I need a case study regarding how Netflix has developed customer primacy from customer experience, personalization, and designing for habits.
Hi there! Thank you for your question about how Netflix developed primacy among its customers. The short version is that Netflix, who is regarded as a "customer experience leader", has a net promoter score (NPS) of +54 and a history of engaging with people like people. Significant amounts of data is accumulated from customers' viewing activity and used by Netflix to make programme endorsements which are unique to the individual, resulting in success of 9% higher in the pillar of Personalization. Netflix uses Amazon Web Services (AWS) for nearly all its computing and storage needs allowing optimization and monitoring of its network which is fundamental for the brand to continually improve its customer experience, increase efficiency, and reduce costs.
Below is a deep dive of my findings.
We researched industry reports and trusted media sites to find relevant information that would assist us in composing the best response to your request. On reviewing the data, we learned that in 2014, Netflix recorded revenue of $5.5 billion. Recently, the company released its 2015, 1st quarter financials which revealed that they now have 62 million global streaming subscribers. Our further findings are documented below.
This is a good example of customer primacy with Netflix who is regarded as a "customer experience leader", has a net promoter score (NPS) of +54 and a history of “engaging with people like people.” According to reports, a Netflix subscriber, Norm, contacted customer services via online chat about a problem he experienced with a video. When the service rep responded, he introduced himself as "Captain Mike of the good ship Netflix." Getting into the role, "Lieutenant Norm" replied as an officer from the Sci-Fi series Star Trek. The conversation continued in Star Trek style but was able to solve the problem. Norm subsequently shared a screenshot on social which did no harm to Netflix NPS, but instead created a considerable buzz.
At the heights of a devastating US recession, Netflix was considered by many as "greedy, insensitive to consumer demands and cavalier." The company eventually suspended its plans, but in spite of this, the damage was already done. It is reported that "stocks fell to $53.80 after reaching record highs of $298.73 in 2011." Remarkably, the company surged to new heights just as quickly as it had been written off. This took one simple decision: listening to feedback from its customers." Netflix chose to reinvent itself as a "customer-centric company" instead of focusing on the development of new services and omitting direct customer input at any cost. Insights from its customers allowed Netflix to identify that a "one-size-fits-all" business model didn't work. They realized that "customers are individuals with their individual wants and needs."
According to The Long Term View, “people love TV content and still watch over a billion hours a day of linear TV.” It is said that there has been a shift in viewer expectations which has forced providers to "rush mobile apps out the door and make top programs available on-demand and online at lower rates." While everyone is running after the model that was created by Netflix, the company is transparent about why they’re running in the opposite direction. Netflix says that they are "relief from the complexity and frustration that embody most MVPD (multi-channel video program distributor) relationships with their customers." The distinction is, companies that aspire to be number one in the world with “next big thing” products and services, do not or cannot align with companies like Netflix that endeavor to be the best by "putting the customer at the center of strategy, development, and delivery."
Netflix takes a "thorough and almost scientific approach" to making the viewing experience an almost perfect one, forming meticulous accommodations to its services by using "complex algorithms and video encoding techniques." It is indeed splendid how the company infiltrated the public's awareness. Reports say, it is now socially acceptable for people to tell their friends that they plan to stay at home and "binge-watch Netflix." Significant amounts of data is accumulated from customers' viewing activity and used by the brand to make programme endorsements which are "unique to the individual." It is therefore no surprise that Netflix's success in the pillar of Personalization is a "notable 9% higher than the study average."
A few years ago Netflix increased its overall price plan causing the company to face some challenges. However, the brand quickly responded to customer feedback and within a short timeframe reversed the situation. This created a foundation for integrity that the brand has been able to build on. The Netflix experience is a more personal one based on the level of knowledge acquired. It is an endeavor that has benefited the brand; the company’s score in the pillar of Personalization is an outstanding 8.07, as opposed to 7.19 in 2013. According to Yellin, "Netflix's algorithms and collected data mean that the brand can organically adapt itself to the individual." This prevents the company from attempting to "force content down users’ throats", but rather, the brand is in fact recommending movies and programmes that will be fascinating and intriguing to them, and therefore enhance their time in front of the screen."
AWS reports that "Netflix uses Amazon Web Services (AWS) for nearly all its computing and storage needs." Optimizing and monitoring its network is fundamental for Netflix to continually improve its customer experience, increase efficiency, and reduce costs. It is reported that Netflix’s Amazon Kinesis Streams-based solution has "proven to be highly scalable, each day processing billions of traffic flows" thereby helping to improve the brand's customer experience through real time network monitoring. According to John Bennett, Senior Software Engineer at Netflix, "Amazon Kinesis Streams processes multiple terabytes of log data each day, yet events show up in our analytics in seconds. We can discover and respond to issues in real time, ensuring high availability and a great customer experience."
"With 1 billion reviews in database, reports say "nobody knows more about movie tastes than Netflix." The brand is able to foresee when a customer becomes fanatical for a program by using such data and customer behavior, and also has the ability to influence the process of converting customers to fans. According to this source, "highly pivotal to this capability and its growth and dominance in digital media, is its creation of a successful digital platform."
Due to the formal timeframe of a single Wonder research, we have listed below two more case studies on how Netflix has developed customer primacy which can be reviewed from the following sources.
* Netflix uses an ever-improving system of “micro-tagging,” which assigns highly specific labels to content.
* Netflix uses A/B testing which shows groups of users who have just signed up to alternate versions of its platform.
To wrap it up, review of the data revealed that Netflix who is regarded as a "customer experience leader", has a net promoter score (NPS) of +54 and a history of engaging with people like people. Significant amounts of data is accumulated from customers' viewing activity and used by Netflix to make programme endorsements which are "unique to the individual, resulting in success of 9% higher in the pillar of Personalization. Netflix uses Amazon Web Services (AWS) for nearly all its computing and storage needs allowing optimization and monitoring of its network which is fundamental for the brand to continually improve its customer experience, increase efficiency, and reduce costs.
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