Netflix, Facebook: Customer or End-User Dilemma

by Emily Jasper on September 26, 2011

Between the disappointing news that Netflix (NasdaqGS: NFLX) is going to spin off the DVD rental business, after already changing the subscription model (and losing Starz, one of the main reasons most of us watch streaming movies), and the newest face lift for Facebook, everyone’s saying, “What about your customers?”

Spending a lot time doing company post-mortems has given me a new appreciation for understanding the exact role of the stakeholders. In the instance of Netflix, yes, the customers may be the ones losing. Shareholders, especially if you pull the stock price charts from this summer, lost really big. And so far, the winners in this could be the very industries that Netflix had tried to leapfrog: cable and satellite. If DirecTV (NasdaqGS: DTV) already provides you with a box, them adding streaming makes sense…saves you from buying a new device (like a game console) and they’re already in your home.

On the other hand, the changes Facebook is making upsets all the users, but we’re not actually the customers. In effect, we’re the product. The companies that advertise and use data analysis of our Likes and interests are really the customers. Yes, if the product revolts, it doesn’t do much good for the companies footing the bill, but it seems after each Facebook change that gets everyone really frustrated, we grumble then go on posting random status updates and tagging photos as per usual.

I think we’d all love it if things didn’t have to change. Sometimes we just want something to work the way it always has. And then innovation creeps up behind us and says, “Yeah, but I have something better.” Then we grow to love whatever technology or product change that comes along, and even when that evolves, we wish it were working the “old” way. Face it, we’re picky, and it’s a wonder companies even deal with us.

Facebook can make changes on its users because a) they seem to do it regularly and we’re getting kind of use to it now, and b) we’re not the ones paying. However, when Netflix makes changes as drastic as the ones they did this summer and over the last week, we’re upset. Because it’s our money.

As a businesswoman, I understand that sometimes not all your customers are right. You may need to do what’s best for the business and shareholders. However, I’m thinking the shareholders are a little frustrated right now, and well, projecting a million lost customers doesn’t sound so hot for business. It’s one thing when there are no alternatives, but quite another when there are. While the intention may have been to have a clean break of the DVD unit, it’s just turning messy.

Managing stakeholders is a lesson every company must learn. And relearn. Your stakeholders, be they end-users or consumers, are the ones who can make or break your business, and the shareholders will be wondering what you’re doing if you completely turn them away.

Image via Wikipedia.