Living up to a brand promise is hard, just ask MoviePass
MoviePass has been in the news over the past few weeks for all the wrong reasons. Questions about cash flow, alterations to terms of service agreements, and fundamental changes to the company’s product have received significant criticism. However, what might be the most interesting aspect of the past couple of weeks is how these changes act as an exercise in consumer perceptions of a brand. Products are often iterating and changing, but the real importance comes from how consumers perceive the change.
Let’s do a quick recap of the MoviePass experience thus far. In August 2017, the company lowered the cost of its subscription movie ticketing service from $50/month to $10/month. It was an unprecedented change to the movie industry that surely could not last, but in the moment, it seemed like too good of a deal to pass up. Personally, living walking distance from a theater, I could easily see a couple of movies per month at this rate. Across the back end of 2017 and first half of 2018, this is exactly what myself and other subscribers were able to enjoy. Up to a movie a day (in standard definition) for $10. Talk about an amazing value — well, at least for consumers.
This value mindset is problematic for MoviePass. When they’re laying out the cash, everyone trying to get the most bang for their buck is their worst nightmare. Between August and December 2017, the service gained a million new subscribers. They were up to 3 million by April 2018. And after months of supporting this astonishingly cheap service, the company began having cashflow issues. This is where the idea of brand promise comes into play. This company had promised — and, honestly, overdelivered — on its service for so long, that consumers inevitably were going to be disappointed with any changes, no matter how needed for the business.
In early July, MoviePass introduced “peak pricing,” which added a several dollar surcharge to movies with high demand. The system, similar to Uber’s surge pricing, was met with serious backlash from many subscribers, myself included. The service that had eliminated the transactional nature of purchasing movie tickets had reintroduced the behavior and, in a sense, had become a source of it. Think about having an open tab at the bar. When you have an open tab, the purchase process is simply ordering a drink. Otherwise, you are thinking about how much money you are spending with each signature. The introduction of peak pricing reintroduced the spending barrier that subscribers had been able to avoid for months.
In the grand scheme of things paying an extra $5 for a ticket for an in-demand movie makes sense. However, if you only see one movie that month, it’s now a $15 ticket. All of a sudden, the value MoviePass promised is gone. Let’s look at Netflix as a similar example. Back in 2011, the company announced it would separate its streaming service and its DVD-by-mail service. Both services were originally bundled at a cost of $9.99/month. Netflix announced the restructured pricing of $8/month for one service or $16/month for both. The company would in essence charge almost twice the original price for the same service. The outrage they faced was enough for them to scrap the move. MoviePass is at a similar crossroads where the exact same service is costing more than it did at no extra benefit to the consumer. On top of the peak pricing, MoviePass later announced a price increase to $15/month, which they scrapped after enormous public pushback.
When raising the price of a product, there are really two roads to take. The first is to announce a “new and improved” product that is in some way better and therefore worth the extra money. The other option is to attempt to increase the price incrementally just below the threshold where consumers would notice. Weber’s law suggests that people tend to accept an increase that is less than 10 percent of the original cost of the product or service. When MoviePass adds a $5 surcharge onto a $10/month subscription, they have clearly gone well above this margin. No wonder their subscribers felt ripped off.
MoviePass’s brand promise is increased movie accessibility on the cheap. In trying to disrupt the movie ticket market, they overdelivered on that promise and now it’s hard to backpedal. Realistically, if the service had been $15/month from the outset, it probably would have done almost as well as it did, but they set the standard of “cheap” too low and now they can’t meet their promise. In several ways, they are literally breaking their promise by changing the terms of service without customer approval. When brands can’t meet the standards expected of them, customers abandon them.
A recent example of this is Chipotle and its brand promise of “food with integrity.” When a chain promising clean food accidentally triggers multiple outbreaks of foodborne illness, that does not suggest integrity. Chipotle has struggled for several years to clean up the damage done to its brand. Another example of a failure to live up to a brand promise is United with its recent PR snafus. Their catchphrase of “fly the friendly skies” has not been a very accurate description of their interactions with customers over the past year or so. Even if you don’t directly interact with the brand, you still get a negative impression simply hearing about them breaking their promises.
There is a level of trust that brands have to earn with their consumers and that is built through delivering on the promises they make. When companies fail to do so it erodes their brand equity. MoviePass’s recent changes have certainly not lived up to the promises that the company initially made. Now it is seeing subscribers leaving in droves. Consumers cannot trust a company that is rapidly changing its product to the point that we no longer know what we are getting. A fellow subscriber told me, “Who even knows at this point, they change their rules every week.” So how can MoviePass go about rebuilding this trust and living up to its brand promise?
There are a few examples of companies that have struggled with a similar issue. The classic example is Johnson & Johnson making a massive recall of extra strength Tylenol in 1982 when someone poisoned bottles on the shelf. Had J&J not acted swiftly, consumers likely would have been outraged because the brand would have broken its promise of helping and healing. This recall rebuilt brand trust by showing that the company was accepting full responsibility and taking demonstrable steps to correct the problem.
Another case of reclaiming a damaged brand is Domino’s and its “We’re sorry for sucking” campaign. By owning up to the product issues plaguing the company, Domino’s demonstrated transparency and a willingness to change. Not only did they make a change, but also, they made sure everyone heard about it, even people who didn’t buy their pizza. Announcements like these are a chance for brands to speak directly to the consumer. It creates a dialogue, or at least puts a voice to what may have seemed like a faceless company. It’s hard to build trust if there isn’t a relationship between the brand and consumers. Think about the difference in relationships between you and the DMV versus you and your barber or hair stylist. On one side, you’ve got a large, uncommunicative entity that probably isn’t changing anything based on what you say. On the other side, there’s a person with whom you can communicate and work with to get exactly what you want. Without acknowledgement of the consumer’s needs and wants, it’s hard to establish trust. So, what could MoviePass do?
It seems pretty clear that, if MoviePass is able to weather its monetary woes and stay in business, the company should take a page from these other companies. Offering a message of transparency and acknowledging its poor handling of the service changes would be a solid first step. Building on the relationship of the subscribers that stuck with them through the changes would help to solidify their relationship with their existing subscriber base. As a subscriber myself, I know that is what I am looking for. They’ve promised stability in the near future and it’s about time for them to deliver. We will see in the coming weeks whether the company manages to either make a turnaround or continue on its current path.
The big takeaway for brands is to give the consumer what you’ve promised them and not break the trust that has been built. Once trust is lost it usually takes a long time and some concerted, strategic effort to regain. Maintaining a stable relationship with customers means consistently meeting and delivering on your brand promise. Although doing so can be difficult, it’s paramount to a brand’s success.
