What the 24-Cent Credit Says About Netflix

It's more than just a quarter.

Brian Richards
Brian Richards
Mar 24, 2011 at 12:00AM

I got a puzzling email last night from Netflix (Nasdaq: NFLX): "We're sorry you may have had trouble watching instantly."

Thing is, I didn't have trouble watching instantly. I didn't log onto Netflix Tuesday night at all. Yet the note began:

Dear Brian,

Recently you may have had trouble instantly watching TV episodes or movies due to technical issues.

We are sorry for the inconvenience this may have caused. If you attempted and were unable to instantly watch TV episodes or movies yesterday, click on this account specific link [link redacted] in the next 7 days to apply a credit to your next billing statement. The credit will be 3% of our $7.99 a month plan that lets our members instantly watch unlimited TV episodes and movies. Credit can only be applied once.

A little Web research popped up this Bloomberg piece, explaining that "Netflix, the online hub for renting movies and television shows, said its website unexpectedly crashed, leaving subscribers unable to order DVDs or play films."

The Washington Post says the outage "lasted a couple hours ... with users reporting problems streaming Netflix on their computers, consoles, set-top boxes and mobile devices." Again, I wasn't among this group.

The 3%
So who cares about 3% of $7.99? At $0.24, it seems like an absurdly low offer -- couldn't even buy a vending machine candy bar.

Yet, it's logical. The streaming-only Netflix subscription costs $7.99 a month. March has 31 days in it, which means users pay about $0.26 a day for their Netflix service. Even though the outage "lasted a couple hours," streaming-only users are essentially being reimbursed for a full day of service.

In that light, the 24-cent offer seems more than fair. Perhaps Netflix needed to sell it a little better -- instead of bogging down in the "3% of $7.99" minutia, it could have simply said it was reimbursing users nearly a full day's worth of their streaming subscription.

The larger point here is that Netflix does its best to take care of customers. My own anecdotal experiences with Netflix customer service have left me impressed; others seem to agree. Netflix recently ranked No. 2 among e-retailers -- a single point behind No. 1 Amazon.com (Nasdaq: AMZN) -- in a customer satisfaction report from The American Customer Satisfaction Index and ForeSee Results.

Happy customers often result in loyal customers, and Netflix was ranked No. 1 overall in a survey of brand loyalty. According to MediaDailyNews:

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Robert Passikoff, founder and president of Brand Keys, said he was surprised to see Internet and DVD video rental service Netflix rank No. 1 among the 530 brands tracked in the latest edition of the Brand Keys Customer Loyalty Engagement Index. ... Passikoff said the 2011 survey was the first in which Brand Keys included the video rental category, and that Netflix delivered the best overall attributes of any brand, delivering a level of consumer expectation that Passikoff described as "delighting" its consumers.

How does Netflix do that? By offering people like me unsolicited apologies and a 24-cent credit when we didn't even know its service was down.

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