The Ace Up Netflix's Sleeve: Excellent Customer Service

Netflix is investing in superior customer service to differentiate themselves from Blockbuster as the two rental giants remain locked in a vicious price war. The company has completely shunned email-based support, instead relying on 200 friendly Oregonians to answer calls around the clock. Netflix CSRs, unlike most, are not given target call durations, and are encouraged to “err on the side of generosity” when dispensing compensation. They have one shockingly simple goal: satisfy the customer.

From the New York Times:

The Hillsboro operation, which occupies about 30,000 square feet of a low building in an office park, is intended to keep the red envelopes coming. Michael Osier, vice president for information technology operations and customer service, said he rejected cities like Phoenix, Salt Lake City and Las Vegas, which are known as call-center capitals, because of their high employee turnover rates. He settled on the greater Portland area because of the genial attitude on the part of most service workers.

“In hotels and coffee shops and the airport, it’s amazing how consistent people are in their politeness and empathy,” said Mr. Osier, who is based at Netflix headquarters in Los Gatos, Calif. “There’s an operational language in the industry that people are so jaded about — phrases like ‘due to high caller volume.’ We’re very consciously trying to counter that mentality.”

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.

When Mr. Osier presented his findings in January to fellow executives, Reed Hastings, the Netflix chief executive, sent an enthusiastic message, BlackBerry to BlackBerry, from across the room. Mr. Hastings quickly became a supporter of the e-mail elimination project.

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.

This is an exceptionally prescient move by Netflix. Price wars help attract new customers, but superior customer service staunches customer turnover, and has been proven to improve a company’s bottom line. Blockbuster has parried each Netflix move so far, except this one:

In contrast, Blockbuster outsources a portion of its customer service, and when people do call, they are encouraged to use the Web site instead. Its call center is open only during business hours, said Shane Evangelist, senior vice president and general manager for Blockbuster Online, because the majority of customers prefer e-mail support, which is available 24 hours a day. “Our online customers are comfortable using e-mail to communicate,” he said.

At Netflix, Victory for Voices Over Keystrokes [NYT]
(Photo: Getty Images)

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  1. phoenixcat says:

    I simply adore the Netflix experience. I get 3 flicks a week, and they are consistently delivered on time with no fuss. The new downloadable service isn’t too shabby either- I watched 3 flicks this week, and experienced excellent streaming- I didn’t get one miss-and usually my computer hangs at the smallest website. The movie selection could be better with the downloads, but I found a few things that interested me, so no complaints today!

  2. TerenceF says:

    The last time I went into a Blockbuster, I was only belatedly greeted by an employee at the counter when I walked up to rent my movie. This was because he had to put down his Xbox 360 controller and walk out from the back room. The rest of the employees were still in there, and the door was wide open. They were loud, they had controllers, there were football sounds emanating from the room. This is the kind of behavior i would routinely encounter in their brick-and-mortar stores. Blockbuster is therefore lagging far behind in the customer service area, because not only does their service department fall short, but their employees’ customer service skills are lacking at best.

  3. cp87 says:

    It sounds great, but it would be cool if they still offered the option of email-based customer service.

  4. Hexum2600 says:

    I am also a very satisfied Netflix customer. In fact, I actually did like their email support and thought that it was very well done. Once I emailed them to ask why it was skipping over certain discs in the queue and they sent me back a full page and a half email explaining the general way the algorithm worked (like not going to season three of a show when i hadn’t finished season 2, etc etc) which is way more than i expected.

    I used to have the 8 discs at once, but after my fiance and I split up I went down to the 3 at a time…

    The discs are always here exactly two days after i mail them in. This was true in Saint Louis and now in Cincinnati. I’ve had a few discs go missing in the mail, they were replaced, no hassle.

    All in all, to hear that a new customer support program from Netflix has a good foundation in customer service does not surprise me, not one bit.

  5. Jim says:

    “…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.”

    Duh! Good job picking that crack research team.

    Regardless, glad someone has seen the light.

    And as for Blockbuster: “‘Our online customers are comfortable using e-mail to communicate,’ he said.” What exactly are they communicating to you about your service Mr. Evangelist?

  6. Christy says:

    Can we also discuss for a minute the fact that Blockbuster just cut their plans two days ago? My plan that used to give me unlimited “Total Access” to in-store exchanges (incidentally, the only remaining motivation for choosing Blockbuster over Netflix) is now limited to 3 in-store exchanges per month.

    Netflix, here I come.

  7. adamwade says:

    I think Netflix is far and above BB service, BUT I have to say, I prefer the OPTION of email support as well. It’s VERY nice to have a phone number to call if I need to, but honestly for anything I’m going to interact with them for, e-mail would really be just fine. It is SO much easier for me to shoot off an email in 10-15 seconds than bother with using a telephone and giving my account info, talking about the issue, etc.

    It’s the same reason I go to the ATM even during normal banking hours, even if there is no one at the drive-up window : I don’t need “personal service” for every single transaction I make, and sometimes, by golly, I just like handling it myself in the easiest way possible. I want that personal service there if I ever do need it, but there is nothing wrong with email support if the company a) has other options, and b) does it right. I’ll give you an example – Dell. I’m sure it’s outsourced to all hell, but they keep themselves accountable to e-mail. Amazon too. I’ve had great experiences with them both (defective merch, merch that failed to live up to expectations), and I’ve never called either.

  8. ChiSwede says:

    Their customer service is the best I’ve experienced. They never give you the runaround, and go out of their way to satisfy you. A few weeks ago, I stupidly shipped back one of my DVDs instead of the one they sent me. The CSR said they couldn’t send it back to me, b/c they carry that DVD for rental. Anyway, she said they would credit my account for 15 bucks to replace my DVD. The credit was in by the end of the day. This was completely my fault, and they could have easily told me too bad.

  9. grouse says:

    Personally I vastly prefer interacting as a consumer via e-mail.

  10. d0x says:

    Netflix has excellent service. I was on a free gift subscription for 3 months about a year ago. I had rented 3 HD-DVD’s and all 3 of them were scratched…one of them was split in half, not broken but the layers of the disk were split from abuse.

    I sent them an email, and a few hours later i got a reply offering me 4 free bonus rentals.

    What that means is instead of having only 3 movies out, I could have 4 by using a coupon and i could do this 4 times.

    All this and I had never sent them a cent. Once my gift subscription was up I bumped my plan up to the 4 movies a month because that had made me happy. If a company pleases me I have no issue giving them my money.

    Now I just need to get my missing netflix movies sorted, recently I have moved and a couple movies I have sent back were never received except one which showed up there about 2 weeks later.

  11. d0x says:

    Oh and btw about the Blockbuster price war…they have just raised the prices on some plans after the recent cut and they also eliminated the free in store game retal/movie rental coupons…ouch

    [stopgeek.com]

    story is at the above link

  12. perianmellon says:

    I really have to agree that netflix has outstanding customer service and support. I lost my queue after putting it on hold for vacation and the person I spoke to was exceptionally empathetic (he commiserated with me about how much he’d hate it if he lost his queue) and generous (I got a month free). Basically everything I wanted to hear. Plus, they managed to recover my queue later that week.

  13. Dustbunny says:

    The Oregonian had this story too, about how Netflix put the service center here because we’re so polite & friendly. Hell yeah, we’re nice — you gotta problem with that?? ;-)

  14. Shadowfire says:

    “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.”

    I don’t think that’ll last long. Once people figure out they can do that, they’ll take advantage of it, and Netflix will need to stop. :(

    People are jerks.

  15. yg17 says:

    I’ve been a Netflix subscriber for a little over a year and have yet to find a reason to contact them, either by phone or e-mail. I suppose that’s a good thing since it means everything’s running smoothly. But Netflix is just awesome. I always get my movies quickly (sometimes it takes 2 days each way since I live in the middle of nowhere for college, but that’s understandable. I’m too busy drin…err…studying, to watch that many movies a week)

  16. thepassenger says:

    Netflix deserves and gets my business because they offer a compelling product and superior service at a reasonable price. They get it, plain and simple.

    Also, my mother got a gift subscription for them a couple of years ago. She is afraid of online shopping, but it still required her credit card to set up online; she called customer service and was able to set up checking account debit to continue the service when the gift period was up. Maybe this option is not heavily promoted on their site, but it exists and was able to get her up and running; three years later she is just as satisfied as I am.

  17. TomK says:

    Netflix here I come!

  18. ellmar says:

    NetFlix is awesome. When I had to cancel the service due to the downsizing of personal expenditures in a post-sub-prime-mortgage-market-meltdown squeeze (and because I always forget to watch the damn movies) the Netflix guy simply said “OK!” He didn’t try to salvage the account or talk me into a different plan or force me to talk to his supervisor. He simply told me that my queue would be there for me for 24 months if I changed my mind. Amazing service, no B.S.

  19. allstarecho says:

    Umm, but they aren’t in a price war. Blockbuster lowered by a buck. Netflix followed. Then Netfilix did it again. Blockbuster went up, then up again. Netflix went down again. So where’s the war? Netflix has went down 3 times while Blockbuster went down once and then back up. durka durka?

  20. catskyfire says:

    I’m happy with Blockbuster. I originally switched for cost, and for me, I got my movies faster. (I’m in Nebraska, and Netflix had their distribution in Minneapolis Minnesota, while Blockbuster was Kansas City, a wee bit closer.) I’ve enjoyed the ‘return at the store and speed up the process and get a movie.’ And they’ve had a few more movies. (Netflix didn’t have Hawk the Slayer, for example.)

    I do think Netflix is wrong on one point. I -never- want to have to telephone for support unless I have to. I hate doing it. If they don’t want ‘e-mail’, then have a real time online chat.

  21. d0x says:

    @Shadowfire: if you mark too many disks as lost and they never get returned netflix will flag your account, call you on the phone and ask what the deal is and then kill your account.

  22. shadowkahn says:

    Netflix custy service is excellent. I was having a problem a few months back with the post office not delivering my mail, including the netflix DVD’s. The PO was their usual charming self, so I called Netflix figuring that anyone who ships that much stuff per day probably has some pull with the mail guys.

    Not only did they place a call to my local post office and get the problem cleared up overnight (I’d love to know how ;) ), but they insisted on slashing the next month’s bill in half “for your inconvenience.” I tried to get them not to do that, since the issue wasn’t their fault *at all* but they wouldn’t hear of it.

    Too bad more companies don’t realize the kind of loyalty that level of service buys. I’m a crusty, cynical old jerk, but they won me over and have a customer for life.

  23. Buran says:

    Wow, no email? Then I will never use their service.

    I’m hard-of-hearing and I hate using the phone. Don’t give me written customer service?

    Don’t get my business.

    Way to alienate customers. Providing phone support is fine, but DON’T FORGET THAT NOT EVERYONE CAN USE THE PHONE. GIVE US A CHOICE.

  24. d0x says:

    @catskyfire: You switched for cost but Netflix is now cheaper.

    Also whats the point of going with online retal service if you still go to the store? That defeats the whole purpose doesnt it?

    I always hated driving to Blockbuster, then having to drive back to return the movie. With Netflix I pick a movie and the next day I have it.

    If you pay attention you can easily set it up so you get 3 movies delivered at one point in the week, then watch and return and then get 3 more before the week is over. 6 movies in a week should be more then enough for even the laziest out of work people.

    Hell, you can get a movie the day after you want it so long as you put it as #1 in your Queue before Noon.

    For instance, I want to watch The Matrix, I put it in my Queue today at 9am, by 2pm tomorrow Im watching it. No hassle, no lines, no idiotic sales people who look at you with angry eyes.

  25. d0x says:

    @Buran: You can still use email I just checked. What they are doing is making it easy to get a live person if you want instant support.

  26. Buran says:

    @grouse: Ditto. See my comment below.

    What’s the email info for their executives so that we can carpetbomb them and tell them about how this fails to provide equal access to their service for the disabled?

    They rent captioned movies, right? Apparently they won’t provide captioned service, either.

  27. Buran says:

    @d0x: Oh? Then why does it say “Netflix’s decision to eliminate the e-mail feature was made after a great deal of research”?

    Eliminate = no longer available.

  28. zaq2g says:

    This artilce almost brought a tear to my eye… BUT IT SHOULDNT!!! All companies should make this thier mission and not a last resort in a fierce battle in this virtual duopoly.

    I like companies like this. If i could, I would only shop with companies that offered excellent customer service as well as reasonable prices. This is why I shop at Costco before others. Not only is thier CS great, but they also have good prices.

    @Buran: Who says they wont be offering TTY services or even continue email support? Please research before you become infuriated at third party information.

  29. umonster says:

    Eliminating email support is considered a boon to customers? Methinks Carey drank the Netflix Kool-aid . . .

  30. aviationwiz says:

    Netlix? Good Customer Serivce? In the same sentence!?

    I’ve tried several times getting support for Netflix Watch Now, and each time, I’m on hold for more than 15 minutes before giving up and just hanging up the phone.

  31. Graciela says:

    I’ve been happy with the Netflix customer service, and I wish more companies would get non-outsourced, aim-to-please human support. Now, if Netflix could make the Watch Now feature available to everyone (not just the Windows/IE users) then I’d be really happy with them…

  32. Nilt says:

    @Buran: “What’s the email info for their executives so that we can carpetbomb them and tell them about how this fails to provide equal access to their service for the disabled?”

    Bullcrap. That’s what the TTY system is for. Equal access is perfectly intact.

  33. YokoOno says:

    I seem to be getting my films faster now–there are fewer hold ups with in my queue. I hope they are really improving customer service because I was getting fed up a few months ago. They seemed to think I was watching my films too quickly and returning them too quickly, so they held up the next film in my queue for a day or two. So annoying.

  34. MMD says:

    Over on the Hacking Netflix blog, people are reporting waiting on hold for upwards of 20 minutes. I wouldn’t exactly call that exemplary customer service. Netflix still beats BB by a mile on many fronts, but I do think an email customer service option should exist. When do you think the class action lawsuit on behalf of hearing impaired customers will be filed?

  35. elimseoj says:

    I am a heavy Internet user. I prefer to use the online site to the telephone merry go round. But sometimes I must call. Sometimes a mailing piece encourages me to call.

    I get so very tired of messages that say, “You can use our online service at http://www.xxxxx.com.” A customer centric service would know that I am an online user, so it would dump me into another queue.

    Blockbuster is so right when they say, “Our online customers are comfortable using e-mail to communicate.” However, they are very silly when they don’t realize that sometimes – darn it – the telephone is necessary. That is why they will continue to lose market share.

  36. SmoovyG says:

    Man, the Netflix experience has defintely changed since I was a customer.

    I signed up with Netflix back in their first year of operation, and I lasted about 9 months before they decided to kill my account out from under me. Seemed that they shipped a movie to me that I never received, and despite my protestations that it never arrived in my mailbox, they insisted that I pay the late fee (which seemed odd to me, since there were supposed be no late fees) and a replacement fee. During my one and only phone call to customer support, I was told my account was cancelled and I was no longer welcome to use their service.

    Nowadays, it’s all OnDemand, DVR and cheap DVDs from the L.A. swap meets for my house.

  37. Namilia says:

    I think that this is a good idea, while real time internet chat (sans automated responses) would be a good system to also implement. I’m not a Netflix customer, but articles like this really make me wonder if I should be.

  38. armchairdj says:

    No email option whatsoever? Insane. I work for a small company in an open seating plan. It’s difficult to make personal calls at work. I would prefer the option to fire off an email about non-emergency issues and wait a reasonable amount of time (24 hours?) for a reply. Having to call, even if they’re open 24 hours a day, is annoying. Timeshifting is everything.

  39. nardo218 says:

    They do have web forms for most common problems, like lost/replacement disks, updating/changing acct type, etc. I don’t think you would need to call their customer service for 90% of problems a typical customer would encounter. I’ve used NF for three years and haven’t yet had to contact a human.

    BTW, this was my tip. Yay! :D

  40. davere says:

    My previous employer had outsourced its customer service and technical support for the longest time. Then due to customer complaints they decided to bring the call center in-house.

    Somehow I ended up roped into the project due to my technical role.

    There was one rule that I was able to suggest and convince the powers that be to implement: no talk time.

    Once the call center was brought in house the positive customer feedback improved considerably and the agents always seemed happy that they didn’t have to be looking at the clock.

    Happy agents = happy customers

  41. delphi_ote says:

    My experience has been fantastic with Netflix customer support. I had a problem with DVDs that didn’t play. They sent me new copies right away and increased my queue so I wasn’t missing out on other movies I’d rented.

    Big thumbs up here.

  42. texasannie says:

    My experience with Netflix has been excellent, and I love that they’re trying so hard to provide superior service. Now I just need to find out where I can send these 200 CSRs some of my famous homemade cookies.

  43. CumaeanSibyl says:

    I would be amused, though disappointed, if the conventional wisdom proved true in this case, and Netflix took a big loss by spending money on a high-quality customer service program about which nobody gave a shit.

  44. mrwok says:

    @Buran: do they have tty service?

  45. Helvetian says:

    This is great, and this is what makes T-Mobile stand out: world-class 24/7 customer service. However I really like using email, even with T-Mobile. I get clear replies, with the details I desire as opposed to calling in. Kudos to Netflix for this move, it comes a long way from their original 5 hour per day center hours with a phone number only available on the new customer sign-up page or when you clicked cancelations on the site. Nice to see them focus on service, and 24/7 is great.

  46. Helvetian says:

    I just read the article, too bad they didn’t include this:

    By the first quarter this year, after years of outstripping Blockbuster in subscriber growth, Netflix added 480,000 new subscribers while Blockbuster signed up 780,000 new members. And in the second quarter of this year, Netflix, which prides itself on customer loyalty, lost 55,000 customers. Blockbuster added 525,000, bringing its total to 3.6 million.

    Now I know the real reason behind this new move. Netflix has the highest churn in the industry and is trying to retain customers. Still nice, but too bad they are only now doing this.

  47. Asvetic says:

    If only Netflix included video games, they’d be unstoppable.

  48. TWinter says:

    @catskyfire: Your Netflix experience must have been a while back. I live in Iowa and used to get Netflix from Minneapolis. But then they opened up shop in Des Moines and not long after that in Cedar Rapids, which is even closer. The speed jump was huge!

    I bet you’ve got something closer to you now as well.

  49. Usermanual says:

    For me this strikes a personal chord, as I had a miserable experience this past weekend with Blockbuster. I have been using the online service for a couple years and have been satisfied. I had a horrible experience when I went to a physical store to rent a movie on a whim and cancelled my account with the online service before I even got the DVD open. (The physical store did not remove the security lock from the DVD case).

    I will give one company my business over another, if there is even the slightest hint that they are making a valiant effort to serve the customer better. Lowering prices, and hiring domestic customer service reps, are two steps in the right direction.

  50. monkey-knife-fight says:

    I got burned pretty badly by Netflix’s really crappy cancellation process. Have they fixed that yet? (My burnination happened about four or five years ago.)

  51. jefuchs says:

    It’s sad when good service is an indicator of desperation.

    I just don’t like BlockBuster, or their limited online catalog. One of their snotty in-store clerks turned me off to them years ago, plus the fact that they live up to their name, by focusing on blockbuster titles, which pander to the lowest common denominator customers. I frequently left their store empty handed after digging through every title they had.

    NetFlix has an excellent selection, for which I’d readily accept a rate hike. I like low prices as much as the next guy, but I cringe when I hear NF is lowering prices again. I fear we’ll lose them before long. Until then, I’ll remain a customer.

    I’d like to see them expand their streaming media selections. That’s a great feature.

  52. silverlining says:

    Blockbuster customer service SUCKS. Seriously.

    I was a Blockbuster customer for over five years. My dad had a major stroke, and in my rush to get to him–a three-hour drive one way–I forgot to return my Blockbuster rentals. The doctors told us to expect the worst for my Dad–they thought he wasn’t going to make it–and I ended up staying three weeks with my parents at the hospital (Dad made a partial recovery, thank goodness.)

    Well, lesson to me: Blockbuster never lets a family medical emergency get in the way of returning movies on time. When I called the local Blockbuster to renew the movies, the manager wouldn’t let me. I couldn’t believe it. Blockbuster was seriously going to enforce its rental deadline during a family medical emergency, even when I tried to re-rent the movies??

    I was a Blockbuster member and even signed up for that goofy monthly program that gives you coupons every month. They had my credit card on file and I would have gladly given it again, but they refused to take it and refused to renew the movies, even after I explained the situation. Essentially, I was told that the only way I could renew the movies was to drive three hours back home and then three hours to my parents place to be with my Dad again.

    Blockbuster, of course, eventually charged me for the late movies, and then a restocking fee when I returned them, which I never paid. To hell with that.

    I couldn’t believe that Blockbuster corporate would condone such action, so I emailed them and NEVER got a reply.

    And then I became a Netflix customer, and I’ve been one ever since. That’s something, considering that I live in Minnesota and Blockbuster is based here. I will never spend another dollar at Blockbuster.

  53. Helvetian says:

    The stores, I don’t deal with. I’m just too lazy to rent and return in a store. It’s too bad that the in-store experiences have caused a few to harbor such disdain for the Blockbuster name. Either way, competition is a great thing and we’re all benefiting.

  54. overbysara says:

    ZING!

    I love netflix.

  55. rdm7234 says:

    A nice little story about Netflix customer service:

    They once sent me some movie by accident. It wasn’t on my queue, and I already had all my movies at home.

    I sent it back, along with an email explaining that they sent me someone else’s movie. They gave me a “free rental”. In the world of netflix, it means that I can have one extra movie at home once. Wasn’t really epecting anything from them, so I thought it was a nice gesture.

  56. rdm7234 says:

    @Asvetic: What about porn? They could trouce NC17-free blockbuster in a matter of hours!

  57. songbookz says:

    My wife and I don’t get cable during the off season – got tired of paying $75 a month for 22 weeks of new shows and 30 weeks of reruns. With both Netflix and Blockbuster, I guess we watched them too fast because it kept taking longer and longer for them to mail out a new movie (and we were subscribing to 8 at a time from one and 5 at a time from the other to try to ensure we had something to watch – which was really frustrating at Blockbuster – they wouldn’t mail out a movie for two days after we returned them at the store.

    If Netflix has discontinued this practice, I might consider resubscribing!

  58. synergy says:

    I had to go check if they still had the email functions because I honestly prefer doing emails than calling anyone hands down unless the shit really hits the fan. And even then I only prefer to call if I’ve had a couple of stupid canned email responses to my problem.

  59. MMD says:

    So I tried to call to get me some of Netflix’s “Excellent Customer Service” tonight. Guess what? I can’t talk to anyone due to “system updates”. I just paid to upgrade my account, but they’ve been sitting on a movie shipment for the past two days with no explanation. So now I can’t email them about it, either and have to “call back at a later time”. Meanwhile, I pay the same subscription rate as everyone else on my plan, yet the “Watch Instantly” feature doesn’t function with my Mac. I never thought I’d say this, but I’m starting to hope Blockbuster turns things around – Netflix needs the competition to keep them on their toes!

  60. Matt says:

    If Netflix is focusing on customer service, why can’t I find the phone number on their website????????

  61. Matt says:

    Oops, put in another 30 seconds of effort and I finally found it…