How To Build Trust By Saying No

Last week, Netflix announced they will begin to cancel subscriptions for customers who have not used their account for a year – or more. At first glance, this decision may seem like cutting off a revenue stream for no good reason. However, I think it’s a good move and may reflect a fundamental principle of making sure that customers pay only when they receive a service that they value.

This stands in contrast with an attitude my former colleagues at a major brokerage firm, often displayed when they repeated, “clients have inertia.” They meant that once a client came to the firm it was unlikely that they would leave, and they were correct. However, this wasn’t necessarily an indication that they were happy. Rather, because it can be time-consuming to do the work necessary to move assets, many people avoid doing so. Yet, the entitled attitude that this can sometimes engender is not what any investor would want to experience from someone entrusted to help them with their assets.

Netflix embodies the opposite with their “cancel anytime” policy. No shaming, no run around, no penalties, or recriminations. Until now, customers would let Netflix know when they wanted to cancel, but most people don’t until they have let the subscription go unused for a long time. It’s not that people are lazy, but rather we have bigger fish to fry and cancelling Netflix doesn’t make it to the top of the list. We forget about them, and other bigger fish as well.

Netflix has found a way to re-enter the consciousness of customers who haven’t used the service by adding value in a highly unexpected way. They are saying “no.” No, we don’t want you to pay for something you are not using. No, we don’t want to be one more thing that you come to resent later when you realize you keep forgetting to cancel your subscription.

Whether you are in a subscription business or not, the philosophy evident in Netflix’s decisions is one to learn from. Here are a few ideas on how to do that:

1. Say no to customers/clients that aren’t a good fit for you. This takes focus on what value you provide, to whom, and what good it does. Engage in a mutual conversation with prospective partners about whether or not it is a good idea to work together. A great example is a client in the financing industry. They are terrific at knowing who is likely to be a good customer and who isn’t likely to be able to benefit from the way they work. They don’t try to do business with everyone, only those whose businesses they can help in a way that their customer will recognize and value. Sales calls are conversations, not presentations, and usually lead to a mutual understanding about whether or not they are a good fit for one another.
2. Turn down payment to do the wrong thing. I was once asked to “babysit” (I’m not making this up, those were the words used) a senior executive in a Fortune 100 company. An out of control executive was causing tremendous havoc but his boss didn’t have the courage to remove him. Instead, I was asked to ride shotgun with him to make sure he didn’t blow up the organization. I told his boss to remove him and, reluctantly, he did so soon after. My advice had value – “babysitting” would have only prolonged a bad situation.
3. Don’t bribe people. Netflix may well see people they canceled, return to the service. Even if they don’t, canceled customers have a story to tell friends and a good feeling about a company that declines to take their money due only to inertia. This is far better than the over-used methods of “do this and we’ll give you that” approach that is the stuff of many email Junk Folders.
4. Reconsider your loyalty programs. It actually irks some people to be thanked for their “loyalty” because it creates a sense of obligation that isn’t due. I fly on Delta a lot and like the airline. Since I live in the city where Delta is based and dominates the airport, I wouldn’t call my behavior loyalty.

Many loyalty programs are costly to operate, take tremendous infrastructure, and are frustrating for customers to use. Those airline miles are great but only if you can actually use them for something besides flying to Azerbaijan on New Year’s Day.

Netflix has made it easy for customers who are inactive to stop paying. What a great idea! What great ideas have you come up with during this time of disruption? I’d love to hear them.