Netflix Phones Ringing Off the Hook in Response to Price Hike

5:53 PM PST 07/13/2011 by Paul Bond
Jin Lee/Bloomberg/Getty Images

After calling Netflix 35 times, a Wall Street analyst excoriates the company for a lack of strategy in dealing with customer complaints.

A Netflix blog that announced Tuesday that a 60% price hike was coming for one of its most popular subscription plans collected 5,000 mostly angry comments in 24 hours, and telephone calls to the company’s customer service department were mostly backed up on Wednesday.

But while customers may be fuming, investors seemed happy. After the stock rose the day the price increase was announced, it was up another 3% Wednesday, closing at $298.73.

Richard Greenfield of BTIG Research told clients that he and his staff placed 35 calls to Netflix on Wednesday over the course of a couple hours and got through to a representative only 15 times after wait times of 9-15 minutes per successful call.

Greenfield’s report, which requires a password to read, even contains audio of a Netflix phone message that says, “We are experiencing higher than normal call volume. Please try your call again later.”

During one of the successful calls, a customer service representative said she was looking at 471 customers on hold, Greenfield said in his report.

Angry customers threatening to cancel are being persuaded by the customer service reps to stay the course because, while the price hike is already in effect for new subscribers, it won’t affect legacy subscribers until September.

“Netflix management had to anticipate an up tick in churn from this major step-up in pricing and the changes to subscription plan packaging. The question is simply whether or not consumer reaction is in-line with their expectations,” Greenfield wrote.

Netflix on Tuesday said it was uncoupling its basic DVD-plus-streaming subscription package so it may charge $7.99 monthly for each, whereas the old plan cost consumers $9.99 a month for both.

Greenfield criticized Netflix for not appearing to have a strategy for addressing customer complaints. Sometimes, he said, customer service representatives told him to cancel streaming while others told him to cancel DVDs in order to keep costs at $7.99 monthly. Other times he said he was advised to alternate between the two plans month-to-month.

“There was literally no (rhyme) or reason to the responses we got,” he said.

He also said “there was simply no promo or save technique to offer us a discount to retain our business. This would appear to illustrate that Netflix is simply not concerned with the prospect of losing customers.”

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