Social CRM Case Study: Netflix Vs. Blockbuster

In one of my previous post titled Social Media: The New Front End of CRM System, I highlighted that Social Media has empowered customers like never before as they can discuss about brands/products on Social Media channels and companies have no control over what customers are saying about their brand. Moreover, as this discussion is “public” – visible to all, including other customers, potential customers and competitors, it is critical that companies engage their customers on social media, else their competitors will and damage to the brand will be immense.

Well, we have a great case study on this subject. Netflix, Inc., the provider of online video streaming and DVD by mail service seems to have misjudged the negative impact of price increase and other service changes they announced “unilaterally” this summer and as a result dissatisfied customers have leveraged social media tools to express their disapproval (for more, read this).

But instead of fighting fire with fire and using Social Media channels to engage customers for building trust and loyalty, Netflix has maintained a low profile on Social Media channels. Guess what? Blockbuster, a competitor of Netflix has seized the initiative by engaging Netflix’s customers using Social Media channels. Blockbuster not only offered a “30 day free trial geared at Netflix customer” on Twitter but also “started a new Twitter contest promising a free year of service for the four best Netflix breakup stories” (for more, read this).

Key takeaway from Netflix’s CRM crisis is that it pays to engage customers on Social Media channels because if you don’t, your competitor will. In that case, you will not only be sorry about not engaging your customers but as a double whammy, will also be sorry about your competitor leveraging the opportunity and walking away with your customers.

Life for companies that don’t care about their customers is tough indeed in Social Age. Don’t you think so?

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7 responses to “Social CRM Case Study: Netflix Vs. Blockbuster

  1.  

    I think with Blockbuster restructuring their prices and
    their business I think they are going to have a good chance coming in first.
    Recently DISH Network released the Blockbuster
    Movie Pass
    which is a really good deal. For current customers the Movie Pass
    is only $10 dollars and for new customers it is free for 12 months. The movie
    pass offers you streaming, a DVD mail in option or in store exchange for
    movies, games, and over 20 premium movie channels. You get Blu-ray DVDs and
    games at no extra charge and new releases 28 days before Netflix. I have DISH
    Network as my provider/employer and so when they came out with the Blockbuster Movie Pass
    I thought it was the perfect bundled package.

    • You are correct, this is an excellent opportunity for Blockbuster to seize the initiative and re-establish its brand, thanks to errors by Netflix.

      Blockbuster is a known brand and should capitalize on this opportunity!

      Harish Kotadia, Ph.D.

  2. I agree that while social media did play a role in this (primarily speeding the entire process up significantly) I think that that Netflix is saving Blockbuster’s bacon because they, like many other comapnies, just flat out ignored their customers and they are now paying the price.  Even in today’s business climate and with the added pressure from social media Netflix ignored the number one rule (whether through greed, incompetence or arrogance) the customer always comes first. 

  3. The only reason I am here is for an ITM essay -_-

  4. LOL same ^

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