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Everyone is talking about Netflix — and for good reason. Just a year ago, Netflix began to really crack down on password-sharing. And while users were infuriated and threatened to cancel their subscriptions, the opposite ensued. This quarter, Netflix ended up adding 9.33 million new subscribers to their customer base — 5x their results from last year.
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And while there are lots of reasons it played out this way, one underlying reason this decision didn’t negatively affect their CX journey too badly was because this decision actually aligns very well with their overall value proposition.
Using Netflix’s Value Proposition to Drive CX
But what does customer experience have to do with value proposition in the first place? Research found in Harvard Business Review shows that “a successful brand shapes customers’ experiences by embedding the fundamental value proposition in offerings’ every feature.”
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Netflix’s value proposition is offering high quality, personalized streaming to every user.
So it’s simple. If multiple people can easily share one account without any repercussions, it does two things:
a) Cheapens the brand
When you pay for Netflix, you’re paying for a unique customer experience superior to competitors like Hulu or Peacock. You’re getting ultra-convenient streaming and exclusive content you can’t find anywhere else. So the users who do follow the rules by keeping their accounts to themselves won’t find it fair nor consistent with Netflix’s value proposition of a high quality user experience if other people don’t have to follow these same rules.
b) Makes personalization tough
One feature especially unique to Netflix is its recommendation algorithm. On the homepage, each user will be shown personalized recommendations based on their individual likes and viewing behavior. These recommendations change over time based on the user’s data — but if multiple people with different tastes and preferences are sharing the same account, it’s unlikely these recommendations will be helpful at all to any of the users on that one account.
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A Deep Dive into Netflix’s Recommendation Algorithms
In fact, a HUGE part of what makes Netflix’s CX journey so excellent is its recommendation engine. It's an algorithm that gives everyone an experience catered to their own preferences and behaviors, one that only gets more and more accurate over time. It’s estimated that 80% of the content users end up watching were recommended to them through Netflix’s algorithm.
So how does it work?
It’s quite a complex engine with many different factors feeding into the final output, which is exactly what makes it so precise.
The 2 main models it relies on include:
- Content Based Filtering
This allows Netflix to make recommendations based on individual characteristics of shows or movies a user is likely to enjoy, entirely based on their past behavior or their explicit feedback.
- Collaborative Filtering
This model is used to make recommendations to one user based on what similar users have enjoyed or reacted positively to.
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But there’s a pretty long list of what data in particular Netflix relies on to make these recommendations:
- User interactions with their site (browsing behaviors or actual ratings)
- Genre, length, language, actors, release year preferred
- Movie covers
- Similarities between users
- + so much more
Takeaways
The good news is, you don’t have to be a content-based platform to incorporate personalization into your customer experience strategy. In fact, the exact CX strategies Netflix utilized likely won't work for your company because every brand is different. When you think about your own CX strategy, here are a few questions to ask yourself:
- Does every touch point of your customer journey align with your value proposition?
- Are you taking the necessary steps to personalize each customers’ individual experiences?
- Are you using data to drive your CX decisions?
And don’t forget that you don’t have to answer these questions on your own — that’s what we’re here for :)