Archive for September, 2011

Netflix/Qwikster Spin Off is…a Good Thing?

Friday, September 23rd, 2011

In July, I argued that the previously announced Netflix price increase is a good thing. And boy, did I get some negative feedback on that video.

Well, I’m back for round two and it’s Netflix/Qwikster versus its customers. And you can bet I’m taking Netflix’s side in this battle.

(If you haven’t read the details of the changes, be sure to read this story first).


(Netflix Mailers. Courtesy of Netflix.)

First, I agree with just about every Tom, Dick and Harry that separating the DVD-by-mail and streaming content services into two different entities is very customer unfriendly. I mean, seriously, having to manage two subscriptions on two different websites is totally uncool.

But Netflix currently faces a big problem, the DVD-by-mail service costs too much to operate. About a dollar to mail a DVD round-trip, with an average volume of 2 million DVDs mailed per day. It doesn’t take a mathematician to see that the cost can quickly add up in the hundreds of millions every year. Compare that to the five cents it costs to stream each movie. With that kind of cost savings, you can easily see why Netflix would want to push customers to stream content only.

But what’s not helping the problem is that too many customers are still picking DVD’s-by-mail over streaming content. Who can blame them? Not all the content available on DVD is available online, so naturally, subscribers would stick with DVDs.

With this impasse between what their customers want and the need for Netflix to lower their operating costs, someone had to make the first move. And that’s Netflix. This change was made, I believe, to ensure the future survival of the company.

In fact, I believe by creating Qwikster, Netflix is designing the service with planned obsolescence in mind. (Commonly defined as designing a product or service with a limited life.) See, Netflix knows that DVDs will be used less in the coming years, and we’ve seen what happened there with Blockbuster. They also know that more customers will stream content in the future as they start to acquire more licensing rights to streaming content.

In response, Netflix is making a transition now by isolating a part of the business they know will become a liability in the future. Soon enough, maybe 5-10 years down the road, I predict that Netflix will shut down Qwikster as streaming content becomes the primary way we watch movies and TV shows. Thus, leaving the main Netflix brand and the streaming service unaffected.

Netflix made a bold move and the right move for the long term to ensure it’ll be around to serve customers for many years to come. Although there isn’t hard evidence to support my predictions, it’s hard to deny that the problems facing Netflix could likely point them to such a decision.

How Much is Good Customer Service Worth?

Friday, September 16th, 2011

When it comes to buying big-ticket items, we’re all guilty of trying to find the lowest price at any expense. In fact, a lot of us use physical retail stores as a showroom and then eventually buy the item online. Maybe it’s to save on the sales tax or because there’s a more valuable coupon online than in store. But oftentimes, we do it without recognizing the customer service or added benefits we receive by buying offline.


(MacBook Pro. Image Courtesy of Apple)

I was faced with a similar situation today. I bought a new MacBook Pro laptop from Apple, as my current computer just celebrated its sixth birthday and sorely needed replacing. (In computer years, it would probably make my current computer 150 years old.)

Originally, I intended on buying the computer via Ebates.com, an online rebating service that receives money from retailers for referring customers. In my situation, Ebates would split this referral fee with me, amounting to 1% cash back on purchases in the Apple Store.

It would’ve been a straightforward online transaction, but I had questions I needed to ask Apple. I called Apple’s sales team and spoke to Byron, a Mac telesales expert. A quick question turned into two more questions. Then a few more questions turned into an hour-long conversation. Byron answered all of my questions, addressed my concerns, and made me feel comfortable about my purchase.

I ended up buying the computer from him over the phone, recognizing that I would lose out on the 1% Ebates cash back reward. On this $3,000 computer purchase, that would’ve been $30.

I have a certain friend who, when I tell her these types of money-saving stories, would call me cheap. I always tell my friends that a dollar is a dollar and we should be mindful of where each dollar goes. But in my case, I recognized the excellent service provided by Byron and felt that $30 opportunity cost was worth accepting.

So the long-winded answer to my own question is: good customer service is worth $30. At least in this situation.

Take the poll below and let me know how much you would be willing to pay for good customer service when making a purchase, all else about the item being equal.

How Much More Would You Pay for Good Customer Service?
 Nothing, I Find the Lowest Price Possible
 A Little More Than Average Price
 A Lot More Than Average Price
 Significantly More Than Average Price

  
pollcode.com free polls 

What is a Bond?

Thursday, September 15th, 2011

Bonds and stocks are talked about together like they’re long-lost brothers. But their relationship is more like distant second cousins. 2MF’s Hunter Patterson will show you what a bond is and how it works in less than 2 minutes.

Payment Options on Your Credit Card

Wednesday, September 7th, 2011

Minimum payment, more than minimum and full payments. Sounds straight-forward enough, but each choice can have dramatic effect on how much and how long it will take to pay off your credit card. Learn more about the pros and cons of each option on this episode of 2 Minute Finance.

(If you haven’t had a chance to see our video about compound interest, it might be helpful to view the video before watching this one. Similar concepts, different application).