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March 06, 2005
NetFlix uses persuasive technology and I don't like it
At the intersection of captology and business is a tricky space where the ethics are sometimes murky. Netflix, the online video service, has entered it head-on. It turns out that they use their customer database to treat certain customers preferentially; if you're new, you'll get more movies faster. Why? It turns out that Netflix loses money if a customer rents more than 5 movies per month. As a result, if Mr. Joe Customer rents too many movies, he'll notice that his movies are being shipped and processed much slower and, theoretically, he'll be less likely to order more movies. Some enterprising people actually tested this and found it to be true:Why are we so turned off by what Netflix is doing? Part of the reason is what psychologists call framing, or how something is presented to us.
Just as there was an uproar when Coke floated the idea of charging more on hot days, Netflix can't win many points by taking something away from its customers. (Coke should have lowered the price on cold days, thus benefiting consumers, at least in perception.)
It's also unfortunate that they're changing behavior by constraining options instead of giving us more choices. I know there are business concerns here, but maybe there's a better way. If I were Netflix, I'd do a few things:
- Frame the early shipping as a benefit of going with Netflix.
- Market to customers that you're the scrappy underdog (against Amazon and Blockbuster) and you're working day and night to beat them. Everybody loves an underdog, after all. I'd probably test this before a nationwide launch.
- Rather than intentionally slowing processing/delivery service, think about what other services you could offer that would satisfy your customers and keep them occupied. Instead of using your considerable technology to focus on your "bad" customers--the ones who rent a lot--look at them as an opportunity for a premium service of ultra-quick processing and delivery.
Posted by at March 6, 2005 11:38 AM
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