Rarely do we receive a personal letter (okay, a personal email) from a CEO whom we’ve never met. Even more unusual is one that begins: “Dear Lisa, I messed up.”But that’s how the long note that came my way recently began.
The letter was from Reed Hastings, co-founder and chief of Netflix. In his apologetic outreach (“I owe you an explanation,” it read), Mr. Hastings tried to account for why Netflix has split its DVD-by-mail service and its streaming-video service into two separate companies. His explanation: “We realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.”
That is a series of absolutely justifiable and realistic reasons for the move by Netflix. The reasons his letter both began and ended with apologies, however, were, first, the suddenness of the announcement and, second, the lack of any explanation at the time it was made a few days earlier. Netflix had already disappointed its customers by changing its fee structure recently to accommodate the two different content sources, and now it seemed to be abandoning its initial brand promise—even abandoning its name by transforming the mail service to something called “Qwikster.”
Overall, Mr. Hastings demonstrated good PR sense in recognizing his errors and issuing a personal apology to Netflix subscribers. However, he seemed not to appreciate the importance of his company’s brand promise and the potential extended value of the brand.
Microsoft didn’t create a new company to market the Windows Phone when it extended its reach to mobile devices. Apple didn’t spin off a newly named unit to create tablets or mobile phones either. In fact, these two companies capitalized on their most treasured brand promises: the reliability and flexibility of Microsoft Windows and the “i” designation that told Apple customers to expect the same experience on their iPhones and iPads that they enjoyed on the iMacs.
We wish the Qwikster and Netflix streaming organizations great success, and we applaud Mr. Hastings for his contrition over his lack of communication with those subscribers “both current and future, who felt we treated them thoughtlessly.” His timing could have been better, but his letter and the actions taken by Netflix can be instructional for every brand marketer.
By: Lisa Vallee-Smith, CEO of Airfoil Public Relations, a high-tech PR agency with offices in Detroit and Silicon Valley.