Have you ever wondered how Netflix became the media giant they are today?
Starting their early days as a DVD subscription service, they slowly started investing the profit from that venture to fund what we know Netflix as today.
Fast forward a decade, and Netflix now has 125 million subscribers.
How did they do it? By building an exceptional brand and creating a culture of experimentation.
From acquisition to retention, Netflix has carefully crafted an engine that not only generates constant growth, but retains more than 90% of their users.
That’s a huge accomplishment for any technology company.
In this guide, I’ll dissect exactly how they did it (and continue to grow as a result). You’ll learn how they use social media to put their brand forward, the retention techniques they use to keep users and the way they get more eyeballs on their owned content.
Learning From Backlash & Controversy
Controversy and backlash are two of the biggest fears shared by social media managers all over the world.
And it’s not surprising that Netflix has racked up a few of their own.
When dissecting the marketing and PR of a company this huge, it’s important to look at what we can learn from their failures.
(As much as I hate to start on a downer, there’s lots to be learned from these stories.)
Starting, of course, with their controversial decision to ban VPNs. Now this may not have had a huge impact here in the US, but this was big news elsewhere.
As the Netflix library varies from region to region, users found a way to access films not available in their country. Simply use a VPN to appear as if you’re coming from that country and browse away.
Despite their efforts, it still seems that 70% of VPNs work on the Netflix system. This begs the question — why did Netflix simply not listen to their users?
In startup land, customer development is the holy grail to reach product-market fit. So why did Netflix not give their users what they wanted: access to every film and TV show in their content library?
This seems to be an issue they’re still working out, which is made even more difficult by regional licensing restrictions. However, they seem to be working on a solution.
Then there’s the Christmas movie tweet:
While on the surface this may seem like a clever way to use data to fuel creative, this approach backfired, with many users expressing how it simply felt “creepy:”
The lesson here is simple: consumers often don’t mind having data used to better serve them, as long as you don’t rub it in their faces.
Despite all this, Netflix stuck by their decision and defended the tweet, sharing in an official statement: “This information represents overall viewing trends, not the personal viewing information of specific, identified individuals.”
Finally, there are the various price hikes over the years. In 2016, Netflix raised their price from $7.99 a month to $9.99 a month, losing 500,000 customers in the process (as well as a hefty lawsuit).
Price elasticity is an entire science in itself. Sure, they may have lost the initial 500,000 customers. But how did this affect overall profitability? And how many of those customers returned?
If the price hike truly hurt Netflix’s bottom-line, it’s likely they’d either go back to the original pricing, or stick to their guns based on in-depth, long-term analysis.
So, that’s the controversial stuff out of the way. Let’s see what Netflix does that makes them great.
A Genuine Social Strategy Fueled By The Netflix Personality
Social media is a must-have strategy for any tech company worth their salt. It’s not only important for brand awareness, but acts as a powerful acquisition and retention channel.
For Netflix, social media is a way to put their personality across. They’re a company that, by definition, sits at the heart of modern-day culture. And so they tap into this in all corners of the internet.
Blending the practice of “newsjacking” and memes is nothing new among brands online. But so few do it effectively. There’s even a subreddit dedicated to how companies fail to do this called “Fellow Kids:”
As a consumer, it’s refreshing to see Netflix get this right. It’s tasteful, in that they don’t push it too far and make it highly relevant to their own product, films and shows.
— Netflix US (@netflix) March 18, 2016
In the tweet above, they tap into a habit many of us share — setting several alarms on our phone so we don’t oversleep — and blends it with content recognizable by Daredevil fans.
The lesson here? The practice of newsjacking has moved beyond events and into the fabric of culture itself. It’s no longer about tweeting about a blackout at the superbowl, but rather owning your corner of the zeitgeist (without killing the trend).
This philosophy is seen throughout their Instagram profile, too. Here, they’re providing a snapshot of an upcoming show in the context of how people consume content on the platform:
Then, their personality comes out again, turning a piece of their own content into a meme:
With over 170,000 likes, the level of engagement speaks for itself.
When taking risks and creating content like this, it’s about executing it in a relevant and tasteful way. As the Fellow Kids subreddit illustrates, it simply doesn’t work when you have to force it out.
How Netflix Promotes Their Owned Films and TV Shows
In 2016, Netflix started investing in proprietary content — acquiring eight films in 2016 with a further 14 by April of 2017.
By the end of 2017, Netflix had acquired 45 feature films, which excludes the number of TV shows and documentaries in their repertoire.
Why did they ramp this up? The reason is simple: if you own content people love that can’t be found anywhere else, you’re going to retain more and more customers.
So, how do they promote this owned content?
“How Movie Trailers Manipulate You,” a documentary recently published by Vice, shares interviews and insights from filmmaking experts who are in the business of exclusively making trailers.
In it, they present some interesting trends and statistics:
- Marvel’s “Infinity War” trailer was watched over 100 Million times in the first 24 hours it went live.
- According to National Research Group, the average trailer generates around 38 million views on YouTube.
- Studies have found a connection between emotional reactions to trailers and a films box office success.
- People trust trailers more than Rotten Tomatoes and social media:
Netflix has jumped on this art, creating buzz and hype around their films and TV shows by launching at least one trailer for all their owned and acquired productions.
For example, the trailer for their feature film Bright (starring Will Smith and Joel Edgerton) has over 9 million views on YouTube:
This content strategy can be emulated by anyone on the planet. Dissecting the process Netflix follows, it goes something like this:
- Create your main piece of content: Whether that’s a long-form video, written editorial content or even a live event: this is the asset that should contribute to your core business goals (conversions, users, readers or leads).
- Repurpose this content into smaller pieces: Netflix does this with their trailers. For you, this can include Instagram posts, Tweets, Facebook posts/videos etc. For example, a long-form article can be transformed into visual content by taking quotes and placing them on top of beautiful photographs or illustrations:
- Listen to the conversation and data: Which parts of your content is resonating best with people? Which of the repurposed content generates the most engagement? Use this feedback to fuel future content efforts.
While posters, social media and PR all contribute to these efforts, nothing has as much weight as trailers.
Every industry has their “golden channel.” What’s the format or medium that resonates best with your audience? Talk to your customers and find your trailer.
Data-Driven Editorial-Driven Content Marketing
This next piece is an example of how to create great native content.
In a paid article in The New York Times, Netflix created an article that talked about incarcerated women — blending data, opinion and illustrated imagery to create a truly interesting piece of content:
If you’re familiar with “Orange Is The New Black,” you’ll understand the reference immediately. Yet this was still a risky move for Netflix.
Why? Because it touched upon a social and political issues, something usually often turns off consumers of entertainment.
However, it worked so well because it tapped into the beliefs and interests of readers of The New York Times. They knew this format would resonate well.
According to data from BuzzSumo, the top five most shared articles on The New York Times are around current social and political issues:
Therefore, this wasn’t a risky move at all. Netflix knew that these topics matters to NYT readers, and so they created something relevant to a production they were trying to build awareness around.
How do you emulate this approach? Blend data with topics relevant to your own content and offering:
What topics are the market currently talking about, and what are the needs of the publisher and their audience?
This formula doesn’t just apply to editorial content. It should be a philosophy followed in your social media strategy, owned content and everything in-between.
How Netflix Retains Users Through Advanced Segmentation
You don’t achieve a <9% churn rate by accident.
User retention is a massive priority for any tech company. So what’s the best way to achieve it?
The answer: customer segmentation.
As we learned earlier, using consumer data can be risky business. But when used correctly, it can provide an enhanced user experience and greater retention.
Here’s just a sample of the user preferences that Netflix measures:
- The device you use to watch particular movies/shows
- When you pause, rewind and resume content
- The ratings you give each movie/show
- Browsing and scrolling habits
As well how many users watch particular episodes vs. entire series.
Everything is measured on a broad level to provide users with the content they want, as well as individual data to serve specific users with the movies and shows they’ll love.
And we can see this data straight from the SpotRight platform. For example, we can see the overall demographic profile of users who watch the Netflix show “Glow:”
As well as the brands, products and influencers they have an affinity with:
So, what do they do with this data? They take a page from Amazon’s book and serve you recommendations based on your viewing habits.
For example, they regularly send recommendation emails to specific users when relevant content is released on the platform:
But they don’t stop there. They use real estate below the main call-to-action to share other recommendations:
And there’s very little friction in these emails. The layout is clearly designed and free of clutter.
Not only that, but no matter what device you view it on, the “Play” call-to-action will open Netflix in your browser or the app on your device.
Netflix also uses these principles when serving push notifications on mobile devices, too. In the example below, a user has shared how they were actually pleased about receiving this push notification:
Which is a rare feat for any app!
The lesson here is clear: customer retention activities can be a welcome guest (not an unwanted pest) when you’re delivering content people want.
Figure out what that content is by generating insights from your data. Create granular customer segments and act upon behavioral data, too.
Which formats, topics and platforms are your customers engaging with most? Double-down on those areas and serve them to those who want it most.
Netflix is a monumental example of how great branding and continuous experimentation can lead to hypergrowth. What do you think of their marketing strategy? Is there a part of Netflix’s brand you love the most? Share your opinions in the comments below.