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3 Lessons to Learn from Netflix Knows About Customer Experience


The video streaming industry has been growing rapidly, and Netflix has been at the forefront of this. It has been disrupting the entertainment industry, and it continues to do so pandemic or not (already crossed 200M subscribers). What exactly is it about Netflix that has made it so popular that it’s been “verbed” like Google was? Ask anyone who has a spot of free time about what they plan to do, and more often than not, “Netflixing” is the likely response.

“Netflixing” is like an addiction. The stats prove it, too. Netflix accounts for about 15% of global internet traffic.

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Netflix's rapid rise and dominance is a classic tale of the kind of disruption that comes with new technology. But what's driving this and how is the Netflix effect impacting customer expectations in other industries?

Netflix is synonymous with seamless customer experience

That’s the company’s secret sauce - consumer-friendly interfaces powered by hyper-personalization. They have created an engine to analyze precisely how subscribers click, watch, search, play, and pause. Then use that data to fine-tune recommendations and create extreme personalization experiences for every subscriber.

Despite being in an industry where customer expectations are phenomenally high and spoilt by choices, they have continued to grow without risking customer disappointment. Let's look at how the streaming giant uses customer data to achieve success and what you can learn from them.

They understand not just the user, but their psyche

To be able to customize user experiences, you need to understand your customers first. Having their personal information and subscription details is not just enough. 

Netflix is increasingly psychologically aware of the 'subscriber'. The constant experimentation built on proven  psychological principles has helped them understand what their users want - a seamless, faster, easier experience appealing to their psychologies. 

Lesson - With every online purchase, there are a wealth of psychological factors that come into play. So it's important to understand how human psychology works, and more specifically, how people decide to buy if you want to provide a better user experience and connect with them on a personal level. 

They predict and personalize experiences in real-time – and delight users 

Netflix’s “Because you watched so-and-so” recommendation is a brilliant example of hyper-personalization of user experience. The streaming giant’s recommendation engine is so accurate that it may even suggest titles with seemingly nothing in common with what a user just watched. But they are still great picks because of their content discovery model that adopts advanced algorithms based on user subscriber data to serve viewers recommendations based on your viewing habits and those of others have watched previously. The company claims that over 80% of its shows  have been watched as a result of its own recommendations.

Lesson - Consumers expect personalized experiences from brands that they trust. Most of the businesses are not delivering on this expectation. They are still stuck with one-size-fits-all digital experiences that deliver low engagement, poor conversion rates, and miss out on opportunities to deepen customer relationships.  

You can use  Netflix as a model for how to personalize the experience for customers in other industries, such as fitness or retail to help customers easily find what they want before they get frustrated and click elsewhere.

They reduce churn by keeping customers engaged and watching

The best step that Netflix can take to reduce churn is to create a great product that people are willing to pay for. They're able to do this because they have a large library of original and licensed content with the ability to play to their preferences.

This is possible because Netflix has over 200M subscribers that allows them to gather a tremendous amount of data. With this data, there are a zillion useful ways they can pivot the data and profile audiences with rich detail and provide personalized recommendations (through Email, Push Notifs and In-App Recommendations), and decide what movie titles/shows to license.

“There are 33 million different versions of Netflix.”

– Joris Evers, former Director of Global Communications Netflix

Lesson - Churn is a tricky beast. It can be caused by many factors, including poor service, price increase, or just simple apathy on your customers’ behalf. You need to have all the data points from different systems about your customers so that you can see a complete picture and find certain commonalities to address the churn problem

Data is your only magic potion

Every company is today already sitting on a goldmine of user data. All you need is the ability to leverage it for insights – at scale – that you can act immediately to offer unparalleled customer experiences. Big data and artificial intelligence are no longer the playthings of the privileged. You, too, can benefit from the value generation of these technologies. A best-in-class customer experience can put you right on the map to becoming a disruptor in your own right – the question then is, do you want to?

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