Netflix blows it again

This morning, Netflix announced that they are officially splitting their DVD and the Streaming services into two separate companies.  They will call the DVD service Qwikster, while the streaming service will retain the name Netflix.  This is their answer to the criticism received for the increased prices of a few months ago for their combined service, which caused over 1 million subscribers to leave.

Huh?

Reed Hastings, founder and CEO, starts today’s announcement by saying, “I messed up…,” then goes on to compound the mess.

Don’t they understand anything about branding?

Here is the problem:  They have done a great job of establishing Netflix as a brand for home movie entertainment.  Now they are changing the name (the brand) to have a completely different meaning.  It would be as if Google decided that the name Google was better applied to their new Mobile Phone business and that the search business would now be called GoFast.  That would flush all their years of successfully associating the services that work so well together under the Google brand.

Netflix could have solved their PR problem of a few months ago by rolling back prices to what they were before unbundling the DVD and streaming services.  Now they have compounded their problem by abandoning a formerly great brand associated with innovative entertainment for the home.

I think when Reed Hastings said that he messed up, he was referring to the past.  I think this is his biggest mess so far.

 

Why Facebook

A year ago, if you had asked me about Facebook for small business, I would have replied that it was a cool waste of time for college kids, but that’s about all.  Since that time, I have completely reversed my opinion.

Now I believe (and tell my clients) that it is an essential tool for most, if not all, small business.  Here is why:

1. It is ubiquitous.  Last year, Facebook passed Google as the most popular Website.  Even the older (50 and above) demographic that you might expect to ignore Facebook has grown rapidly in the last year.

2. It is versatile.  You can easily modify your message, include photos, video and web links, and post it instantly.  How else could you promote a freshly cooked homemade soup for lunch today?

3. It is viral.  If you post interesting stuff, your friends will spread it for you.

4. It is free.

Facebook can still be a colossal waste of time and wasting time is the enemy of any business-person.  Don’t get sucked in.

I recommend much of what David Meerman Scott writes about web marketing.  He is unusually eloquent in his explanations.  His blog (http://www.webinknow.com/2009/12/social-media-marketing-explained-in-61-words.html) says it all in 61 words.

 

Calendar Season

This is what I call “calendar season”.  It doesn’t seem possible, but the middle of summer is when stationery stores put out displays of next year’s business calendars.  If you want the best selection, now is the time to shop.

There are other benefits to getting your calendar now. Many calendars, including the calendar I use from a company called Quo Vadis, have refills which reduce the annual cost by two thirds and waste of having to replace the cover.  Having next year’s calendar now lets me start to record planned events for next year.

It’s a good time to consider “calendar management,” which is what most of us call “time management.”  Manager Tools, a series of podcasts (manager-tools.com) devoted to improving management skills, has a two-part series on Calendar Management.  It’s approximately 60 minutes long and is well worth the time.  They recommend, and I agree, that a week-at-a-time calendar is most effective.  A month display is too long and a day at a time does not let you easily plan the week.  For me, week-at-a-time is the most natural.

While we’re on the subject, I also recommend David Allen’s Getting Things Done, available in both paperback and on CD.  I find the abridged CD’s to be an especially effective way to get an overview of his thinking before diving into the very detailed book.

 

Seamless Problem Solving

I recently drove all the way to San Francisco to buy a bicycle, a major purchase that I had been planning for many months.  The arrangements for the bike and the schedule for the fitting were made via phone with an employee who assured me that the bike I wanted was available and that I could complete the transaction in the time I had.  After driving 4 hours to reach the store, I found that the bike they promised was in fact not my size and the key employee required to do the fitting was not going to be available as promised.

As these problems unfolded, the owner of the store got involved and took over the transaction.  His process not only got me more and better product than I was expecting but delivered it ahead of the original commitment.  He made it seem like there was no problem he couldn’t solve, and in what was a fairly complex transaction, he upgraded components, extended warranties, offered to swap parts that did not fit correctly, even after future weeks of use.  This situation could have turned into a real disappointment with lasting hard feelings and certainly loss of my future business.  Instead, the effect was that problems were solved seamlessly, almost before I was aware that there was anything wrong. I was left feeling like I was their most important customer.

A key business fact to notice is that this situation did not involve giving away anything, it did not require any apologies, it did not involve any disagreements, complaints or confrontations. The exceptional part of this transaction was that the owner realized what the problems were almost before I did and so was able to take care of me before anything became a problem.  In fact, I  felt so well served, I bought several additional products that I had not planned to buy and would recommend this store to anyone.

I have said before that the true test of an organization is not that they never make mistakes, but how they handle the mistakes when they do happen.  I will add to that basic principle that in the continuum of ways to effectively solve a customer’s problem, having such a keen awareness of the customer and their needs that the problems are solved without drawing attention, before the customer needs to voice dissatisfaction, is the ultimate level of this great customer service.

By the way, the shop is The Bike Nut at 2221 Filbert Street, San Francisco.  I would recommend them to anyone considering a bicycle.  Their slogan, ”Yes Can Do,” is printed right on their business card and they truly live up to it.

www.bikenut.us

 

Suggestions for a Business Dealing with a Slow Economy

To listen to an interview with Michael Carroll on this topic, click this link. This interview was broadcast July 2, 2008 on KZYX, Mendocino County Public Broadcasting.

A slow economy to a business is like winter to a farmer. It is part of a normal cycle. Things may be dormant, but there is still lots to do. And winter is always followed by spring. Unfortunately, economic cycles are far less predictable, and the slow periods may be years long. But here are a few things to think about.

1. Lower interest rates Interest rates are at historic lows. It may be possible to refinance your debt and lower your monthly expense. It is not necessarily a good idea to borrow against losses just to maintain lifestyle. Rather it is more appropriate to tighten belts and spend less.

2. Slow economy weeds out your weaker competition If the slower economy is hard on a strong, well-run business, it will be much harder on businesses that were just barely making it in the good times.

3. Sometimes easier to find new employees Recruiting good employees is always a challenge, but when the economy slows down, more people are out of work, and it is often easier to find new employees.

4. May be cheaper to have new construction done When the construction industry is down, there are more out-of-work construction trades people, and it might be possible to get construction work done sooner or more inexpensively.

5. Be frugal This is not a time to spend extravagantly and even to continue to spend as you have been. This is a time to be extremely careful with your expenses. If you need to cut, cut owner’s salary first. For a while, live on less.

6. Watch the business expenses even more closely Use your P&L and cash flow. If you do not have these essential tools, get them and learn how to use them. Costs are going up in spite of what they government is announcing about low inflation. Your suppliers may not notify you when they increase prices. Stay on top of it.

7. Revise your cash flow forecast regularly This tool is important anytime, but in questionable economic times, it is essential. If you have a sales forecast and cash flow forecast, review and revise it more often. If you don’t, get urgent about getting one.

8. Increase, not decrease marketing A common mistake is to cut marketing. It is often the only way to reduce expenses without reducing owner draw or payroll. Other expenses like rent are usually fixed. But if you are doing effective marketing, reducing the effort will guarantee your sales decrease. Rather, find other ways to cut, and spend more effort on marketing.

9. Avoid fear-it’s corrosive Watching Fox News or CNN on TV will convince you we are in trouble even if we are not. Fear is good for keeping you from going over a cliff, but staying in the state of fear over a long period is unhealthy and unproductive. The antidote to fear is action. Ask yourself what can you do differently – then do it.

10. Might be a good time to start a new venture This doesn’t seem to make any sense. However, if you use the time during a slow economy to do the groundwork for the new business–make a good plan, perhaps raise money, hire key employees–you might struggle some in the beginning, but you’ll have a year’s head start on a competitor who’s just thinking about getting started in the same business. The enterprise can follow the growth of the economy when it does turnaround. Think about the difference between starting an internet company in 1993 verses 2000.

Don’t misunderstand me. Things are tough and may get tougher. It may not be as much fun as boom times. But usually a well-run business can survive, even thrive, during an economic downturn.

 

Smile!

We recently stayed at a small hotel that featured, among other amenities, a full breakfast. On Saturday morning, a hoard of hungry guests descended on the dining room. The only wait-person was a friendly woman who was moving very fast. In spite of her energy and efficiency, trying to get 25 hungry guests their food was a challenge.

As you might expect, some of the guests were less than happy. No matter how rude or unhappy the diners were, the wait person always seemed to be smiling and happy. This “service with a smile” did wonders at calming the clients.

From a management perspective, one server for 25 guests was a little unrealistic and unfair to the employee. But I was impressed at how well she handled the situation and how much of a difference the smile made in the response of the guests.

I have said before that great customer service is more than just being friendly, but friendliness and a genuine smile are still essential tools for anyone dealing with the public. How often do we forget to smile when dealing with our customers?

 

“They Test Us Every Month…”

Last Saturday night, Margaret took me out to her favorite San Francisco restaurant for a belated birthday dinner. Since her own restaurant was famous for both great food and wonderful service, I am always intrigued by a restaurant that impresses her.

When ordering wine, the waitress was very knowledgeable about some esoteric Italian regional wines. And all three wines we ordered were everything she promised. As we expected, everything about the food and the service was exceptional.

At the end of the meal, I asked the waitress how she knew so much about the wines. What she answered is as close to a secret of success as one will ever get in any restaurant. She enthusiastically answered, “I drink the wines, they are always teaching us about the wines and they test us every month.” She said this with a confident pride and enthusiasm.

In a restaurant, your servers are your sales force. They need to be trained. Not just once, but regularly. They need try all of your offerings so that they know and believe enthusiastically in your product. I guess you small business owners both restaurant and others are saying to yourself, “I cannot afford to regualrly train and test my employees.” I say that you cannot afford not to.