Netflix Back Flips on Qwikster

Time to recover lost brand equity.

In another stunning move, Netflix announced today that it was abandoning its move to split websites for its DVD movie rentals and streaming businesses, and dropping the Qwikster name.

As we wrote less than a month ago, previous moves by the company’s management was effectively destroying its brand equity.

While the question of what the Netflix brand stands for still remains, this move today will undoubtedly put the Netflix brand back on firmer ground. Whether they regain the hundreds of thousands of lost customers is another question.

I guess every generation needs to have its “New Coke” moment. Hastings and his senior crew at Netflix have brought us ours, even surpassing the miscues made last year by the Gap logo saga.

What are your thoughts? Is the Netflix brand back on the road to salvation?

Leading Masterful Sales Conversations

3rd free Entrepreneurial Selling sales training video now available for viewing.

What’s the missing link between the value your organization delivers and the sales you need to build a sustainable business?

Most likely it’s the quality of the sales conversations you have with prospective customers (and potential investors for that matter).

The third video in the Entrepreneurial Selling series from RAIN Group president Mike Schultz, author of the best-selling book Rainmaking Conversations, shows entrepreneurs and small business owners How to Lead Masterful Sales Conversations.

This 20-minute video shows how to connect with the people you want to have the most sales success possible.

These three videos on Entrepreneurial Selling are being made available for free for just the next week or so. Go watch Masterful Conversations today and share your comments below.

Communicating Your Value

2nd Entrepreneurial Selling sales training video now available for viewing.

The entrepreneur’s job is big, and sales comprises a small percentage of the overall responsibility of being an entrepreneur or a small business owner bringing an idea, product or service to the market.

And, for most entrepreneurs and small business owners, sales is not even the job you want to be doing!

Yet, the real reason so many entrepreneurs and small business owners fail is that they never learn how to sell.

For this reason, I am partnering with Mike Schultz and the RAIN Group on the marketing of a free, three-part video series on Entrepreneurial Selling. These videos are based on the concepts found in the best-selling book Rainmaking Conversations.

The second video shows how Communicating Your Value helps to overcome the Most Common Selling Mistakes made by entrepreneurial sellers.

These three videos on Entrepreneurial Selling are being made available for free for just the next few weeks. Go watch Communicating Your Value today and share your comments below.

Entrepreneurial Selling

What stops entrepreneurs from success?

Ever wonder why some of the most innovative businesses fail and yet many mediocre ones succeed?

Some people attribute entrepreneurial success to luck or timing. Others believe business success depends on networks or connections. And unfortunately too many believe great ideas, products or services will sell themselves (the “build it and they will come” mentality).

The real reason so many entrepreneurs and small business owners fail is that they never learn how to sell.

For this reason, I am partnering with the RAIN Group on the marketing of a three-part free video series on Entrepreneurial Selling. These videos were created by Mike Schultz, president of RAIN Group and the best-selling author of Rainmaking Conversations.

Details and the key learning points from this video series are on our website.

The first video is on the Most Common Selling Mistakes made by entrepreneurs. These are the ones to avoid at all cost.

After you watch the first video you will receive notifications on when the other two videos are released for reviewing (both scheduled for next week).

Watch the first video and share your comments below.

Netflix: Destroying Brand Equity

File this under the “what were they thinking?” category.

Netflix announced that it is splitting its DVD rental and streaming video businesses in an attempt to overcome the massive negative publicity and rapidly escalating customer attrition since it raised prices for both services in July.

Okay, that makes sense.

But here’s the killer.

In an attempt to “win back the trust of its customers,” the company is rebranding its DVD rental service to Qwikster.

Let’s see if I understand this correctly. Some 25 million customers signed up for Netflix as a convenient and preferred way to rent DVDs. And, until a couple of months ago, these customers seemed to trust Netflix.

So now, to win back the trust of the remaining customers (it has reportedly lost over 600,000 monthly subscribers since the July price hike), the CEO has decided to change the name of its DVD rental business and use the Netflix brand for its streaming services.

What could they possibly be thinking? Why not leverage the equity of the Netflix brand and call the streaming service Netflix On Demand, Netflix Streaming, Netflix Video, or even the Netflix Channel? Or anything else that created a brand extension and told customers “Netflix is a brand you can continue to trust.”

And if company management thinks the Netflix brand is not good enough to trust for those remaining 24 million customers who will now forcibly be shifted to Qwikster, what makes anyone think it is a brand that can be trusted for video streaming services?

Apparently even the Netflix DVD business will move to a new website. How confusing will that be to its customers?

I wonder how popular the search phrase “Netflix alternatives” is becoming?

In the past two months, the company has ineptly implemented a much maligned price hike to its existing customers (so much for customer loyalty), split its services into two, and dropped the Netflix branding from its most popular service.

So what does the Netflix brand stand for now? Who knows.

No wonder Netflix has lost roughly 50% of its market value since this series of blunders began in July.

If I were on the Board of Netflix I would be asking for the immediate resignation of CEO Reed Hastings on the grounds of destroying the brand equity of Netflix.

Amazon, Apple Top Loyalty Leaders List

Consumers Reward Brands with Emotional and Social Connections.

Amazon knocked the Apple iPhone off the top perch in the 15th annual Loyalty Leaders list from Brand Keys, while Facebook came from nowhere to the number three position.

Apple need not be overly concerned, however, as Apple also ranked fifth in customer loyalty for its computer products. Amazon may also have benefitted from the free fall of Borders, which dropped to dead last in 528th position.

The Brand Keys Customer Loyalty Engagement Index assesses 528 brands across 79 categories, using both telephone and face-to-face interviews with consumers.

While Brand Keys claims that its “proprietary customer-listening system” is predictive, highly accurate and close to 100% test-retest reliability, the firm does not share any details about the methodology behind this study. They also claim that the Brand Keys Loyalty Model is a leading indicator of brand and corporate profitability, though that is hard to swallow when BP shows up six places from the bottom in 523rd place. While the BP brand certainly deserves to wallow at the bottom of this list, I cannot see BP’s future profitability falling to the same level as Borders , Friendster, Bank of America and others in the bottom ten.

I would agree with the assessment by Brand Keys that “brand loyalty has always been driven by emotion” and that “consumers are looking to emotionally connect with brands that stand for something and delight them.”

The Top 100 Customer Loyalty Leaders is a mixed bag of technology, retail, social media, alcoholic beverages, and fast moving consumer goods (FMCG) brands. Interestingly, only 13 of the top 100 (though five of the top 10) would be on my personal list of brands that would receive my loyalty. How about you?

Trust Key Factor in Why Consumers Switch Providers

Trust is emerging as a critical influencer of consumer behavior.

Only one in four consumers reportedly trust the companies with which they do business, according to the latest Accenture Global Consumer Research study.

And, over the past year, loss of trust has increased as one of the key reasons behind consumers deciding to change providers in the consumer electronics, retail and tourism industries.

According to the authors of the report, “trust is emerging as a critical influencer of consumer behavior.” In eight of the 10 industries surveyed,  13% to 17% of the respondents mentioned trust as one of the reasons for switching service providers.

The five least trusted industries, in which at least 20% of consumers “do not trust at all,” were  (in order): gas & electric utilities, cable and satellite companies, landline phone companies, wireless phone companies, and life insurance providers.

Not a single industry is trusted “very well” by more than one-third of its customers, and none of the 10 industries surveyed had higher “trust very well” scores  than a year earlier.

The sixth annual Accenture Global Consumer Survey was conducted in 17 countries, with over 5,800 respondents being asked about their attitudes and behavior towards 10 key industries. For more details on these survey results, see the Keeping Good Customers Blog.

Other surveys reflect similar trends in the trust gap between consumers and business. We wrote a three-part series on these declines about a year ago in the Monday Morning Marketing Memo (send me a note if you would like me to send these three articles to you.)

The declining levels of trust across the globe in businesses and governments dictates that organizational leaders need to focus on regenerating trust with key stakeholders and constituencies. 

This is more than just a marketing problem; it needs to rapidly become a Boardroom concern before it becomes a Boardroom problem of epic proportion.

On the other hand, building trust with consumers and your customer base is definitely a strategic marketing opportunity, since so few consumers find their service providers trustworthy.

What are your thoughts on how businesses can re-build trust with consumers?

Advertising and PR 10th Most Negatively Viewed Industries

Continued decline in how Americans view advertising and PR industries.

The Advertising and PR industries in America have an image problem.

Each August Gallup asks Americans to indicate whether they have positive or negative views of various business and industry sectors. The 2011 Gallup survey was conducted in mid August and the advertising and public relations industries ranked 10th from the bottom with a net negative rating of -5.

37% of the respondents rated advertising and public relations negatively, compared to 32% who view these industries positively (the remaining 29% were neutral).

The computer industry was by far the most positively rated industry, with a net positive score of +62, while the federal government hit an all-time low, coming in last place with a net negative rating of -46.

The nine industries viewed less favorably than advertising and PR were:

Pharmaceutical industry                   -7

Airline industry                                 -10

Education                                           -12

The legal field                                    -16

Banking                                               -17

Healthcare industry                          -28         

Real estate industry                          -29

Oil and gas industry                         -44

The federal government                    -46

The industries scoring higher than advertising and PR were sports, movie, telephone, automobile, publishing, accounting, travel, retail, grocery, farming and agriculture, Internet, restaurant, and computer.

Gallup has been conducting this survey annually since 2001, during which the positive rankings for the advertising and public relations industries have dropped from 38% to 32%. This is the tenth highest drop of the 25 industries surveyed annually.

Do you agree with these results? Where would you put advertising and PR? Add your thoughts below.

Steve Jobs: Marketing Genius

Why Apple’s Steve Jobs is a World-Class Marketing Genius

Like many consumers I have long been enamored with the product designs, enhanced functionalities and overall quality of the Apple products brought to us by Steve Jobs.

As a marketing professional, though, I have also been enthralled by the power, story lines and production values of the TV commercials produced by Apple under the eagle eye and branding brain of Jobs. And yet this is only part of the story behind the marketing genius of Jobs.

Apple is often seen as a company built through product design. But it is more, much more.

Led by the instinctive and intuitive insights of Jobs, Apple has had a foundational focus on the customer experience, long before “customer experience marketing” entered our industry jargon.

The customer experience was often the focus of Apple’s advertising campaigns. And it has certainly been the key element in how the Apple retail stores have been designed, from free availability of products test and trial to the clever concept of the Genius Bars. It is little wonder that Apple’s retail stores have a higher sales-per-square-foot level than any other retail chain in the USA, including high-end retailers like Tiffany’s, Gucci and Coach.

How was Apple able to produce a steady flow of brilliant advertising over the years? Two key factors:

a) Jobs was heavily involved in the creative process at all times

b) Jobs used only one agency (Chiat/Day, which eventually merged into TBWA)

Together they produced a litany of powerful, emotive, brand building advertising campaigns, including:

  • 1984
  • Mac vs. PC
  • Meet iPad
  • Silhouettes
  • Think Different
  • Meet Her
  • Stacks
  • Quotes

Which of these were your favorites? Any to add? I will be adding the ones I like best to my favorites at our Howard Marketing YouTube channel.

Designers call Steve Jobs an inspiration to their craft. Computer geeks claim Jobs as their own guru. And those of us in the marketing profession know that, above everything else, Jobs is a marketing genius.

We can only hope that Jobs will do for marketing in the Boardroom what he has done for marketing as CEO.

Internet Ad Spend to Surpass Newspapers in 2013

Prediction from ZenithOptimedia Adspend Forecast

Internet advertising expenditures will surpass newspaper advertising in 2013, to become the second largest advertising medium, according to the most recent quarterly forecast on global advertising expenditures by ZenithOptimedia (July 2011).

With a forecasted growth rate of 14.2% per annum, Internet advertising will grow from $63 billion in 2010 to almost $954.5 billion in 2013. Advertising in global newspapers is predicted to decline over this same period from $95.2 billion last year to just $92.8 billion in 2013.

If these projections come to fruition, Internet advertising will account for 18.3% of all global advertising expenditure (up from 14.1% last year), while newspapers will receive just 17.9% of the advertising pie, down from 21.3% last year.

Television advertising is forecast to have moderate growth, going from 40.4% share last year to 41.4% in 2013. Television accounts for the most new ad dollars over this period, growing from some $180 billion last year to almost $216 billion in 2013. TV advertising will remain at twice the level of the second highest medium.

While advertising in China will be approximately 50% higher in 2013, all markets are miniscule compared to the behemoth USA market, which at $151.5 billion last year was 3.3 times larger than second place Japan at $43.3 billion.

Over the next two years China will surpass Germany for the third spot on the advertising expenditure leader board, while Australia will climb one spot from 9th to 8th. Italy is projected to drop out of the top ten ad markets and will be replaced by Russia.

An interesting break down of Internet advertising expenditures shows paid search advertising accounting for almost 50%, with display advertising (36%) and classified ads (15%) accounting for the rest of this $90+ billion advertising pie.

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