Netflix Last in Customer Satisfaction: What Investors Need to Know

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What's happening in the headlines can affect you as an investor. Here's what's going on, what you need to know, and what you should expect.

The headline
Reuters is reporting that Netflix (NAS: NFLX) is among the worst performers of the 2011 holiday season in terms of online customer satisfaction, a survey by ForeSee reveals.

The details
Gap
(NYS: GPS) and Sony (NYS: SNE) were also was among the worst. Overstock.com (NAS: OSTK) came in dead last. Topping the list, for the 14th consecutive time, was Amazon.com (NAS: AMZN) . Apple (NAS: AAPL) tied for third along with J.C. Penney, QVC.com, and TigerDirect.com.

Netflix saw the biggest decline in the ForeSee survey after the company tried to raise prices and split its DVD and video-streaming services, dropping seven points, the largest decline of any retailer in the survey. "Netflix totally misread its customer base and is paying the price, damaging its brand among both consumers and investors," Larry Freed, chief executive officer of ForeSee told Reuters. Netflix had come close to customer-satisfaction leader Amazon.com in previous ForeSee surveys.

Now what?
Netflix shares lost more than half their value this year, with the vast majority of the decline coming after the company unveiled its intention to split its services. Being better schooled in the ways of retail life on the Internet than most of its peers, and also seemingly better run, Netflix really should have known better than to have idly squandered more than a decade's worth of customer goodwill.

Hopefully, all of the companies that did poorly on this survey will read the results and take them to heart. For those that performed well, hopefully they won't take their eyes off the online-customer ball, because it doesn't take a Fool to know that the world of retail sales is shifting more and more online. Companies that don't get this part of their business right, a la Netflix and Gap, will be in big trouble if they don't mend their ways quickly.

Keep track of what's happening with Netflix and the other companies mentioned here by adding them to My Watchlist, a free service of The Motley Fool that lets you easily keep up with everything on your investing radar.

At the time this article was published Fool contributorJohn Grgurichloves his Twitter newsfeed so much he wants to marry it, but he owns no shares of any of the companies mentioned above.The Motley Fool owns shares of Gap, Amazon.com, and Apple. Motley Fool newsletter serviceshave recommended buying shares of Amazon.com, Netflix, and Apple.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has a scintillatingdisclosure policy.

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