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How Much Transparency Is Too Much?
Reed Hastings, the CEO of Netflix, has had a rough year.
First Netflix hired actors in Canada to pretend they were excited customers. The problem? Canada was dying to get Netflix so the anticipation and excitement was already there and actors weren’t necessary. But the bigger issue was those actors were talking to media, as if they were real customers. And, maybe they were, but that’s not why they were there.
When found out, Netflix had a bit of a crisis on their hands.
Then, in July, Netflix announced a price hike. Overnight. Via email. They lost nearly a million customers and their stock tanked.
In September, they apologized for the price hike and described the reasons they did it, including streaming comes with its own infrastructure issues, such as different taxes and IT. They also announced they were splitting the DVD and streaming businesses. Now you could have access to DVDs through Qwikster and streaming would remain Netflix.
Earlier this month they decided they weren’t going to split the businesses, after all, and claimed to have learned their lesson.
I make my living speaking on digital trends. Arment Dietrich, has weathered the economic storm because technology is fundamentally changing the way we communicate. So you know when I ask the following question, it’s something I’ve really thought about.
Is too much transparency a bad thing?
Five years ago, I doubt Reed Hastings and his team would have stumbled all over themselves like they have in the past 12 months. Sure, the Canadian thing probably still would have happened because that’s a very traditional, old school way of launching a new product or service.
But the emails and the blog posts and having to make up for all of in an earnings call? Five years ago, we didn’t have the technology for the instant communication we have now. I doubt they would have even used email marketing in the same way they did this summer.
Some people are defending their moves, saying they appreciate the transparency and are enjoying learning about the changes in the business model.
As a communication professional, and one who really enjoys the liberties technology allows us, I am here to tell you there is such a thing as too much transparency.
You’re going to stumble. You’re going to make some mistakes. We’re all human beings.
But please, please, please…before you use the digital tools to give your customers access to you, think about what it could mean down the road. Think about it strategically. And then, if you’ve done that and you still screw up, use these two little words: I’m sorry.
They’ll go a lot further than any transparency or explanation of a business model.
This first ran as my Crain’s weekly column.
Maybe it's because I work in government that I think this, but transparency isn't a bad thing; being plain stupid however....
Being a transparent company does not mean you have to reveal everything, but you reveal what is necessary to the community you serve...in a timely and respected manner. As a customer and a communicator, I have tracked the saga and you are right, Gini, the words *I'm sorry* go a long way.
It seems pretty simple to me. If Netflix had signed and announced their streaming deals with Dreamworks, AMC and Disney/ABC BEFORE the price changes (the Quikster thing was just bad idea, period), they would have saved themselves of most of the trouble -- and lost customers. Then the transparency about how the economics around the streaming business model was more costly (because of the cost of content) would have made sense.
TedWeismann I think Netflix should read Spin Sucks. THIS is a great idea.
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Here's the thing, Netflix just had their highest revenue quarter ever, but because their CEO Is a jackass, no one sees that. They just see an implosion, one that arguably may not be real. I see nothing wrong with focusing on a higher dollar business so long as old customers are grandfathered in a respectful fashion.
geoffliving I see nothing wrong with the refocus either. What I have a problem with is the see-saw approach. We're going to do this. Nope! Now this. Nope! Now THIS!
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ginidietrich No question. This guy or his entire communications team should be fired.
geoffliving If he even has a communications team.
My latest conversation: Three Steps to Building an Incredible Brand
It's really easy to blame the communications team when the problem is more likely a policy decision. This Kill the Messenger mentality is sort of sad. Who knows what the communications team advised him to do.
@peter_osborne Or if they advised him.
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@peter_osborne P.S. I'm not blaming the communication team. I'm blaming the communication. I don't know if he was advised incorrectly or didn't listen. Either way, the way it was handled is the problem. I don't blame his team.
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@peter_osborne I hear you. I sit on the board of a unique non-profit and we've been experiencing a barrage of negative attacks that are calculated, misleading smear tactics.The attorneys sitting on the board drive me mad with their CAUTIONARY (which really means move at the pace of a turtle) advise.
The irony is I joined Netflix around the time they announced their changes. But that never affected me as I only bought (and am still with) their streaming plan. Ordering DVDs through the mail never appealed to me.
Is too much transparency bad? Depends on who's giving it.
Ari Herzog I suppose that's ironic for you, isn't it? There is still such a thing as proprietary information...including that which you should wait to iron out before announcing.
My latest conversation: Three Steps to Building an Incredible Brand
I now see why this house gets 100+ average comments; see below. Uhmm, NancyD68, DannyBrown, HowieSPM -- you are fired.
On a better note, did I win the Spin Sucks Jack contest? Huh?
Soulati | B2B Social Media Marketing We haven't announced yet. Patience!
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K, Mom. ginidietrich
Soulati | B2B Social Media Marketing <i>Spin Sucks Jack contest?</i> Um....
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TheJackBSoulati | B2B Social Media Marketing LOL!!!
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Could be worse - they could be Klout...
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DannyBrown Are you stirring the pot Sir? :)
NancyD68DannyBrown excuse me but Danny and my use of the hemp plant to make holiday brownies is a private matter.
HowieSPMDannyBrown You better share! Jerk.
NancyD68HowieSPM What the deuce?
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DannyBrownHowieSPM How are you guys going to make "special brownies" and not share with your pal Nancy? That is just wrong.
and all I can think of now when referencing brownies is this:http://www.youtube.com/watch?v=vK7hZ9CxCfU
HowieSPMNancyD68DannyBrown thanks to dough
NancyD68DannyBrown now if I can only combine Danny's terrorism against Kloot and mine against Yelp! into one broad campaign we could make history. Kloot + Yelp is Klelp!?
HowieSPMDannyBrown What in the name of all that is good in restaurants do you have against Yelp! Howie?
NancyD68DannyBrown I have major issues with Yelp! right now Nancy. Read my comments on Molly Megasko's recent post here. I find the site as dangerous for a small business as it could be a boon because of their lack of customer service, no way to call them, they refuse to remove abusive reviews, it can be gamed by creating accounts to write false reviews (many businesses do this to up their score or hurt competitors) etc.Oh and they offer you to buy advertising space on your competitors pages!
HowieSPMNancyD68DannyBrown I have heard of this very thing re: abusive reviews, Howie. It happened to a friend of mine. He *eventually* was able to get Yelp to remove the offensive (and untrue) comments from their site, but it took tremendous effort on his part.
What safeguards can be put in place to prevent such things? I mean, without violating little things like the First Amendment and all that?
Then arguments come back for Free Enterprise. Purchase advertising space to counter your competitors. Arg! A nasty cyclone in which the winner is... Yelp!
HowieSPM Do you place Tripadvisor and other peer review sites in the same sentence as Yelp when bashing it? NancyD68 DannyBrown
BethKSchmitz Dear Beth, you are very smart. Please stop by anytime. Love, Gini
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Ari HerzogHowieSPMNancyD68DannyBrown Remember, every business has a right to make money! <snide wink!>
ginidietrich Ooo,... let me know when the 'brownies' are ready!
ginidietrich Oh, my relies got out of sync -- I hate it when that happens!
BethKSchmitz Yes, indeed, businesses must make money. A right, though? They exist to earn profit which exists in many forms.I frequently patronize restaurants based specifically on reviews on Yelp. Where, and other places. I then tell my friends about the meals and service. Without such sites, where does that money go again? /grin HowieSPM NancyD68 DannyBrown
Ari HerzogHowieSPMNancyD68DannyBrown [I was attempting a spoof of Obama commenting on BofA's decision to charge a fee on debit cards. There was a <snide grin> that was lost in the ether and something else that was lost in translation.]
Yes, Ari, businesses *used* to exist to make money. I'm beginning to question if this is the sole reason any more. Even Harvard Biz School has rewritten its charter to include something about good services before strictly making money (I can find it if you want).
Ari HerzogBethKSchmitzHowieSPMDannyBrown I use OpenTable to find restaurants. It has not failed me yet.
NancyD68 If Opentable didn't enable you to reserve a table, would you still use the site? Because without the reserving, it's yelp.
NancyD68 Perish the thought, miss... ;-)
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NancyD68DannyBrown Stirring the pot?!? He's been writing about it for a week!
My latest conversation: Three Steps to Building an Incredible Brand
ginidietrichNancyD68 Actually, of four posts on my blog last week, I only wrote two about Klout. bobledrew wrote a guest one, and I wrote a teaser about a new blog launching tomorrow.
So, um, do the math. ;-)
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courtv I'm sorry!
tamcdonald Morning!
toddforsythe Thanks for the RT!
ginidietrich Netflix just doesn't have the best PR practices in my opinion. Their communication strategies don't seem well thought out.
Alineh86 If they're strategies at all...
ginidietrich yes! Well I guess I was just trying to put it delicately. Just goes to show how critical a role PR plays!
Alineh86 Exactly!
danamuses #museweb It's a Catch22. Transparency can be messy and late, but think about the reaction Netflix would get if they said nothing?
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