Valuable Social Media Lessons, Sponsored by Verizon and Netflix

By Pedro Pereira  |  Print this article Print

Verizon and Netflix's recent gigantic errors in judgment can serve as lessons for the rest of businesses. Here's a look at the right way to treat customers.

We need big companies to step in it once in a while. How else are we to learn important business lessons?

Thankfully, Verizon and Netflix have obliged in recent months with spectacular public relations missteps that proved the worth of social networking for consumers.

Any company that sells a service or product to a demanding set of clients should have learned critical lessons from the Netflix and Verizon experiences. That of course includes IT services providers, whose customers could easily log on to Facebook or Twitter to mount a campaign against a provider that screws up.

Lesson No. 1: Don’t take your customers for granted. Verizon and Netflix did.

Netflix clearly assumed customers would be OK with a 60 percent fee hike accompanied by a decision to split the DVD-by-mail service from its web streaming service. This would have created two companies and forced customers to use two websites, build two movie queues and make two payments.

Convenient, right? Netflix ultimately abandoned the company split plan, but not before bungling things badly enough to chase away 800,000 customers.

Verizon, for its part, decided around the holidays it would be a great idea to start charging customers $2 for making one-time electronic bill payments. Verizon wants customers to pay online all the time, but rather than giving them an incentive to do so, the company’s brain trust figured it would punish those who do it only sometimes.

From my own experience, this is a company that has serious trouble keeping its billing straight, so to see the carrier wanting to punish people for paying their bills is nothing short of extraordinary. Some might call it chutzpah.

Lesson No. 2: Act quickly. This is one of those lessons that no matter what happens, some companies never learn. To Verizon’s credit, the company reversed its ill-conceived fee decision within days, potentially saving itself a lot of pain.

Perhaps Verizon learned something from Netflix, which moved more slowly. In this era of real-time communications with consumers jumping online from laptops, tablets and smartphones to opine on everything from the texture of their breakfast porridge to the fate of the universe, companies simply cannot afford to drag their feet in public relations crises.

It took but one day for 100,000 customers to sign a petition through Change.org against Verizon’s so-called convenience fee. (Convenient for whom?) Had the company reacted too slowly to the customer backlash, it certainly risked losing customers.

Lesson No. 3: Communicate. Companies must not only communicate effectively but also recognize communication is a two-way street. It’s not enough to say, "Can you hear me now," if you aren’t listening as well.

Customers will make themselves heard, and these days they have plenty of tools to get their message across. While the Netflix situation was playing out, plenty of people used Facebook status updates to lash out at the company.

And when CEO Reed Hastings issued an eyebrow-raising apology, he made matters worse: "It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes."

You see, in the CEO’s view, it wasn’t so much the size of the fee hike or the inconvenience the company split would cause, but really the way Netflix announced its plans that warranted an apology. Out of touch much?


The Verizon and Netflix episodes demonstrated that social media is a powerful tool for consumers. One false move deemed bad enough by your customers, and you’ve got trouble.

The trick is to avoid false moves. And that’s how social media can help companies as well, letting them gather information generated through social media sites to gauge customer moods, likes and dislikes. The information is there; now it’s just a matter of whether you bother to collect it and figure out how to use it.

Pedro Pereira is a columnist for Channel Insider and a freelance writer. He can be reached at pedrocolumn@gmail.com.