Netflix is the world’s leading subscription streaming entertainment service with over 195 million paid streaming memberships. Its content, available in over 190 countries, contains TV series, documentaries, and feature films across a wide variety of genres and languages. Netflix is ubiquitous, with members able to watch as much as they want, anytime, anywhere, on any internet-connected screen. They can play, pause, and resume watching, all without commercials.
Netflix is a pioneer in the delivery of streaming entertainment, launching its streaming service in 2007. It continues to offer a legacy DVD-by-mail service in the United States, but with slightly over 2 million subscribers, the focus remains predominantly on streaming entertainment content. Netflix’s core strategy is to grow their streaming subscription business domestically and globally.
Company Objectives
In October 2011, co-founder and CEO Reed Hastings expressed a clear vision for the future of Netflix which includes:
- Becoming the best global entertainment distribution service
- Licensing entertainment content around the world
- Creating markets that are accessible to filmmakers
- Helping content creators around the world to find a global audience
(Hastings, 2011).
Netflix’s brand promise or “quest” is “We promise our customers stellar service, our suppliers a valuable partner, our investors the prospects of sustained profitable growth, and our employees the allure of huge impact.”
The company’s prime objective is to continuously improve its members’ experience by expanding streaming content with a focus on programming a mix of content that delights its viewers and attracts new members. In addition, it is constantly enhancing its user interface and extending its streaming service to more internet-connected screens. A feature many members find convenient is the ability to download a selection of titles for offline viewing. This is great for people traveling and families with young children to keep them occupied.
Two key metrics for Netflix are member growth and member retention. A key measure is the length of membership, now measured in years, of the average subscription. It is becoming increasingly difficult to retain members given rising competition from new streaming services like Disney+, Apple TV+, HBO MAX, and NBCUniversal’s Peacock. As members can leave Netflix at any time, finding new subscribers is also vitally important to its success.
COVID-19 has presented both challenges and opportunities for Netflix. Like most businesses, Netflix has reduced its marketing and advertising spending since the pandemic outbreak. The company was forced to assess its marketing and promotion tactics, determine what is working best, and what improvements could be made. A focused effort on Netflix’s social media presence can both boost member growth and assist in member retention, while proving less expensive than the traditional marketing utilized by the company.
Setting a SMART Goal
To grow and thrive, any successful business needs to utilize SMART goals. What does the acronym SMART stand for?
- Specific (simple, sensible, significant).
- Measurable (meaningful, motivating).
- Achievable (agreed, attainable).
- Relevant (reasonable, realistic and resourced, results-based).
- Time bound (time-based, time limited, time/cost limited, timely, time-sensitive).
Implementing a SMART goal methodology will allow you to create both relevant and achievable targets that will support your company’s overall objectives. Like a compass, having SMART goals will provide you a path and guide you to a successful outcome.
Things just got interesting for Netflix. On October 29, 2020, the entertainment streaming service announced a price increase on subscriptions, the first increase since January 2019. The cost of its standard plan is increasing $1 to $13.99 per month, while its premium plan has increased $2 and will now be $17.99 per month. Netflix is testing the elasticity of demand and it will be a challenge to see if the price increases are tolerated. With this announced price increase, Netflix should adopt a SMART goal of increasing its membership by 2% each quarter for the next two quarters.
The goal of increasing subscriber membership by 2% in each of the next two quarters meets each element of a SMART goal. It is a Significant goal to achieve an increase in membership numbers coming off a pricing increase announcement in the hotly competitive space of entertainment streaming. Given the past history of pricing increases, Netflix anticipates a certain number of users will abandon the service and opt for a competitor. The goal is Measurable and Meaningful in that membership levels are closely tracked by company management and investors alike.
A 2% increase each quarter (nearly 4 million subscribers per quarter) will be challenging due to the recent price increase announced by Netflix, but it is Achievable. It is also Relevant, Reasonable, Realistic and Results-based. Netflix failed to meet internal growth targets in the last quarter. By pushing itself in the Time-bound goal of increasing members by 2% per quarter for the next half year, Netflix will need to come up with new ways to identify and sign up new members while also retaining existing ones.
Key Social KPIs to Track
Netflix already has an excellent social media presence, but has an opportunity to expand it. By identifying key social KPIs and setting achievable targets, Netflix’s social media campaign will contribute both to member retention and in finding new subscribers.
One of the most important KPIs to investigate is Customer Satisfaction score. This will help Netflix discover the effectiveness of their streaming offerings and whether members find their original content engaging. Netflix will be able to determine which segments of their streaming are popular with viewers and thus will give content managers the power to drive subscription revenues. Mapping out a goal that meets the SMART criteria, the target would be for Netflix’s CSat score to increase within two months. A simplified way of expressing the CSat score is Happy customers divided by number of customers, and leaving a positive impression with customers will be the best way to increase this metric. The results can be measured through analytics tools such as Google Data Studio.
Another relevant KPI to track would be Costs-per-click. The reason this is very relevant to Netflix’s social media managers is because it indicates which shows, actors, and mentions are most relevant and will develop the most hype when delivered through hashtags that followers use. Determining what the cost per click is will assist social media managers because they’ll realize which ads are most popular and which ones they should either cut or maintain going forward. By achieving these KPIs, Netflix will limit member defection and best position itself to meeting the SMART goal of consecutive 2% quarterly membership growth.
Other metrics to measure include the number of followers on each of Netflix’s social media platforms, as well as the quantity and quality of the posts that are shared. Currently, Netflix has 70 million likes on Facebook. This compares to just 2.36 million on Disney+. Our social media effort should increase our likes by half a million during the next two quarters of our SMART goal. Fan following for Netflix on Instagram is huge, as there are currently 25.1 million followers. Through our SMART goals, Netflix will set a goal of gaining more followers by designing posts that are humorous, relevant, and engaging. Our aim is to focus on both attracting new followers and maintaining current ones.
How can social media help Netflix achieve its SMART goal of increasing membership levels by 2% in each of the next two quarters?
Netflix’s prime focus is on pleasing its members. It is the key to its growth. With so many competing options for people’s time, including social media itself, Netflix needs to give its members what they want — interesting and exciting streamed content that brings them back night after night. Netflix will strategically use its presence on social media platforms, meeting key performance indicators, to drive people to its site.
Netflix has successfully used social media to position its brand. Its brand voice is focused on the fact that people love to talk about what they are watching. Netflix is unparalleled in its home-grown content, making it a brand that offers a unique value proposition in providing a large amount of content that is not available elsewhere. To capitalize, its hit shows are complemented by behind-the-scenes content that is available only on Netflix’s social handles. According to Lizz Kannenberg a year ago, in her article Social Spotlight: How Netflix uses social to create a brand experience, Netflix drove 1.7 million brand mentions and 30 million engagements in the first two weeks of September. The focus was brand loyalty and awareness — touting their unique brand proposition of great content that you cannot get elsewhere. Kannenberg, pointing to the Netflix licensed show Riverdale, notes that fans wanting to go beyond the content of the show itself, for behind-the-scenes peeks, star profiles and fan predictions find that following the show on Netflix social media is the easiest. Netflix can also use these platforms to drive awareness. Think of shareable gifs that are all the rage!
What are the outcomes Netflix will achieve from its social media campaign?
The social media campaign is designed to increase brand awareness, content offerings, and to ultimately drive people to Netflix. By meeting the KPIs, Netflix will see an increase in mentions and customer engagement. The sharing aspect of social media is one of the best ways to attract new users to the subscription service. An analysis of competitors will be performed at the same time to be able to compare the share of voice that Netflix is receiving during the relevant period compared to its peers. In tracking information in this way, the social media campaign efforts can be analyzed for their success in relation to the impact on growth of Netflix members. To the extent that social media mentions, customer engagement, and share of voice metrics are achieved, the SMART goal of a 2% increase in members per quarter for the next two quarters should be accomplished.
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