Netflix benefits from measured approach

Strategic relationships and reliance on metrics helps the company keep its membership strong

Last year, New York Times reporter Katie Hafner sent Netflix CEO Reed Hastings an e-mail commending him for a positive customer experience she had.

“It was a serendipitous event,” says Steve Swasey, VP of corporate communications at Netflix. “[Hastings] forwarded it to me, and I called [Hafner] and invited her to Hillsboro, OR, to see [our customer service center] firsthand.”

The timing couldn't have been better for Netflix. By bringing Hafner to Oregon, Netflix ended up with a 1,400-word article in the Times that ran in August 2007. The piece brought to light one of Netflix's strongest market differentiators.

Hafner wrote: “Netflix set up shop [in Hillsboro, OR] a year ago, shunning other lower-cost places in the United States and overseas, because it thought that Oregonians would present a friendlier voice to its customers. Then in July, Netflix took an unusual step for a Web-based company: It eliminated e-mail-based customer service inquiries.”

“That's a perfect example of how we took an operative function and made it a corporate communications success story,” Swasey says. “When The New York Times runs a story like that, the ripple is enormous. We got a lot out of a single strategic relationship with Katie Hafner.”

With a staff of only six – and no full-time agency help – Netflix's communications team considers building strategic relationships and efficiency essential.

“We measure everything – we're a very analytical company,” Swasey notes. “We're not distracted by what isn't critical.”

The primary criteria that the team uses for measurement is: Does the communications effort improve its member experience by fostering member retention, attracting new members, and prompting current members to move up to new price plans?

“If it doesn't... we don't do it,” Swasey says.

Another way the company maximizes its efficiency is to hire only senior-level PR staffers and to decline numerous speaking engagements for its CEO, Swasey points out. It also means having to decline some media requests and to ensure that, when the company does hold media events, they are widely covered.

For example, this month, the company held the Netflix Popcorn Bowl in New York's Times Square to establish a new Guinness World Record for most consecutive hours spent watching movies. The exhausting effort ended after 123 hours and 10 minutes of continuous movie watching, beating the previous record of 120 hours, says Catherine Fisher, director of consumer PR at Netflix.

The effort, however, kicked off just as the Wall Street tumult was demanding the press' attention. Even so, the event garnered coverage from consumer, entertainment, and general-interest media because of big-name drop-ins like actress Susan Sarandon and exercise guru Richard Simmons. Netflix worked with Shea Communications on the effort.

“Our charge is to create an emotional appeal and to create awareness in ways that... draw mass media,” Fisher explains. “The [Popcorn Bowl] speaks perfectly to that. You're at the crossroads of the world and you have this event with a group of movie enthusiasts.”

Netflix also created a social media angle by posting mockumentary videos on YouTube and using Facebook to recruit candidates.

“We find that with all the events we do there is a natural social media angle,” Fisher says. “For us, social media is about engaging dialogue and giving people a chance to submit their own videos. It's important to let people feel like they are part of an event.”

Despite having a relatively successful year, Netflix has been hit by the economic uncertainty of the past few months and increased competition from rivals like Blockbuster, Apple, and Amazon.com. Subscribers totaled 8.67 million at the end of September, less than the company's forecast of 8.675 million to 8.875 million. The company also lowered its projection for fourth-quarter revenue and subscriber growth. Yet, this hasn't veered the company off its communications objectives.

“On the consumer side we're more focused on raising awareness and building regard and emotional appeal for Netflix,” Fisher says. “Our programs are meant to do that – not directly pit ourselves against any competitors.”

Company: Netflix

Founder and CEO: Reed Hastings

Headquarters: Los Gatos, CA

Key trade titles: Hollywood Reporter, Variety, Video Business, Home Media Retailing

Marcomms budget: Undisclosed

Communications team: Ken Ross, VP of communications; Steve Swasey, VP of corporate comms; Catherine Fisher, consumer PR director

Agency: Works with agencies on a project basis

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