The fourth quarter report from the American Customer Satisfaction Index reveals that Amazon continues to outpace the retail industry with a score of 85, placing the company ahead of Office Depot (84), Nordstrom (84), Costco (83), and Kohl's (81). What's particularly interesting is how consumers continue to rate their experiences with Amazon well above that of Netflix (75), particularly as Amazon is taking aim at Netflix along with the TV and cable industry as it ushers in a set of new entertainment offerings as part of its Amazon Prime Instant Video Service.Netflix gained notoriety in 2011 when it made a series of customer experience blunders, first by raising its prices by 60 percent, followed by plans to split its DVD by mail service from its streaming service. Although the company abandoned the company split, the damage had been done, resulting in 800,000 customer defections in Q3 2011 alone.
Amazon's aggressive push into entertainment services doesn't bode well for Netflix. As Peppers & Rogers Group founding partners Don Peppers and Martha Rogers, Ph.D. have frequently commented, customers are likely to forgive a well-managed customer-centric company when it makes a mistake, especially when they feel that company is consistently acting in their best interests.
Although Netflix has rebounded modestly from its customer experience mistakes in 2011, it's not in the same class as Amazon, which proactively notifies customers when they've ordered the same product more than once.
As Peppers and Rogers also note, customer trust is dependent upon companies demonstrating good intent and competence. My family had been a Netflix customer for years and we had been fairly satisfied with our experiences over most of that time. We didn't cancel the service based on the company's missteps in 2011, although the price increase was a factor. In our case, my wife had recently begun working at a local library and we were able to obtain access to a sizable collection of first-run movies and TV series for free instead of paying a provider like Netflix.
At the time we canceled our Netflix subscription in the summer of 2011, the number of films and TV series available through the company's streaming services were fairly limited. Netflix has since expanded its streaming offerings, but its efforts may be too little too late against a juggernaut like Amazon. Meanwhile, Netflix continues to be dogged by technical issues with its streaming service.
Given Amazon's competence and customer centric approach, its future in the entertainment services market looks extremely bright. And the future for Netflix? Ultimately, customers will decide.