Where Is the Love? Understanding What Went Wrong for Netflix

I was having a conversation with my good friend and colleague Marcus Thornton, Chief Marketing Officer of Scheels, about the challenges Netflix is facing. So it’s fair to say Netflix is not having the best time ever right now. Instead of achieving 2 million more subscribers, they lost 200,000. The stock price is the lowest it’s been in five years. Employee morale is reportedly through the floor. The world is watching to see if the streaming giant has merely stumbled or if this is the beginning of a fall.

We begin with Netflix occupying a reasonably strong position – both Loved and Trusted by the public. Think about the whole Netflix and Chill phenomenon. Here we have a case of a brand being explicitly called out as integral to having a good time with your favorite person. There’s a serious amount of love going on.

But something happened. The relationship that was so strong has started to sour. Why? Let’s look at some choices Netflix has made and how they have contributed to the change in the way people feel about the brand.

Love Doesn’t Mean Giving Someone Everything They Want: You Have to Do More Than That.

Have you noticed how Netflix went from having everything you could ever want to watch to having nothing you’re excited about seeing? This is, we believe, directly attributable to the strength of the recommendation algorithms Netflix uses.

At first glance, the logic is sound. Someone likes a particular program and serves them up more content of that type. But – as you’ve undoubtedly experienced – it doesn’t take very long for all of your recommendations to look alike. The algorithms don’t stray too far from the tried and true. It just serves up more of what you’ve already enjoyed.

What’s missing from this experience? Delight. Discovery. The experience of finding something fresh and unexpected that you didn’t know you would like something people love. Netflix’s vast library undoubtedly contains many hidden gems people would happily pay to keep watching – if they ever saw it in the first place. If only there were a way to introduce serendipity into the algorithm, Netflix would be well on the way to getting some of that love back.

And Let’s Be Real: It’s Always About the Money, Honey

Netflix raised its prices steadily over the course of the pandemic. While price hikes are never welcome, doing so when their customer base was already feeling trapped by COVID restrictions was an interesting choice. There was much new financial stress introduced into people’s lives during the pandemic. Adding to this burden at this time was a choice Netflix made that negatively impacted the amount of love their customers feel toward the brand.

In much the same vein, the reports that Netflix is now open to advertising have created delight among advertising agencies – and absolutely nobody else. Customers on the fence about the value of their Netflix membership are not going to be persuaded to stay by adding commercials to the viewing experience.

The third leg of this tripod of terrible is the crackdown on password sharing. Does password sharing cost Netflix lots of money? Absolutely. Do they have the right to limit the delivery of their service to people who pay for it? No doubt. Is the ideal time to address this issue during a period where membership numbers are dropping fast and your employees have just lost tons of money as the value of their options plummeted? Perhaps not. Certainly not if Netflix asks the question, “Will this move make our customers love us  more?”

The Route to Screen Needs to Change – Considering a Post-Binge Netflix

Live by the sword, die by the sword is wisdom that applies in many situations, but in this case, let’s look at it in terms of content creation. Netflix has produced some amazing original content, using a model that involves hiring well-known stars and providing generous budgets. These shows have dropped a series at a time, keeping with the love people have for binge-watching.

This all bears re-examining, given the pandemic and the much more competitive environment the streaming industry has become. Netflix’s studio arm just isn’t as strong as Disney or Paramount, which have decades of experience in fundamentals-based storytelling. Star power can not be purchased in sufficient quantities to guarantee great content. That being said, Netflix should get some credit for bringing in stars from around the world to keep things going. Case in point, Squid Games, the survival drama that introduced Americans to top Korean actors. 

Additionally, a lot of Netflix’s original content is highly derivative of content that has already performed well for Netflix or another studio. It will be difficult at a time when the most comfortable response to tension is to pursue whatever appears to be the safest course, but in terms of content creation, it may be time to give the muse even more freedom. If there was ever a time Netflix needed to be more creative, it’s now. 

Forcing creativity is hard. Thinking strategically about the content release is much easier. Just because a show can be binged doesn’t mean it should be binged. Subscriber retention becomes easier when viewers need to wait to see what happens next. Love requires growth. While the binge-centric model of dropping entire seasons at once may be what’s known and familiar, it could be time for Netflix to explore what might work better. 

What Did I Miss?

Obviously, this is a big story with many different angles to consider. What do you think? What has Netflix done that’s reduced how much their customers love and trust them? What moves would you recommend to get Netflix back on a more positive trajectory? I’m very eager to hear your thoughts.

May 9, 2022 by

Defining Your Target Customer

Management guru Peter Drucker reminds us, “The purpose of business is to create a customer.”

The driving force behind this step is developing customer intelligence. You want to become masterful at generating actionable consumer insights through web surveys, focus groups, one-on-one in-depth interviews, in-store interactions, and more.

Here’s a list of questions that require thoughtful deliberation:

  • Who is your business especially for? Who are your Brand Lovers? That is, who will be your most profitable customers?
  • What human needs are you trying to satisfy in your target customers?
  • What internal tensions are you attempting to resolve?
  • What problems are you trying to solve?
  • What is the ideal experience you’re trying to create for your target customers?
  • What are the emotions you want your Brand Lovers to experience when they interact with you?

Your goal is to understand who your customers are, how they behave, and what they experience. The better consumer insights you have, the better chances you have for executing an effective branding strategy.

May 2, 2022 by

Love, Trust, and the Right to Repair

Every company wants to be in a position where its customers love and trust them. That’s where profits are high and loyalty is strong – critical considerations for the long-term health of the business.

But sometimes, companies make choices that diminish the relationship they have with their customers. Why would any brand willingly take steps that make their customers love them less?

Trouble Down on the Farm

We could ask John Deere – or, to be fair, any of the other major manufacturers of commercial farming equipment. These highly trusted brands damaged relationships with farmers – notoriously loyal to their tractor brand – by barring owners from repairing their equipment. 

This decision imposed high costs on farmers, especially those operating at a considerable distance from an authorized repair service. The revenue realized from repairs represented a minuscule percentage, and when weighed against the damage to the brand’s goodwill amongst its small pool of target customers, hardly worth it.

So why was this decision made? 

To Feel Less Fear, We Sacrifice Love

Businesses are led by rational people who strive to make intelligent decisions. Farming equipment manufacturers have legitimate concerns about their proprietary technology being stolen and replicated by competitors. 

They also know their customers have relatively few options. There are only so many top-tier brands in this space. 

To address the fears of industrial espionage, the decision was made that there’d be less love in the customer-brand relationship. People stay married even when they don’t like each other very much because each party somehow gets their needs met. 

Until, Of Course, We Wind Up In Court

Dysfunctional marriages end when one party takes the issue to court. While there’s no direct equivalent here, farming equipment manufacturers have found their fear-based response – some would call this their Shadow – checked in the courts. 

The Right to Repair movement has steadily gained traction, culminating in a presidential executive order in 2021. The changes allowing farmers to fix their own equipment haven’t made it far enough into the field yet to track the impact on how the brand is trusted and loved – but we will know before too many harvests.

What do you think will happen? I am interested in hearing your thoughts.

April 25, 2022 by

How Do You Identify Your Target Market?

No product is appropriate for every market. Clarifying your ideal target markets is a vital element in formulating your Branding strategy.

Factors might include demographics, psychographics, ethnographics, drivers of need, buyer personas, online/offline, and geography.

Remember you can’t profitably pursue every market so you want to determine where you can most effectively differentiate your brand and attract the most profitable customers who resonate with your offering.

Force yourself to sacrifice and focus on what matters most.

Start by brainstorming a master list of all possible markets you could pursue. Then, determine how you will assess each market opportunity. You may use metrics like market size, growth trends, ability to compete, barriers to entry, and the economics of each market.

Consider:

  • Which markets have the biggest and most urgent pain?
  • Where are there gaps in the market?
  • Which markets are most aligned with your corporate strategy?
  • Which markets best match your core competencies?
  • Which markets can you most easily reach?
  • Which markets have the largest market size and least competition?

Next, assess each market for accessibility, alignment, and overall opportunity. Do what you can to test or validate each market opportunity with key stakeholders.

Review feedback from current and prospective clients as well as employees on the front line. Review trend data from available sources. Try using customer surveys and external focus groups.

Finally, prioritize your market opportunities and refine them on an ongoing basis.

Ultimately, your best opportunities will also attract your competitors, so defining your target markets is insufficient in itself.

You will still need to differentiate your offer and position your brand. But at least now you will have the confidence that you’re fishing where your fish are.

April 18, 2022 by

Crocs: How Fashion’s Most Divisive Footwear Wound Up In Everybody’s Closet

Crocs weren’t created to be beautiful. 200 pairs of distinctively shaped, lightweight footwear were created for the 2001 Fort Lauderdale Boat Show. They sold out quickly. This was the brand’s first step to superstardom. More than 720 million pairs of Crocs have been sold since then, and the company is enjoying its fourth straight year of impressive revenue growth. This despite the fact that the fashion world deemed Crocs hideous, one of mankind’s worst inventions ever. How did this happen?

Know What Your Customers Love About You

Crocs may not be pretty, but they are durable, comfortable, and easy to clean. These characteristics, along with the shoe’s iconic clunky silhouette, have remained a constant over the brand’s 20+ year lifespan. Crocs fans are legion in part because the brand has identified what is important to their customer and then improved upon it.

Case in point: Croc’s roomy fit and durable construction made them an early hit with people with diabetes, who often have foot problems. Knowing this, Crocs focused on creating specific styles for this audience, using guidance from medical professionals. Other styles were created for health care workers, who appreciated having comfortable shoes that could easily be hosed off after a messy day of work, but needed a solid top to protect their feet from any medical waste that might splatter or spill upon them.

Love means listening, and Crocs has demonstrated that they do that.

Focus on Keeping Things Fun

As part of their corporate values, Crocs promises to keep an open mind and look on the bright and colorful side. That’s definitely been demonstrated in their product mix. While you can get basic white and black Crocs, the vast majority of Crocs offerings are boldly colored, distinctively patterned, or otherwise eye-catching. Crocs builds trust by delivering on its brand promise to be completely practical and totally goofy. Product options for men include Real-Tree Camo, Classic Tie Dye, styles matched to your Zodiac sign, and more.

Crocs also boosts the fun level of the brand through collaborations and limited editions created with pop celebrities and popular brands. The range of options is very impressive, including shoes inspired by the Grateful Dead and Post Malone, Kentucky Fried Chicken and Peeps, Vera Bradley, and Lightning McQueen from Cars. No matter what it takes to put a smile on your face, Crocs likely has a collaboration that covers it.

In fact, some of the most popular Crocs collaborations have a deliberately counterintuitive feel, such as the ongoing project with top fashion brand Balenciaga. Platform Crocs aren’t for everyone, but for the people who pay attention to what runway models wear, they’re certainly something.

Gilding the lily, in 2006, Crocs acquired Jibbitz, a company that made small fun charms people could use to personalize their shoes. Today, Jibbitz sales represent a sizable portion of revenue and have even been credited with the brand’s strong performance during the pandemic.

Crocs’ fun, expressive footwear makes their customers and other people smile. This positive emotional experience has resulted in a cohort of fanatically loyal Croc collectors. While the ‘typical collector’ may have a few dozen pairs to brag about, Doogie Lish Sandtiger is on a quest to have the world’s largest collection – he has nearly 800 pairs!

Love Means Getting Close: Crocs Direct to Customer Experience

While Crocs are available via many high-quality retail outlets it’s important to pay attention to Crocs’ Direct-to-Customer shopping experience.

It’s very easy for shoppers to quickly find the products that are meant for them, whether they’re after that classic Crocs look or need a new pair of shoes for work. With special discounts for teachers, healthcare workers, and the military, Crocs effectively honors and recognizes an important portion of its customer base while simultaneously keeping the shopping experience cheerful and bright.

While working hard to maintain the love and trust of their core customer base, Crocs uses its website to effectively leverage the social media influencers they’ve been using to expand the brand’s identity and grow market share. This is a smart way to keep customer experiences in alignment with expectations: the shopper who sees a pair of shoes on Instagram that they want will find those same shoes in the influencer’s collection on the website.

Other features to pay attention to are the Crocs Club, the Say Hi feature that directs shoppers to the nearest brick and mortar retail location, and importantly, an opportunity for customers to have their own Crocs images included on the site. The invitation to and celebration of community gives Crocs brand Lovers an easy-to-access way to deepen their relationship with the brand.

Going Forward: Growth Based on Core Values

Crocs has conducted itself fairly consistently since the beginning. The focus has been on continually improving product quality and keeping the fun factor high. Over the years, strategic acquisitions and partnerships have helped Crocs achieve and maintain a High Trust/High Love position.

Crocs core audience includes teachers and health care workers. What professions would you identify as being part of your core audience? How do you recognize and honor these individuals?

April 11, 2022 by

What’s More Important Than Growing Market Share? Examining the Wal-Mart/Spotify Partnership

Shortly on the heels of the Joe Rogan debacle, in which Spotify found its user base in conflict over the podcaster’s misinformation, the brand announced it was now in partnership with Walmart.  In the deal, new and existing customers of Walmart Plus – the membership program built to take on Amazon Prime – would receive six free months of Spotify Premium.

Why Did These Two Brands Join Forces?

There are obvious benefits for both brands. Walmart Plus is at a severe disadvantage in terms of streaming content; Amazon Prime has original video content as well as partnerships with the world’s most famous studios in addition to Amazon Music, Amazon Gaming, and more. Adding Spotify Premium makes Walmart Plus more competitive.

And for Spotify, this partnership is a smart way to increase the customer base without exerting a lot of effort. Six months is certainly long enough for a new user to become hooked on the service and continue enjoying it after the free trial has expired.

But Wait…There’s More!

It’s certain that this relationship was navigated well in advance of the Joe Rogan episode. However, subsequent to it, there are additional benefits Spotify is realizing from this partnership. We’ve talked before about how users’ trust in Spotify has been diminished. People who aren’t personally familiar with the brand have certainly heard negative media coverage. 

However, Walmart’s reputation is much the same as it always was. While people may not love the Walmart experience, the mega-retailers performance and pricing are consistent enough that people trust them. 

Right now, for people who are dubious about Spotify – in a position where they’re not sure whether or not they should trust the brand – their faith in Walmart may be strong enough to overcome any hesitation. Admittedly, getting someone to enjoy a generous free trial effort isn’t that high of a bar to clear, but if you’re in this business you know it’s not always a sure thing. During this time of crisis, Spotify’s leadership surely appreciates the assistance Walmart Plus gives to its credibility.

Considering Trust in Strategic Alliances

Brands do business with each other in an endless number of ways. Whether it’s a partnership of the sort we see Walmart Plus and Spotify engaged in or a different model, it’s critical to always consider the impact these relationships have on the trust the public has in your brand. Will you be assisted, the way Spotify currently is, or will your brand suffer? The time to have this conversation is before the deal is made, of course, but it’s also continually relevant to keep an eye on existing relationships to make sure they’re in your best interest. I’d love to hear your thoughts on this – what other high-profile brands have you seen working together to enhance how trustworthy they appear?

April 4, 2022 by

Brand Trust: How to Build and Protect Your Most Important Asset in 2022

Of all the factors that go into creating Brand Lovers – those shoppers who will come to your store time and time again, even when they have other convenient options – trust is the one that’s entirely within the brand’s control. No matter what’s happening in this world, you can always choose to be trustworthy.

Every single interaction you have with your customer is an opportunity to demonstrate trustworthiness. There are a couple of ways to illustrate this idea. Let’s pick two – pricing and policies – to point out opportunities to create trust.

Pricing & Policies –  Understanding The Infrastructure of Trust

Pricing first. No matter what you’re selling, from diet soda to diamond tiaras. Your customers are going to be aware of the price. Trust is established, at least to a minimal degree, if the price they encounter aligns with their expectations. When things don’t line up, trust starts being damaged right away. If a diamond tiara only costs $20, you don’t trust that it’s the real thing. This can work in your favor. If you’re a specialty gourmet foods retailer, let’s say you might be able to sell a diet soda for $20 to the connoisseur looking for a particularly unique flavor. They may have never heard of the brand, but they’ll buy it because they trust you & your store. That being said, if they pay that $20, that diet soda better be the best one they ever had.

If your pricing deviates significantly from the market, there needs to be a credible reason why your customer won’t trust your prices. And if your prices can’t be trusted, the relationship you have with this customer will not go too far. More than half of all shoppers price check; two-thirds will check prices online while shopping in-store. Is Will having trustworthy prices close the deal? Not necessarily, but even the opposite appearance will lose your business.

The Power of Policies

Policies are precisely what I’m talking about when we get into discussing the infrastructure of trust. Every business has policies – how do you return merchandise, is it acceptable to bring a pet into the store, is it necessary to wear shoes in the establishment, and so on. In terms of establishing and maintaining trust, what the policy is isn’t nearly as important as if the procedure is clearly communicated and consistently applied.

Consistent application of policy allows your customers to trust that the experience they have in your establishment is one that they can expect to proceed in a specific fashion. If your fine dining restaurant has a dress code, your guests can reasonably expect to eat their dinner without looking at someone wearing a bathing suit, flip flops, and towel. People who are underdressed can trust that they’ll be able to dine comfortably once they too are suitably attired – and that no one else is getting away with dodging the standard they’ve been asked to meet.

Assuredly, these seem like simple points – but they’re the points that make or break relationships on a day in, day out basis. If your customer retention rate is just not there, it’s a good time to do that close perspective examination of your operation, focused on whether or not your customers trust you on that granular level. If the answer is not yes, the good news is it’s entirely within your control to improve.

March 28, 2022 by

We Don’t Talk About Bruno…What Can Brands Learn From Encanto?

Because I have small children, I have seen The Walt Disney Company movie Encanto about 37 million times. And this experience has made me wonder: does every brand have a Bruno?

We Don’t Talk About Bruno – What’s That About?

A quick summary for those who haven’t seen the movie. Encanto is about a family that has magical gifts. Bruno’s gift was the ability to see the future, which sounds fantastic, but most of his predictions were negative. His family began to believe his predictions caused the bad outcomes, and after one especially notable conflict, Bruno left. Ever since, the family’s most famous song says, we don’t talk about Bruno.

In every group, each person has a role to play. Bruno’s role was that of the truth-teller: the person who, genuinely out of a sincere desire to help, says things other people don’t want to hear. These people are often dismissed from the conversation, brushed off, as Bruno was, as the crazy uncle no one listens to.

Who Is Your Bruno?

What does that mean for a brand? Who is your organization’s Bruno? Who don’t you talk about?

Bruno could be a customer, quick to write harsh reviews pointing out even the smallest flaw.

Bruno could be an activist, loudly demanding your company conduct itself in a way they see as more humane, ethical, or otherwise correct. 

Bruno could be an employee speaking up about working conditions and pay rates.

Bruno could be a manager pointing out that changes need to be made because the in-store experience is suffering.

Bruno could be in leadership, taking a stand and telling the others the organization isn’t going in the right direction. 

In the movie, it becomes clear that Bruno’s predictions weren’t causing the events that happened. He merely spotted the clues of impending events ahead of time and did his best to let people know. But it was easier for the family to become angry with what they were hearing and stop talking about Bruno. 

This dynamic plays out in every human setting, including within our organizations. Perhaps you can think of times within your career when you’ve seen someone who’s been acting as a truth-teller phased out of the organization or otherwise disregarded. This is a thing that happens, but it doesn’t need to be that way.

As part of our ongoing conversation about trust, we need to reach a point where brands trust themselves enough to be able to listen to the Brunos of the world without shutting them out. We have to trust that the people in good faith relationships with us – our customers, our communities, our employees, team, and leadership – tell us things we don’t want to hear because they want us to do better. 

We don’t talk about Bruno, but we have to if we want to grow.

March 22, 2022 by

Can Customers Trust Your Brand?

So we’re at an interesting and unique place in our examination of trust and what it means for a brand to be trustworthy. The Russian invasion of Ukraine has had impacts all around the world. What a brand chooses to do or not do now has reverberations that extend far beyond their company’s financial performance.

A brand’s character is demonstrated by its actions. Customers are watching what their favorite brands are doing at this time. This is the moment when loyalty is won or lost on that forever basis.

Knowing What The Right Thing Is Can Be Complicated: The Hierarchy of Trust

Important to remember: we’re less than a month into the invasion. Events are happening very quickly, and brands (just like the rest of us) haven’t had much opportunity to understand what’s going on, never mind craft the correct response to it. Everyone is operating on the fly during a complex, difficult situation.

That being said, what we’ve seen emerging is that this is one instance where size definitely does matter. Small to mid-sized brands appear to be taking inspiration and direction from how larger organizations are announcing their decisions to limit or cease doing business with Russia at this time.

You can see this playing out in many areas, but for this, we’ll use the world of sport as an example. Fairly immediately after the Russians first invaded, FIFA condemned the violence and announced the Russian team would be subject to penalties. This was quickly seen as an insufficient response, with players from Ukraine, Poland, and other neighboring countries refusing to play against the Russian team, no matter what it would be called. FIFA was under great pressure to ban Russian teams from competing entirely but held off saying they would impose a total ban until the International Olympic Committee – IOC made a similar announcement regarding Russian participation in the Paralympics. Over the years, IOC and FIFA have had contentious relations, but in this instance, FIFA seemed ready to let the IOC take the lead.

People Trust Brands More Than They Trust Governments

According to the Edelman Trust Barometer Report for 2022, globally, people trust brands and NGOs far more than they trust the government and the media. Why does that dynamic exist?

We can’t cover all of the answers to that question here, but one cause – illustrated by FIFA’s rapidly evolving response to the Ukraine crisis – is that brands have to respond to their fans and critics in a way that governments do not. If the customer base withdraws its support, the brand fails. Even an organization as large as FIFA needs to pay attention to what its fans expect of them so that trust relationships can be maintained.

Subsequent to the IOC & FIFA other brands, including The Coca-Cola Company and McDonald’s have also announced they’re ceasing operations in Russia. Thinking of this in terms of trust, what brand promises do you think these brands are fulfilling with this decision?

March 15, 2022 by

Is Your Social Media Strategy Really A Social Media Strategy?

how can you use your brand to help customers tell their stories? how can their stories help you tell your story better?

Native American Proverb

Pull up almost any major corporation’s Facebook page and look at how they respond to negative feedback. Often, it’s ignored. When it’s not, it’s usually a copy-and-paste response that reads like it spent several weeks losing its humanity in the legal department: “Sorry you didn’t have the perfect experience we’re committed to delivering. Please call 1-800…”

In the latter case, not only does the customer have to make the effort to call, but they also have to re-explain the issue. And, they’ll likely get put on hold. This is hardly a commitment to a great customer experience.

This isn’t just reserved for negative posts; positive posts usually get the same responses: no answers or cookie-cutter answers that aim just to try and make the algorithm see a boost in engagement. 

Behavior like this should be shocking at this point: experts have warned companies for well over a decade to use social media to primarily communicate rather than broadcast. Yet, most still predominantely use social media as little more than a glorified broadcast platform.

Whether this usage stems from ignorance or inability (or both), ultimately the issue is that companies are ignoring the true nature of branding: authentic brands are co-authored experiences with customers, employees, and the brand; authentic brands are not broadcast experiences.

In October 2012, I attended AdAge’s Social Engagement/Social TV Conference in Los Angeles. The most interesting thing I heard there was an offhanded comment by Kay Madati—then the Head of Media and Entertainment for Facebook who later worked for Twitter and LinkedIn and now works for FIFA. He said that internally Facebook refers to posts and their threads as stories.

In that context, most of Facebook’s moves—even the controversial ones—over the last decade make sense: how do we allow our users to better tell the stories they want to tell and see the stories they find meaningful?

But, social media isn’t just great for customers to tell their stories; it’s great for brands to tell their stories too. How much different would your brand’s Facebook page be if its only goal was to tell the story of your brand in a way that’s meaningful to your customers’ lives?

If customers are trying to tell their stories, how can you use your brand to help them tell their stories? And, how can their stories help you tell your story better?

Next time you consider your social media, think about the platforms as tools for co-authorship and storytelling.

February 22, 2022 by