A hellacious battle is playing out on the internet this week over Netflix’s move to increase subscription rates by 60%.

Angry customers are accusing the cheapest movie deal on the Web of selling out … transforming itself into a “greedy corporation” … etc. etc.  More than 600,000 complaints so far.

Netflix of course has its own explanation, which you can see here.

I could care less about Netflix or movies. (The last one I saw was Shane in 1959 – which will give Tom some ammunition.)

BUT … what the debate triggered in me is the remembrance of all the nonprofit, dues-dependent organizations I worked with that believed they could simply balance their books by raising dues by $5 or $10 a year. “Roger, let’s do it. We have 100,000 members and just $5 will mean a half million dollars.”

Not that simple. In fact, a disaster in the making with that kind of organization-centric thinking.

As Netflix is finding out through the river of cancellations that are flowing in, there is a bond developed between the organization (Netflix) and the consumer (donor) that deserves attention.

In the years I spent advising dues-dependent nonprofits I warned that simple math — an increase of $2 or $3 in annual dues – would prove ruinous. And, sadly, it always did.

Why?

Because the automatic increase/demand for more always fails! Renewal and retention rates drop. The simple math never works.

UNLESS … you single out your best customers/donors/members and explain why you’re thinking about doing this … why it is necessary. And, most importantly, why the increase will result in greater benefit to the donor/consumer/buyer in terms of adding to the real accomplishments of the organization’s mission.

In a world that is donor-centric, the needs of the organization and its bottom-line matter very little to donors … and frankly, it shouldn’t.

What matters is bringing the donor into the decision process — both financial and programmatic. And there are plenty of ways to do this: surveys, emails explaining in advance what you face, personal letters, you name it.

So, let’s learn from Netflix’s billion dollar mistake and understand that nothing any of the organizations we represent are so ‘essential’ – so ‘must have’ – that we can make unilateral demands on any of our supporters.

Anyone disagree?

Roger

P.S. For you movie fans, for the fascinating detail and analysis behind the Netflix pricing decision see David Pogue’s analysis in the New York Times.