ChannelTrends: How Well Do You Know YOUR Customers?

Earlier this week, Facebook made one of the most costly mistakes a business can make—forgetting who its audience is. Whether the company was hoping to emulate the information stream of Google +, or just following their own unique direction, the changes they made to the popular social media site could prove to be a major misstep. With a streaming newsfeed and subscriber options that Facebook added in one fell swoop (with no notice ahead of time), it was a bit overwhelming for many of its members. Just browsing the site and reading the posts by high-tech and low-tech friends, feedback was extremely negative. Few could seem to understand the changes or why they were implemented.

While the tech community may be more forgiving, with more than 750 million active users (with an average of 130 “friends” each), a significant portion of their audience is likely not as tech savvy. Chances are they may not be so comfortable with the sudden and significant changes to their Facebook. According to posts from some people who obviously use the social network as their daily connection to the world, the new interface was almost traumatic. But with a little communication to prepare users for the changes, Facebook may have stemmed the anger and increased the customer experience. They have every right to significantly alter the site, as many have reiterated, but the company should have had a better understanding of its ENTIRE audience before making major changes to the community.

Change Should Be Positive (Or At Least Appear To Be)

Sure Facebook is free and the company can make any changes they want to, but it’s a lesson from which the tech community can learn a lot. How do customers respond to sudden system change? Just ask the Netflix CEO how well their members adapted to hasty modifications to their program. In both cases, poor communication likely magnified the problem. The companies broke an implied social contract – that they would understand when significant changes were made to their membership program, or at least be told of them. Whether addressing the members of a social media network or business clients of an IT solution provider, companies must manage change properly with an effective communications plan.

Even if the modifications a company makes are good, when a significant number of members don’t understand the need for the transformation, it could be considered a failure. It’s not easy to balance the amount of information your customers expect you to share with what you feel safe to release. If a company leaks too many details, the changes may be countered quickly by their rivals, so caution prevails in many situations. But when you thrust new ideas on an ill-prepared audience, they typically balk and your customer satisfaction level could take a significant hit.

That seems to be what happened with Netflix, with its projected loss of more than one million subscribers in the past few weeks (although they still report almost 24 million subscribers). The company angered a number of customers by increasing DVD subscriber prices as much as 60 percent overnight and by moving its streaming services to a separate website. The revolt was swift and vocal, with the company’s stock falling to $125.02 as of yesterday’s close (September 22nd), significantly lower than its high of $304.79 earlier this year. The negative feedback even caused CEO Reed Hastings to offer an apology in the Netflix blog this week. He was frank and admitted he screwed up and could have avoided most of the animosity if Netflix had done a better job communicating their plan from the beginning.

Don’t Overlook Customers

Both Facebook and Netflix had their eyes closely on the competition. So much so that they overlooked their customers, forgetting to design a proper plan to communicate the reasons for the changes they would be making to help them keep up with rivals. In both cases, their intention may have been altruistic, but the delivery made each company look disengaged from its customers.

This scenario plays out more often than you imagine, with the need for higher revenue and stock prices dictating a swift change to the business model—which customers never saw coming. Many times they may just be trying to blunt a competitive move, but that doesn’t excuse leaving their audience in the dark. It’s a lesson for solution providers and the IT vendor community to pay attention to (especially those that are publicly traded).

The Facebook user interface revisions seem to have been inspired more by their technical team trying to outdo Google + than their desire to improve usability, but we may never know. The situation appears to mimic the battle that goes on in many technology companies, with the engineers winning out over the sales and marketing teams. Netflix may have been inspired more by the realities of their markets and competitors. In the end, each organization’s target audience felt alienated, thinking the companies had lost their vision. In Netflix case, a large number of their clients (and stockholders) walked away. The jury is still out on the changes at Facebook, but time will likely soften the anger.

Brian Sherman is founder of Tech Success Communications, specializing in editorial content and consulting for the IT channel. His previous roles include chief editor at Business Solutions magazine and industry alliances director with Autotask. Contact Brian at Bsherman@techsuccesscommunications.com.