New Marketing in action: Netflix.

View more presentations from reed2001.

I’m guessing that most of you have already seen this deck that made its way around the Interwebs yesterday but if not, it’s definitely worth a read. It’s another example of why Netflix is so successful – because they haven’t left culture to chance. Additionally it’s also a great example of a favourite theme of mine – operations as marketing. This presentation is catnip for investors because it points to an extremely well run company and a management team who are focused on the right things.

(Although as soon as I wrote that sentence I took a look at the stock price which has dropped today.)

I think this is also a smart move from an employee standpoint. They have very publicly told their staff that they are paid at the top of the market and they have told the competition it will be expensive to poach. Really there’s lots to admire about this from a marketing standpoint.

Around here we often use Netflix as a prime example of a Modern Brand. They’ve consistently used New Marketing principles to build their business and are a shining symbol of how this new thinking around business and branding can succeed. I was talking with Eric last week about Netflix and he told me that he’s had a DVD at home since before his daughter (who’s now almost two) was born.

Historically, the video rental industry built its profits upon people returning films late, but they profited by punishing you. In hindsight this couldn’t be a sustainable business model, your profits directly tied to your customer misery.

Not surprisingly however, Netflix haven’t once contacted him about it. Instead they’re actually probably quite happy that he’s sitting on it because that’s two years of movie rights, postage and handling costs that they’ve been able to avoid. Rather than penalizing him for his behaviour, they’ve figured out how to profit from it while actually encouraging the behaviour that generates more profit.

For me this is New Marketing thinking at its best, a rethinking of your value streams that involves your customers and treats them as allies in helping you make more money.

Random Posts

This entry was posted on Thursday, August 6th, 2009 at 10:57 am and is filed under brands, marketing, strategy, web 2.0. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View Comments to “New Marketing in action: Netflix.”

tomneveril Says:
August 6th, 2009 at 9:57 pm

While Netflix's current practices are profitable I don't think they engender brand loyalty. When a customer is responsible for not getting the most out a given service, doesn't that customer often fault the service? Consider the way people talk about their gyms. When they don't use their gym, it evokes ill will towards the gym. Rationally, it doesn't make sense. Nor does it make sense when a friend of mine threatens to quit “stupid Netflix” because she hasn't made time to watch her dusty copy of “The Other Boleyn Girl.” Should the brand remain silent? I don't think so. Equinox gyms conduct customer outreach to encourage gym usage. While it might not make for easy profits, I think Equinox benefits far more from ultimate customer satisfaction. Or at least complete innoculation from blame for lack of usage. You might argue that Netflix reminds people what they have at home every time they log in. Trouble is, people don't log in often. So, Netflix should allow customers to create email reminders at customer-selected time frames. This would probably make Eric even happier about the service, and less likely to use other video entertainment avenues.
adrianho Says:
August 6th, 2009 at 10:14 pm

Hi Tom,

While people grumble loudly about Netflix I think the general state of their business is very strong For example, they've come top in many customer satisfaction surveys for several years running, including this year: http://www.videobusiness.com/article/CA6657326….

Also Eric loves Netflix but watches everything instantly, I should have mentioned that.
Looking for the fundamental contradictions. | From The Head Of Zeus Jones Says:
August 10th, 2009 at 2:36 pm

[...] because can be the starting point for innovation. For example, as I wrote the other day, Netflix used a fundamental contradiction in the video rental industry as a starting point for its bu…. I also think that these fundamental contradictions are fairly easy to spot. The only question you [...]
Contradições « Run, Motherfucker, run Says:
August 10th, 2009 at 4:04 pm

[...] né? Um bom exemplo do que o Adrian defende é a Netflix. « E se vc fosse cliente [...]
ventureblogalist Says:
February 28th, 2010 at 4:37 am

employer branding is a fast growing space. Universum is a large player here
air jordan 9 Says:
May 31st, 2010 at 5:49 am

Well , the view of the passage is totally correct ,your details is really reasonable and you guy give us valuable informative post, I totally agree the standpoint of upstairs. I often surfing on this forum when I m free and I find there are so much good information we can learn in this forum!
Nike air force Says:
June 1st, 2010 at 4:51 am

Here products xx, has fashion model, superior quality and service, cheap price and updates quickly.I support strongly always! I want to buy XX, Original I hesitate to select which style more better.Hope your unique recommends.
air jordan 8 Says:
June 1st, 2010 at 7:12 am

It looks good,I have learn a recruit!
Recently,I found an excellent online store, the XX are completely various, good quality and cheap price,it’s worth buying! http://www.globalcommuni-cation.com/
gucci Says:
June 4th, 2010 at 1:31 am

Well , the view of the passage is totally correct ,your details is really reasonable and you guy give us valuable informative post, I totally agree the standpoint of upstairs. I often surfing on this forum when I m free and I find there are so much good information we can learn in this forum! http://www.brfinder.net/
Anonymous Says:
June 4th, 2010 at 3:19 pm

Here you have given good description about Air Jordan shoes. If you can give some more information about Air Jordan then please update me thanks.
prada outlet Says:
June 7th, 2010 at 2:01 am

Hhe article’s content rich variety which make us move for our mood after reading this article. surprise, here you will find what you want! Recently, I found some wedsites which commodity is research-laboratory colorful of fashion. Such as that worth you to see. Believe me these websites won’t let you down.

From The Head Of Zeus Jones