Netflix always innovates. One thing they've spent a lot of time on is the ability to "stream" portions of their video library - taking advantage of the broadband connections in most homes and the tech savvy nature of their customers. The move to streaming would help make the business more profitable - mailing out all those DVDs isn't cheap, it turns out...
So in 2011, Netflix decided to cannibalize their core business and move people to Broadband - here's the rundown of the details from TechCrunch:
"Netflix is officially on an all-out assault on the DVD — or so says their just-released pricing strategy. The new prices yell loud and clear that streaming is the future and you’re going to pay (literally) if you don’t hop on the bandwagon. Maybe this is why Reed Hastings stated back in May that DVD shipments might go down for the first time ever.
Gone are the plans that include streaming and DVD. Customers previously had the option of selecting the streaming plan for $7.99 and then paying an additional $2 to be able to rent one DVD at a time. Now the plans are separate with the streaming plan costing $7.99 and the DVD plan at $7.99; selecting both options for $16 results in a 60% price increase. Current subscribers will be able to ride the lower price until September 1st, but the plan just went live for new customers. Ouch."
Netflix customers were pissed. But I'm not sure how many people are still mad about the change. I got a new TV for the mancave about 4 months ago, complete with the broadband streaming Netflix account. Not sure what the big deal was. It works perfectly, looks great - all enabled by the big broadband pipe into your home and a wireless router.
So what's it all mean? What can you learn from the Netflix pricing change as an HR Pro? I think the following 4 things:
1. Costs and margins matter. Don't kid yourself. If you believe you can migrate the customer to a similar product but a cheaper delivery platform and you choose not to do it because you're scared of the blowback (from employees in your case), you're going to run the risk of having an operator make the call for you. Put on your big boy/girl pants and make the call. It's called business, and you have to participate.
2. Take all the pain at once. If you're making a move that's going to be seen as negative, ask yourself the following question: "What do we need to include in this organizational change, so we get as much of the change out of the way with this single announcement as possible?" Don't do 2-3 change announcements if you can do it all in one package.
3. Communicate why you're doing it. Why? What's the goal? Does it make the organization more stable as a result? Sell the reasons - or get judged without your voice present. Netflix didn't do this - their move was designed to drive people away from the costly DVD model or make them pay dearly for it - and they didn't say that. You can do better.
4. Consider grandfathered tiers in the change. Can you make the change effective with new employees and protect grandfathered status for existing employees? May not be the right thing in your situation, but certainly a damage control mechanism (if the math works out) that you should consider.
But that's not all. If you're really looking for opportunities to innovate as an HR pro, you look at technology trends and figure out new ways to deliver the same value to your customers, who just happen to be employees.
I’m privileged that I get to speak at conferences to large groups a good bit. Any time I do any topic that relates to social, I ask the following question:
The answer is always 95%+ of the room. 95 freaking percent. I need to take a picture of the crowd next time I ask that question. It’s staggering. It’s also the answer to why you need to think about how broadband and wireless changes how you deliver value to your employees.
“How many of you checked your smartphone every morning before you even get out of bed?”
Think about it. You work HARD to get information in front of employees via all kinds of communications.. It’s hard to get people to pay attention at your company.
All the people you really want to pay attention? They’re checking their smartphone before they get out of bed. How can you leverage that fact at your company? Broadband, mobile and smartphones have changed the game. It's your business, and the issues at play are the same for a VP of HR as they are for the CEO of Netflix.
How can you use those trends to change the way you do HR? The big winners who answer this question won't be HR Tech vendors, they'll be the VPs of HR who get the opportunity and create a custom strategy to take advantage of the trends at their company.
Today's article is in association with www.broadbandgenie.co.uk, the online price comparison site for the latest broadband and tv packages and deals. Click here for more information.