The Future is Now: Learning from Netflix
By Peter L DeHaan
Go back with me a few years. Internet-centric companies were the
next big thing. It was purported that they would change how
business was done, render traditional commerce models obsolete, and
usher in a new way of valuating companies - at historically
unfathomable and untenable levels. They were the dotcoms! Their
basic premise was insightful, if not somewhat simplistic and naďve.
With the pull of the ubiquitous Internet and the support of massive
server farms, their business models (that is, their technological
infrastructure) would be infinitely scalable, while customer service
would be strictly self-service. This would keep costs down and the
employee count even lower. Page hits and profitability would be the
inescapable conclusion. Unabashed euphoria was everywhere.
The problem was that most people were not ready for and did not
embrace self-service via the Internet. Not surprisingly, the dotcom
bubble burst. Stock prices plummeted, bankruptcies ensued, and
computer hardware was peddled for pennies on the dollar. Most
dotcoms dematerialized even quicker than they had materialized.
Some companies tried to retool, admirably adhering to the faltering
dotcom mantra; it was an effort in futility. A few insightful
innovators listened to their customers and changed their paradigms,
wisely supplementing their limited and lacking self-service Websites
with full-service human beings. Call centers were built and staff
was hired. The clamoring dim of the masses was largely satiated and
these adaptable entities survived. Some even thrived, having found
the perfect mix of massive computer technology and the personal
touch.
But what about Netflix? Born in the dotcom era,
Netflix
embodies the highly scalable, self-serve model that had failed
most. Not only has it succeeded, it has done so exponentially and
most effectively. For the uninitiated, Netflix is an Internet-based
DVD movie rental service. Members log into the Netflix Website,
browse a selection of 70,000 titles, putting requested titles into
their personal queue, where they prioritize their preferred delivery
order. The first movie generally arrives via mail the next day.
There are no due dates, no late fees, and no shipping charges. Once
viewed, the DVD is returned via a prepaid self-mailer. Upon
receipt, Netflix automatically sends the next movie in queue. Netflix’s 42 regional shipping centers manage 42 million DVDs and
ship 1.4 million a day. Their website includes movie write-ups,
reviews, member ratings (1.5 billion of them), and recommendations
for titles similar to what has been enjoyed by that member.
Interestingly, Netflix customer service is 100% self-serve.
[Netflix
does have a toll-free number for prospective customers and an email
address for media queries - which is how I found out about the
toll-free number; I never did find it on their Website.]
With Netflix, there are no call center agents, no email support, and
no text chat options. Its Website does have a help section; it is
actually helpful. Its list of FAQs are truly questions that one
might want to ask (I did); there is also context specific hints,
instructions, and explanations. The site is quite intuitive and
easy to use.
Given all this, is Netflix an anomaly or an indication of what is to
come? Although it is currently atypical, it is also a model on how
to effectively and successfully design a Website, support customers,
and engage visitors. It is, or at least it should be, a peek into
the future.
Although wide-scale defections from full-service options to
self-service Websites is not an eminent threat, it is one,
nonetheless. Businesses are therefore advised to pursue a two-prong
strategy. The short-term - and continuously ongoing - initiative
should be to look for ways to differentiate oneself from the
competition. Make your company and services stand out; do what
others don’t - or can’t; position yourself to be indispensable.
Long-term, be aware that commerce, in general, and customer service,
specifically, will migrate to the Web. What can your business do to
capitalize on this? The answer may have little to do with the
business you currently run, but it will have everything to do with
your long-term viability. Fortunately, there is time to consider,
study, and plan for these eventualities, but preparation is
requisite because this is a threat that won’t go away; ignoring it
will be to your peril.
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