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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

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 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

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
Netflix announced its plans that warranted an apology. Out of touch


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