Netflix Password Sharing and Your Business
Streaming giant Netflix recently rolled out the bold decision to crack down on password sharing. While controversial with many of its customers, from a business perspective, Netflix felt it had no choice than to act given the rising costs of its content library and the revenue loss from users gaining access to the platform for free by simply sharing a login. The Netflix decision and the context behind it serves as a great reminder to re-evaluate your own business and its evolving market. While a decision as drastic as that by Netflix may not be in the cards, there are key learnings that could be gained in your business.First off, each market is unique. It is very unlikely you are competing with Netflix. What is the dynamic of the market you compete in? Do you fully understand it today and where it is headed tomorrow? What are your competitors doing right now? Is there pricing pressure? Is the customer base growing, flat or even declining? Don’t just assume you know. Be proactive and really understand the dynamic. The rate at which markets are evolving is increasing. Even traditionally stable industries are seeing disruption. The proper lens is critical in evaluating any potential changes to the business, whether mundane or more radical.
Inflation – What to Consider
Whether out of opportunity, or necessity, consider what changes make sense for your business. Inflation continues to be an issue in the economy. The costs to deliver your product or service have increased. Have you increased prices to keep pace? What about your delivery model? Does it allow you to charge a premium? A customer of ours has become known as a premium quality and service provider in its space. As competitors have moved toward volume and price competition, they have been able to command a pricing premium because of their business model. The key is making sure the customer perceives the difference. Ensure that any marketing and branding efforts support this narrative.
Your Business Delivery Model
Does the delivery model need to be adjusted? There are countless businesses that have added a small tweak to the business model to drive customer stickiness. An engineering firm serving large commercial properties has doubled down on its technical acumen to design complex solutions for its customers. They are serving as a “quarterback” for entire systems, taking the place of multiple providers that then have to coordinate together. This strategy has allowed the business to command higher pricing and improve customer satisfaction. Higher margins and a stickier customer sounds great – it is likely not out of reach for you either.
Business Feedback – What Matters?
All customer complaints are not necessarily bad. Complaints provide insights, but also expose opportunity. Brand Strategist Scott Wozniak had a brilliant, yet simple quote about pricing – “if 5% of your customers are not complaining about price, you are doing something wrong”. Notice he did not say all. 5% is still a small number. Don’t be afraid to lose customers. You want the right customer base, not the biggest one. Do you have customers abusing your system or your team? Who are the ones constantly grinding on price? Netflix feels it will be better off after losing customers. You might be too. Short term profit may suffer, but sustainability should be the aim.
Testing is key.
Netflix tested this strategy in smaller markets before rolling it out in the U.S. That allowed them to gauge customer response and behavior. You too can test changes, pilot initiatives with certain customers, and study the results.Bold decisions are necessary, especially in times of economic disruption. Constantly re-evaluate your business, its customers, and how you deliver to them. Disruption is your friend. Seek it, evaluate the options, and evolve. Some competitors will evolve faster, and they likely already are. You don’t have to be left behind.
