Interesting piece in the NY Times yesterday about competing on personal service. Michael Osier, Netflix VP for IT, operations and customer service, observes:
Netflix’s decision to eliminate the e-mail feature was made after a great deal of research, Mr. Osier said. He looked at two other companies with reputations for superb phone-based customer service, Southwest Airlines and American Express, and saw that customers preferred human interaction over e-mail messages. “My assessment was that a world-class e-mail program was still going to be consistently lower in quality and effectiveness than a phone program,” he said...
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. More often than not, a month’s credit will be issued or a missing disc marked simply as lost, and the customer will not be charged. Netflix places no particular requirements on call duration, preferring that customer service representatives take the time they need to keep a customer happy and loyal.
The company is choosing to swim (smartly, in my view) against a tide of late-'90s conventional wisdom that's still surging--quite perversely and mono-maniacally--towards the fixed and narrow vision of a low-cost, homogenized, arms-length, location-agnostic world in which everyone is wired and cultural nuance, emotion, politeness and human connection don't matter in business-detectable terms. It's a perfectly appropriate vision for some kinds of organizations. It's just that I don't see any of its advocates pushing for it for their children's education, their church or their therapist.
Netflix' strategic turn is remarkable more for the clarity and swiftness with which it has been agreed and executed than for its originality. Theirs is a classic, almost textbook service differentiation strategy, necessitated by the entry of a rival (Blockbuster) with a more established brand, broader distribution channels, and greater scale economy. Pursuing this course is risky, no doubt. Delay in pursuing it could have been fatal. (Cue obligatory if overused 'deer-in-the-headlights' metaphor).
Good for them for recognizing that their primary innovation lay in the company's founding. Their future depends on clear-eyed resolve and flawless execution--with a human touch.