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3 Ways Netflix Can Win Back Customers

NEW YORK ( MainStreet) -- Since a string of controversial decisions in recent months, Netflix (NFLX) expects to have roughly 1 million fewer domestic subscribers in the third quarter of this year than it had predicted back in July, the company announced Thursday.

The revised subscription estimates follow a wave of consumer backlash caused most notably by the online movie service's decision this summer to raise prices for those who stream movies and get DVDs, as well as the news that Netflix lost its partnerships with Sony and Starz. The company is also aiming to limit how many videos customers can stream simultaneously depending on their subscription, but early rumors of how strict this policy would be were reported inaccurately.

Netflix subscribers bailed after a price hike, but there are still a few ways for the online movie giant to win them back.

While the company had its reasons for each of these decisions, they have nonetheless caused many subscribers to think twice about their membership and, as projections show, have scared away droves from the service altogether. But even with the new pricing policies and fewer partnerships, there are several ways Netflix could try to win back customers.

Install kiosks
Kiosks alone are not enough to win the movie wars, as Blockbuster found out firsthand when it banked on this as its gateway into the 21st century, but having kiosks could nonetheless serve as a powerful incentive for Netflix customers. Ever since Netflix was launched, there has been one major inconvenience with its model: If you want a DVD, you have to wait at least a couple days to get it in the mail since there are no bricks-and-mortar locations. The streaming options have helped to mitigate this, but ultimately, if there is one movie you have your heart set on and it's not streaming, you're stuck waiting. Opening store locations would likely prove too costly for the company, but the convenience of having kiosks at select locations (grocery stores, for example) might just entice customers.

Sponsored ads
We know the last thing you probably want in a video service is more ads, but hear us out. Netflix is one of the rare online entertainment platforms out there that doesn't bombard users with advertising (just compare it with what you have to endure on Hulu and YouTube). Perhaps it's time for Netflix to take a page from Amazon's playbook and create a two-tiered pricing system for the service -- with and without ads. Those who really don't want to see an advertisement could continue paying the same amount they do now for what would be considered the premium, ad-free version, while the rest could opt to pay a few bucks less each month and see some extra ads.

A little advertising at the beginning of a film or TV show wouldn't be too distracting. After all, we endure much more just by watching the same content on TV.

Offer rewards
Arguably the biggest mistake Netflix made this year was asking customers to pay more money for the same service without throwing in any kind of value-add. If customers are going to be told to pay nearly twice the money, they need to feel they are about to get twice the quality of service. In Netflix's case, most of the content upgrades were added gradually in the time before they raised the price rather than after.

One simple way Netflix could incentivize customers to continue with the service would be to partner with credit card companies and the movie industry to offer targeted rewards opportunities. For example, every month Netflix could offer its customers points toward a gift card for a movie theater. Likewise, the company could send out raffles for movie screenings and DVD giveaways on a regular basis. It may seem like a small thing, but it's always better to reward your customers for staying with your service than to penalize them.

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