This is a guest blog post by Jacopo Romei. Author of the Italian version of the book Extreme Contracts, and author of an upcoming book on the same topic in English.
We all know how easy it is to leave Netflix after having subscribed to their service.
Whenever you want to cancel the subscription, you just click a button and you are free, no questions, no tricks, no cheating.
You are free to use the service until the date you had paid for and you will be free to rejoin again, whenever you want. This feeling of freedom is a crucial part of Netflix branding, and was a key attractor for their first users. You read it on their homepage, clear and bold: “Watch anywhere. Cancel anytime.” It is a promise, second only to the one about the chance to see your favorite movies in full mobility on any device.
Now, imagine for a minute, what would happen if Netflix were to not keep their promises. Imagine that Netflix would ask for extra documentation before the user was allowed to leave, perhaps even setting a mandatory notice period, preventing users from quitting when too close to the subscription expiry date.
Imagine what would happen if Netflix wouldn’t actually allow you to “cancel anytime.” If this nightmare scenario was a reality, tons of disappointed friends would tell you that Netflix is not up to expectations, they would abandon the service with no intention to return, and they would actively discourage other people from subscribing in the first place! In the end, Netflix would see fewer users and less engagement.
The Anti-Netflix contract
The plot thickens…
Does this sound absurd? Yes, it does. We know Netflix would never act like this because they know their whole branding relies on those two promises: “Watch anywhere. Cancel anytime.” You break one of the two and you are not Netflix anymore.
Well, believe it or not, there is a video streaming service which betrays users precisely like that!
TIM Vision is a video streaming service I was about to register to, a few weeks ago. They promise the chance to cancel anytime—as you may read in the screenshot above—so I had no concern in giving it a try. Just a few moments before completing my subscription, it requested me to accept a small text clause. The text alerts the customers that, in case they want to leave, they will need to fill one or two forms. No, it is not a typo! It states that you will have to fill in either one or two forms. Pretty fuzzy, isn’t it?
There is more. One of the two forms is a standard withdrawal form, the kind we are used to finding provided by online services to end any subscription. The second one is a “modulo del Ripensamento” which in Italian means something like “form of the Change of Heart”! Please note:
- Not just a change of heart, but The change of heart!
- Not a change of heart, but a Change of Heart, in capital letters! 🙂
I mean: seriously?! Not one form. Two forms! Well, actually: one form or another? What does it mean? Why? Isn’t a withdrawal form enough? And, last but not least, I may understand a change of heart, but what is The Change of Heart?! Come on!
[“Recesso” means “termination” and “del Ripensamento” (capital letter X-D) means “of the Change of Heart”. It’s all true. And absurd, at the same time.]
If it sounds confusing to you, well, it sounded very confusing to me too! Definitely light years away from the simplicity I had experienced with Netflix! As you may guess, I suddenly reconsidered my decision to subscribe when I faced that screen.
First, why does TIM Vision introduce rules in a small font? It is allowed—sure, it doesn’t break any rule, but this is not fair—as we discussed in “Ethics over rules – An agile retrospective gone wrong”.
Second, I would definitely feel uncomfortable subscribing to such a service, once aware of the freedom granted by competitors like Netflix. So I decided I wouldn’t become a TIM Vision’s customer.
Despite the attractive marketing, the true substance of the agreement proposed by TIM Vision made all the advertising, communication, and web development useless. The “contract” became the single point of failure of their whole customer acquisition & retention strategy.
Attract, select and retain the right customers
According to the Business Model Canvas’ authors, P. Osterwalder and Y. Pigneur, one of the nine building blocks of a business model is called “Customer Channels” and it describes how an organization gets and keep in touch with its customers. As customer channels, we have a web platform and a bunch of mobile applications if we are Facebook, a landing page and the concierge if we are a hotel, or a newsletter and agents hiring donors if we are Unicef or Amnesty International, to name a few.
All organizations have at least one customer channel, whether they know it or not.
It’s critical to know and explicitly manage your Customer Channels because they can leverage ways to attract the customer segment each organization prefers to trade with. Since they are the “place”—physical or virtual, it doesn’t matter—where the customer “meets” the brand, Customer Channels are also the place where we can expose our values, show the benefits of a possible collaboration, convince with offers and options, and, somehow, influence the way 3rd parties choose to work with us. We must make sure that the experience of our customers flows consistently from the very first contact.
Contracts are Customer Channels
Now, if you allow me to bring this reflection a bit forward, contracts are among the first touch-points through which our customers experience our brand. This has two main consequences:
- The contract we propose can contradict the image and the values of the organizations that we communicated in earlier stages. For example, advertising we are a very agile company and then offering our customers a 357-page long effort-&-estimation based contract will dismantle our agile aura in a few seconds;
- The contract we propose can create expectations the organization is not in a position to meet, like promising a level of customer care that the customer will regret seeing failed.
My point here is that contracts are full-fledged Customer Channels. Not treating them as such is a threat to the consistency of the customer experience as well as the whole brand perception. Customers may lack the analytical skills and be unable to explain why, but if your contracts won’t match your style and your delivery, they will feel betrayed.
According to P. Osterwalder and Y. Pigneur, Customer Channels are relevant and vary their effectiveness in different stages of the relationship with the customers, also including their awareness of the product or service sold. What do customers expect from us even before starting the last negotiation phase with us?
Contracts are extremely relevant regarding the way we shape those expectations. Once you have set a collaboration with a customer according to a given set of rules, the very existence of that relationship will attract other customers willing to work the same way.
Every time we manage to work with a single customer in the terms that we prefer, we are more likely to find another customer to work the same way. This, in turn, will reduce the wasteful friction we experience when we have to introduce a new lead to our preferred workflows and habits.
To conclude, your contracts are crucial devices which belong to your professional identity as a whole, that you have to integrate with your whole brand. Your contracts are a key strategic device to shape your market and the customers you like most.
About Jacopo Romei
Jacopo is an independent strategy consultant, with a strong background in Agile product development.
Jacopo is also an entrepreneur & writer. After having founded a couple of IT companies and practiced agile software development, he started as a full-time freelance agile coach, coaching teams in Italy, Germany and UK.
He has worked with eBay Italia team to set their agile process up. Product ownership and agile UX are added skills acquired in the field.
As a writer, Jacopo published a couple of books on agile coding practices and the Italian version of “Extreme Contracts: knowledge work from negotiation to collaboration“.