With 22 years of experience in the e-business, Netflix is still in the relentless pursuit to perfect their total customer experience. They are famously praised for their recommendation engine because they try their best to predict and satisfy the needs, and want better than their competitors, providing them with a real consumer, and emotional experience. In addition to that, they add value to interactions and reward customers with engaging memories. Even with 167.1 million subscribers, they are still making efforts to acquire new viewers. Netflix also focuses on customer retention, which explains how they have a comparatively low churn rate of 11%, lower than other subscription-based services in the market.
The former DVD rental by mail service established in 1997 is now grown to be one of the most influential online subscription streaming platforms with 167.1 million subscribers in Q4 2019. Netflix supports 30 languages and is streaming in 190 countries.
From the beginning, Netflix showcased its ability to conform to technological change and meet consumer demands which contributed to its huge success. Just a year after its service in 1998, they launched a website for DVD rental. Netflix continually improved its services by introducing membership subscriptions that came alongside many perks and partnership alliances with consumer electronic brands.
In 2009, Netflix invested three years and $1million to collect 40,000 submissions to find an algorithm that can improve the accuracy of their service recommendation. Until now, the framework is still being used but with some adjustments added to it.
Besides that, Netflix enjoys providing their audiences with personal and engaging experiences by using interactive content. This changes the user experience because it will not be viewed as a passive activity. At the same time, it sets Netflix apart from other service providers. As a result, this is how Netflix increased their customer loyalty with eCRM and acts as a testimony on how constant improvements will maximize customer satisfaction.
Critical Analysis of Ecrm
Relationship marketing is a strategy that aims to please customers for the long haul rather than being transfixed on short-term wins and sales transactions. (Forsey, 2020). Customer relationship management (CRM) is a business philosophy stemming from relationship marketing, but with an added emphasis on customer retention by effectively managing customer relationships. (Leventhal, 2006). On the other hand, eCRM refers to all or any marketing activities, tools, and operations encompassing the web that supports and enhances a company’s CRM strategy. (Kennedy, 2006). eCRM may be categorized into four segments, (i) maximizing customer satisfaction/minimizing customer dissatisfaction; (ii) increasing customer loyalty; (iii) increasing product/service quality; and (iv) resolving customer complaints. (Cho et al., 2002, as cited in Fjermestad and Robertson, 2015).
In a traditional business landscape, a brand would normally focus on the success of their product and services. In recent years, however, marketers have shifted their emphasis to create value for their consumers. (e.g. Clutterbuck and Goldsmith, 1998; Fudenberg, 2000; McAlexander et al. , 2002). Researchers agree that traditional elements that mattered in the past are no longer relevant as the total customer experience (TCE) is currently the differentiator. Once TCE is delivered and if it exceeds expectations, lasting customer loyalty will soon follow suit.
To successfully deliver TCE, brands should first take into consideration these six factors. Brands have to predict and satisfy the needs/wants better than competitors, provide real consumer and emotional experience. (Leventhal, 2006). Besides that, they will also concentrate on having distinct economic offerings, provide value-adding interaction, and engaging memories. (Leventhal, 2006). It is predicted that the future of CRM will still revolve around what drives the customers and what a brand should do to keep their business. (Smith, 2017).
Over the past decade, technological rapid innovations have provided brands an opportunity to connect with audiences conveniently. Platforms that integrate CRM tools with social networks are becoming an emerging need, these digital tools can assist organizations to tap into existing conversations on the web to facilitate customer relationships. (Basaille et al., 2013). Email marketing is one of the effective eCRM because it supports customized information between an organization and its customers. (Aileen, 2006). Researchers also state that the Web is the medium with high interactivity. (Hoffman et al., 1995, as cited in Fjermestad and Robertson, 2015). Other advantages of eCRM include its ability to collect and evaluate data, interpret behavior, and develop relevant predictive models for individual customers. (Aileen, 2006). Thus, eCRM practice benefits both parties; customers can receive product/service more associated with their needs and the brand acquires a high value, low-risk customer.
As more organizations follow through with eCRM practice, they expand to offer customers multiple touchpoints across channels to better serve them. Organizations need to make certain they can deliver consistent customer service across all communications as it greatly affects the ability to build and maintain customer loyalty. (Park and Wiedner, 2003). Organizations that can seamlessly integrate customer interaction across touchpoints produces an exceptional customer experience. (Campbell, 2013 cited in Chaffey, 2018).
Netflix application of CRM
Netflix is an exemplary example of an organization that successfully deployed eCRM. Although the organization does put some effort into customer acquisition, predominantly they strive to manage the customer experience value and persuade customer retention. Due to the fact that retaining existing customers and building a long term relationship is more profitable compared to acquiring new customers. Netflix’s customer-centric approach lessens friction at hand and safeguards the emotional and rational bonds with their ideal customers. Brands are encouraged to listen to their customers, know and fulfill their needs but also provide relevant incentives to keep them interested and ensure they return. (Chaffey & Smith, 2017)
Enticing new subscribers
Netflix entices new subscribers by having 30 day free trials, most video streaming platforms have trials that are only as long as a week. However, in recent years, Netflix is gradually putting a halt to free trials in certain countries. Recently, Netflix is assessing new types of content sampling accessible only on web browsers in hopes to produce different marketing promotions to replace the free trial. At the moment, Netflix is releasing a limited amount of Netflix original content to non - subscribers for free globally. Simultaneously, Netflix is also testing to deploy ‘mobile-only’ plans which are by far the cheapest subscription Netflix offers. The mobile-only plan is available in Malaysia, India, Thailand, and the Philippines which are Netflix emerging markets.
Personalized Content
Netflix takes pride in its recommendation engine which consists of several algorithms to serve different purposes and as a whole create the Netflix streaming experience. This engine consistently influences TCE and is prompted from the very beginning of a customer’s journey. Upon signing up and creating a profile, users are asked to select titles that interest them to jump-start the recommendations engine. Once users begin watching, Netflix gathers ‘Big Data’ then structures it into behavioral data such as dates, searches, devices used, and utilizes it to select the programs that they predict might interest viewers. The recommendation algorithm influences up to 80% of content watched and has saved Netflix $1 billion a year in value from retaining customers. (Karr, 2018) The act of personalizing the customer experience to cater to specific interests leads to an increase in engagement, builds trust towards the company, and improves overall customer relationships. (Haughey, n.d) Apart from that, Netflix web design is set up in a way that subscribers can create up to five different profiles on their account to ensure that their recommendations do not get affected.
A/B Testing Film’s Artwork
Netflix tries to improve click-through rates (CTR) by experimenting with multiple film artwork variants. Netflix ran an A/B testing and measured the engagement by observing the CTR, play duration, how long content is viewed. Eventually, they concluded that the viewers are sensitive to the artwork changes and continued to explore with 2 more tests. The results pointed out that images with expressive emotion and polarizing character performed better. (Netflix Techblog, 2016) Netflix's dedication to selecting suitable artwork has improved the Netflix experience and increased overall audience engagement.
Email Marketing
Netflix's approach to leverage off age-old email marketing channels is experimental, to say the least. Through the data collected from existing viewing habits, custom emails are made to notify viewers on new releases or to continue watching, they also take note of how viewers respond to the email. Netflix pairs email marketing with machine learning-based systems to get more consumer data. (Haughey, n.d). With the abundance of information experienced daily, it can be difficult to catch the consumer’s attention. Therefore, marketers need to get the message across quickly and easily. (Egan, 2018). Netflix's email layouts are visual and straight forward, viewers can easily skim through to catch the main purpose of it. Moreover, a call to action is often presented such as play now or add to my list.
Improving the Product/Service
Netflix Vice President, Eric Pallotta recently commented on Netflix's new global campaign “One Story Away” emphasizing how the phrase perfectly encapsulates the brand’s passion for storytelling. On that premise, it is evident how Netflix stresses the importance of its content. Putting the focus on having interesting content is one of the contributing factors to Netflix's growth. (Khandelwal, 2020) As more companies are entering the online streaming industry, losing rights to licensing is inevitable thus Netflix aimed to create more blockbusters on their own. Netflix spent around $15 billion on its content in 2019 and most of the budget was allocated to its original programs. (Khandelwal, 2020). Although licensing content is cheaper than producing original series, it is more beneficial to start the transition now so that Netflix does not need to negotiate for costly licensing deals in the near future. (Molla, 2020). Netflix has even started to see some return of investment through nominations and winning awards which reflects its intent to make quality content for its audiences.
Dominant Social Media Presence
Netflix does not overwork themselves into staying relevant with hashtags on social media. Instead, they have benefited from their brand identity to the fullest potential by having an engaging tone of voice on social platforms. People would describe them as authentic but easy-going, witty, and even humorous. A method to inspire emotions in people and making your brand memorable is by giving it a personality. (Biddle, n.d). In addition to that, Netflix has a dominant social presence across all social platforms. In fact, Netflix has multiple accounts on Youtube alone, each catering to different segmentation of audiences. For example, swoon by Netflix is for Korean and Asian fanatics while Investor relations and We are Netflix is more for business-related content. As of July 2020, Netflix has an average of 2.5M views on its main Youtube channel, data projects that the account will hit 132M subscribers and 24B views by 2025. (Moore, 2020). It is crucial for businesses to possess a strong digital footprint within the internet to be successful in this digital age. (Forbes, 2014). Furthermore, their ability to catch on to trends and generate content that goes viral and stimulates conversation is commendable. The brand has even managed to infiltrate pop culture with the term “Netflix and Chill”, which has become a free word of mouth marketing.
Successful Multi-Channel Campaigns
The marketers at Netflix developed a multi-channel marketing strategy to meet their target audience across different channels. For example, Haunting of Hill House social campaign; Netflix utilized Facebook, Instagram story highlights, Twitter, and Reddit to promote the show. Reddit is a platform used for discussion and ratings, famously known for scary stories by creepypasta. Marketers built an anonymous account on Reddit and posted a series of short stories relating to the series plot. The threads organically attracted attention from horror enthusiasts, gaining 25k followers. After the series premiered, people recalled the Reddit threads and made connections to the story. In addition to that, Netflix also posted about easter eggs in the film which encouraged viewers to rewatch episodes to find them. At that time, the show was the third most Googled TV series in the US. Based on the campaign insights, Netflix received 575k followers, 1.6M engagements, 10.5 million video videos, and 127M impressions. (International Awards Associate, n.d).
Removing objections
When users hover over a show title and remain there for a while, Netflix will take this chance to play short teasers so that it encourages the audience to continue streaming. The consensus behind this is because if Netflix can capture a viewer’s attention just to watch for a few minutes, the chances of them continuing to view the episodes increases exponentially. (Kay, 2019) Similarly, when users watch something continuously without interruption, Netflix prompts the notification ‘are you still watching?’ Lastly, when trying to log out from a Netflix account a similar prompt will appear reassuring that users do not have to log out unless it is logged in a public/shared computer. All these efforts are to keep consumers engaged.
Immersive Experience
Netflix released its first interactive movie, Black Mirror: Bandersnatch in 2018. The interactive film has over a trillion choices for viewers to choose from and results in 5 different endings. It runs for 90 minutes to 2 ½ hours depending on the narratives chosen. Bandersnatch was considered a huge success as 94% of viewers were actively making choices. (Strause, 2019). With the user participation, Netflix receives more insightful data, not just tracking how the audience engages with content but through the decisions that they make. (Damiani, 2019). Due to the unique nature of the film, it was highly anticipated and received much recognition. Upon its release, it became a trending topic worldwide on Twitter, fans also produced their own flowcharts of the film. (Dalton, 2019).
Offline Connection
In addition to creating immersive experiences for their viewers, Netflix also practices offline connections. Netflix recreated a simple rating app that was featured in Netflix Black Mirror episode ‘Nosedive’. More impressively, in conjunction with the Netflix Originals launch of tv series The Queen’s Gambit and the upcoming season 4 of The Crown, Netflix collaborated with the Brooklyn Museum to render a digital exhibition showcasing the outfits and props used in the series with detailed description and clips of cast interviews. Using rich media formats is able to refer traffic to sites and help with brand building (Chaffey & Smith, 2017).
Recommendations
Netflix VR
Amidst the pandemic, more brands are implementing virtual experiences to connect with audiences. This opportunity will not only nurture closeness, showcase adaptability but will also allow consumers to recognize a brand's effort during hardship and give them a memorable experience to look back on. (Arndt, 2020). With that said, Netflix should focus on improving their virtual reality features from their current 2D to 3D or 360° support. As of 2019, Hulu, one of Netflix’s biggest competitors, has over 100 VR programs available in many different genres. Hulu currently has the largest VR library and is still investing in more VR- specific shows. (Bond, 2019).
Implement Chrome Extensions to website/app
Data shows that 51% are devoting time to watch films on streaming services, resulting in one of the most popular forms of online entertainment. (Trifonova, 2020). Netflix could set up more features on its website and app so that its viewers would not have to rely on Chrome extensions. To name a few there is Teleparty for synchronized viewing remotely, Better browse for finding hidden category films, and Netflix God Mode for the option of vertical scrolling. As of the start of October 2020, Disney+ has already implemented the group watch feature across their app, allowing up to 6 users to watch a show together.
Improve Social Media Governance
Online public relations can be a challenge to control as there are more online platforms compared to traditional media outlets, it also requires a faster response from the people involved because bad news travels fast and could damage a brand’s image severely. (Chaffey & Ellis-Chadwick, 2019). Netflix should improve on their social media governance with community management. Enforcing online community management helps identify social media risks early and address the issue accordingly. (Sharma, 2020). In regards to the recent “Cuties” controversy, Netflix suffered from criticism for promoting hypersexualized preadolescent content on its platform and even received threats from viewers to cancel their subscription. When Netflix released the promotional materials for Cuties, there was a backlash for its provocative artwork and disturbing description. A petition started on Change.org for Netflix to cancel the show before it was even released, it circulated on social media and has garnered a total of 600,000 signatures. (Nugent, 2020). Soon thereafter, Netflix made the necessary amendments. CEO Ted Sarandos also issued a formal apology to the public for the poor choice of poster and words used. (Bustle, 2020). Cuties premiered despite the petitions, Netflix experienced an eightfold increase in cancellation rate compared to average daily levels recorded. (Spangler, 2020).
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