The REAL Sales Lesson from the Netflix “Debacle”

November 16, 2011

Filed under: Strategic Planning — Ginny Hegarty @ 12:45 am

The REAL Sales Lesson from the Netflix “Debacle”

November 15th, 2011  Here’s a summary of analysis of situation by Don Cooper, The Sales Heretic. Love this update on the old “Kodak Study” Great lesson for dentists to pay close attention to. Set yourself up to practice they way YOU want to practice and avoid the heartburn of working with managed care programs. Dentistry will remain a joy for you & your patients will appreciate and thank you!

Much has been said and written about Netflix’s decision over the summer to raise their monthly full-service subscription fee from $10 to $16.  Netflix lost 800,000 subscribers in the following months. Before the price increase, Netflix had 24.6 million subscribers.Which means Netflix raised their price by 60% and only lost 3.2% of its customers.  24.6 million customers at $10 each is $246 million. 23.8 million customers at $16 each works out to $381 million. In other words, even with the loss of nearly a million subscribers, Netflix has increased its monthly revenues by $135 million! A whopping 54%!

So what’s the real sales lesson here? Don’t be afraid to raise your prices.You won’t lose as many clients as you fear you will. In fact, you may not lose any. And even if you do lose some of your customers, you’ll still come out ahead thanks to the larger profit margin. Too many people and companies undervalue what they sell and undercharge as a result. Insufficient profit margins will doom your business. If you produce a quality product or service, charge appropriately. People will happily pay it.

 

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