New Marketing in action: Netflix.
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.