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Benchmarking concrete example - Netflix

Netflix is one of the main VOD platforms available online. It is undoubtedly the leader in the field, with more than 200 million paying subscribers worldwide, including 67 million in the United States.

Benchmarking concrete example - Netflix

Credit Photo : Pexels John-Mark Smith

In 2020, turnover was around 23 billion euros, with a number of subscribers that have continued to grow, especially with the health crisis and the successive lockdowns that have encouraged consumers to find jobs, and therefore to register on Netflix.

During 2020, there was a 40.2% increase in registrations.

The group also spends more than 15 billion euros on the production and research of new original content.

The benchmark is an essential step in a group’s strategy. Widely used by different companies looking for an effective way to counter the competition, this analysis helps to better understand rivals and to define a better valid and effective marketing strategy in the long term.

Netflix benchmarking

There are several steps in a competition benchmark, the first of course being to know the market in question and the rivals already present.

As for Netflix, this is a 100% online market, so we won't talk about location or geographic data, as the service is present worldwide.

However, the main competitors are Amazon Prime Video, Disney + and HBO, which are competing for market share internationally.

The benchmark aims to draw inspiration from the competition, the one that works, to establish a better strategy.

Finally, it is about taking inspiration from a method, but not about copying.

The first step is to know how to self-assess in order to identify your strengths but also and above all your weaknesses. In the case of Netflix, while the company has more strengths than weaknesses, the fact remains that the intensity of competition requires it to pay attention to every detail in order to remain competitive. It should also be taken into account that the VOD market is booming and changing.

New entrants from foreign countries may emerge within a few years, forcing the group to pay particular attention to its customer strategy and communication.

Thus, Netflix has undeniable advantages, such as the quantity of content, in particular, but consumers will also be required to have a very strong internet connection to use the service. Subscriptions are also monthly and in the process of being increased, which can be a significant weakness for the platform.

Indeed, currently, prices are higher than those offered by competitors, and if we take the example of Amazon Prime, new content is being released every year.

The question to be asked at this level is how it is possible to improve performance while maintaining attractive prices to appeal to consumers?

Communication plays an important role, especially that found on the internet and on social networks. Is this increase justified in the eyes of customers?

The answer undoubtedly lies in the networks, which are visited by thousands of Internet users every day.

It is then a matter of self-analysis to understand how it is possible to improve yourself.

Who is the target audience? Netflix has a very large audience, but those who use the platform the most are children, adolescents and more generally those under 50.

It is then a question of knowing the tastes of consumers. What they like and dislike about the service?

For such a service, how much are customers willing to spend per month? This is an important question, because, in order to assess the price of a service, it is still important to rely on the prices usually charged by the competition. Exceeding a certain tariff threshold known as the psychological threshold is complicated, precisely because there is no lack of competition.

Consumers want originality and be able to watch their favorite series, but on the other hand, they want to continue to have the services without exceeding a certain monthly amount.

The third step is to know which are the most dangerous competitors in a given country. Indeed, not all countries work the same, and Netflix must take this into account. The most common competitors are Amazon, OCS and Disney.

This is head-to-head competition, and monitoring it is important to establish the percentage of new registrants, new content, or all customer comments and reactions at any given time. It is about having the least misguided overview of the market and, therefore, staying one step ahead of the competition.

Retaining customers in the face of the extent of this competition is not easy because, like all VOD platforms, consumers can unsubscribe very easily. There is no commitment, consumers don't want any more anyway and offering a service without commitment is still the best way to retain them. However, if prices increase too much, it can also tire consumers and lead them to cancel their subscription. In 2021, for example, Netflix did not have the expected number of subscribers, while Amazon or Disney have increased their number of subscribers.

In a benchmark, it is, therefore, a matter of carefully studying the strategies of competitors so as not to be left behind. It's not just about wanting to gain new registrants but actually making those present want to continue using the service. The more targeted and analyzed the competition, the better Netflix's analysis will be, as the group can take its weaknesses into account and compare them to those of others.

The grouping of data will then make it possible to analyze the results obtained.

In this phase, the internet plays a very important role, the various review sites as well as social networks.

The Internet makes it possible to have fairly reliable information on the finances of platforms today and, therefore, it allows for more regular and, above all, more reliable comparison.

The goal is to take the most dangerous competitors for Netflix and draw inspiration from their methods to attract and retain customers.

This is also about learning from trends, as these are likely to change quite frequently.

Keep in mind that Netflix, like all of its competitors, is a service that consumers can subscribe to and unsubscribe from with just a few clicks. It is often more complex to build customer loyalty in this case. Gathering the data also helps to better establish an action plan, which is usually the last step in benchmarking.

The next step is to find the right solutions to allow the group to stay one step ahead of others and, above all, to stay ahead of consumers' subscription desires.

The results are then communicated to the various partners, who can help the company find relevant solutions. Likewise, subscribers and other Internet users, through social networks, may be asked to give their opinion on the service.

The opinion of consumers must be taken into account, as it helps to better target needs and expectations. With social networks and the Internet, software makes it possible to cross-check the responses given in surveys, in particular, to then assess those that come up the most.

It is, thanks to this, that it is possible to put a real strategy based on the customers, and not only on the figures of the group.

The last step is to put in place an action plan with achievable goals over a set period of time. This plan will then be monitored and renewed or resumed if necessary.

Indeed, there is no point in benchmarking the competition if there is no regular monitoring of the results.

It is, thanks to this monitoring, that the strategy can be changed more quickly in the event of a problem. The action plan must correspond, in all respects, to what consumers want, because on this type of platform they have very strong negotiating power. Today, they are very knowledgeable and no longer hesitate to compare all the services before choosing one.

Sources : Capital, Marketing stratégie, Qualtrics