Whether you operate a two person start-up, or a multi-national billion dollar corporation there's one thing that always holds true in business: you're bound to screw up one day.
The real test of a company is how well they respond to the mistakes they make. That's because slip-ups aren't typically something any entrepreneur can project in their business plan—and decisions regarding how to fix whatever misstep went down are often made quickly. But just because you can't predict most of the mistakes your company will one day make, that doesn't mean that you can't learn from the companies who successfully managed and moved on from their own blunders. They are a good lesson for anyone in business, particularly for an entrepreneur with a young start-up.
Take Netflix and Apple. In the past few months both companies have suffered fairly substantial gaffes. Apple first, with its faulty MobileMe service, which Steve Jobs has admitted was released too early, and Netflix, whose entire system crashed last week.
Perhaps more than any other company in recent memory, Netflix responded especially well to a mess that culminated with their whole system going down for three days. The company, which ships DVDs to customers via the Internet, says they experienced a technical glitch that paralyzed their service and prevented them from shipping. The flop was on such a grand scale that the New York Times likened it to McDonald's not serving burgers for three days.
Despite that, customers are actually cheering the company, and its stock has generally remained even. That's because Netflix did a few things right. The first and most important thing they did was to directly address the situation with their customers. They posted updated announcements on their website, along with a long apology letter. They also sent customers e-mails detailing exactly what was going on so no one was left in the dark. And to top it off, they offered customers the ultimate salve—a freebie. Those Netflix members who were affected by the system failure got 15% off their monthly bill.
The result? Happy customers. Consumerist, a hawkish consumer website, reported that they received more than 20 emails from Netflix customers who "congratulated Netflix for apologizing after their shipping system experienced some delays."
While Apple has been less effusive with the apologies over its buggy MobileMe service, they took a page from the Netflix handbook in customer service this week. Yesterday they announced that they're offering customers an additional 60 days of service for free to "recognize our users' patience." This is in addition to the free month granted on July 15. While it's unclear how consumers will respond as yet, it's likely that their show of understanding—and the free months of service—have a better shot of keeping Apple in customers good graces.
The lesson? Empathy—and hand-outs—go a long way with consumers. What do you think? And does anyone else have any examples to share?

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