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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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.
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.
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.
ZING!
I love netflix.
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.
@Asvetic: What about porn? They could trouce NC17-free blockbuster in a matter of hours!
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!
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.
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!
If Netflix is focusing on customer service, why can’t I find the phone number on their website????????
Oops, put in another 30 seconds of effort and I finally found it…