understanding what its customers liked about the service it provided.
When I read Mr. Hastings' statement, I wondered if anyone in the PR department actually uses the Netflix service. Customers flocked to Netflix because they could get DVDs and streaming content. They saw the company as a content-delivery service with multiple avenues for delivering that content.
But the company saw itself differently. Where customers saw one service, Netflix saw two (DVD and streaming) and decided to charge for each. Which they probably could have gotten away with pretty easily had they made moves to separate the services in customers' minds before they announced the big price hike. (I have no words for the new Qwikster service. WHY are they making it harder for people? Why?)
The lesson: You must listen to your donors. Know how they perceive your organization, what they like and what they don't like. See where their goals and your goals meet and where they diverge. If you must make a change you know will be unpopular, see if you can steer your communication efforts so that your donors will understand where you're headed and why.
You'll always get complaints, and most of the time, that's good. It means your donors are paying attention.
But if you understand where they are coming from, you can communicate your changes more effectively, and avoid the kind of controversy -- and mass exodus of once-loyal supporters -- Netflix has enjoyed the last few months.