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Differentiate with service
Netflix introduced what was then a landmark product when it first began offering DVD rentals by mail. Prior to that, we all trudged to the video store for rentals. Netflix gave consumers an option to go online, make selections, read reviews, and get the DVDs for viewing via their mailboxes. Service and "delighting" customers has been the backbone of the company's offering, and service has fueled its growth. As the market has changed, and Netflix's easy delivery method has faced heavy competition from digital delivery services such as iTunes and the Comcast cable box, the company continued to differentiate with service. So, when this glitch occurred, Netflix knew it needed to recover quickly, honestly, and in its own unique way to prove that the company was worthy of having customers stick around.

Decide to say sorry
Netflix "End of Week" blog update after the shipping debacle posted the message: "Apologies to all once again and thanks for hanging in there with us." A customer responded with: "Forget all those whiney haters. You guys did your best. You deserve praise for getting through it, not hatred for having some hiccups." It's estimated that Netflix's recovery cost it $6 million. Because the company communicated directly with customers, its decision and actions are being applauded and fueling its growth. Ninety-three percent of existing subscribers say they "talk up" how great Netflix is to everyone they know.

How about you? Would you so readily fess up to an issue not all customers are even aware of?

Groupon's recent (humble and honest) apology:
Recently, Andrew Mason, founder and CEO of Groupon, made his own apology. Known for his great sense of humor, Mason tucked his humor away for the moment and showed his serious side while apologizing in a video to his Japanese customers for an error made in a deal featuring a food delivery service. When too many "deals" were sold, the food company was unable to keep up with the volume, forcing them to deliver the meals late and in poor condition.

Rather than blame the food company, Mason acknowledged that it was Groupon's error, and Groupon reimbursed customers and handed out vouchers for future use. Like Netflix, Groupon management could have sidestepped the issue, twisted the press, and avoided much of the blame -- especially considering that Groupon is a rather new phenomenon (much like Netflix was a few years back) and that people are fascinated with finding "deals" so probably willing to cut them some slack. But rather than hoping to slide under the wire on this recent food snafu, Groupon stepped up and owned the mistake.

As Mason says in the video apology posted above, "We created Groupon to help enrich people's lives by bringing new exciting experiences to them," he said. "So when we do the opposite, as we have in this case, it really hurts."

Do you confess to customers when something happens?

Netflix let all of its customers know that it was experiencing a technology glitch holding up requested DVD shipments. The company didn't wait for customers to notice; it was proactive in admitting the error, apologizing for it, and making up for it. Groupon own its error and apologized. Most companies wait for customers to complain, when they have much more to gain (in loyalty, satisfaction, retention, and trust, as well as the profitability that goes along with those assets) by proactively offer a resolution for everyone. Do you openly explain to customers when something goes wrong? If not, perhaps it's time to start.

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About the Author: Jeanne Bliss is owner of Customer Bliss and author of I Love You More Than My Dog.