Netflix: Disgruntled customers rejoining service

A third of Netflix's new customers are people who quit the service and signed up again in less than a year, says the company's CFO at an investor conference.

Screenshot by Lance Whitney/CNET

A Netflix executive said today the company has taken its brand hit for pricing changes last year, but a third of new subscribers are former customers who are rejoining the service.

Speaking at the J.P. Morgan Technology Media and Telecom conference, Netflix CFO David Wells talked about churn, customer satisfaction, and the overall vibe around the company's brand. Wells sounded like a person who thinks the worst is over. Netflix showed improvement in the first quarter, but spooked investors with talk about competition.

Netflix is a few months shy of the first anniversary of its price increases , which went over like a lead balloon with customers.

According to a transcript of his talk, Wells said:

I think we're feeling really good about the brand, the progression that we had from last year. We think there's room to grow, but the improvements in retention and our growth in Q1 and Q2 since Q3 and Q4 of last year make us feel pretty good. Rejoined or folks rejoining the service still remain about a third of our new subscribers that are coming in. So that is an encouraging stat. We think, we've said before that the brand hit will take years to recover from and I think that's still true, with the bulk of the recovery coming in the full year and I think we still feel that way.

Specifically, a customer who rejoins is one who left Netflix a year ago or less. Netflix compares the address and credit card data to match up new customers with former subscribers. Netflix keeps old customer data for about a year.

For Netflix the customer retention game boils down to this: The longer a subscriber sticks around the more likely that person can be kept.

In addition, Wells said Netflix is merchandising better and aiming to burn off "the negative PR swirl around the brand." Wells added that he expects the public relations hit will "dissipate over time."

About the author

    Larry Dignan is editor in chief of ZDNet and editorial director of CNET's TechRepublic. He has covered the technology and financial-services industries since 1995.

     

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