January 29, 2024

How Does Netflix Maintain Such a High Customer Retention Rate?

For many people, Netflix is synonymous with a relaxed evening of binge-watching TV or a day spent with a new season of their favourite show. Despite entering an industry with high competition, such as Disney+, Amazon Prime Video, and Hulu, Netflix is the clear leader in streaming services and boasts a customer retention rate of almost 200 million paying subscribers. How does netflix maintain such a high customer retention rate?

Netflix has a clear understanding of their customers, which allows them to build a strong value proposition. Their strategy is to deliver highly personalised content that meets the needs of their target audience. This is achieved through the collection of customer data, such as their viewing history, which allows the platform to suggest films and shows that are likely to appeal.

In addition to this, Netflix offers a variety of genres that aren’t available on their competitors, such as foreign films, cartoons, anime, and small-budget documentaries. This gives them the opportunity to attract a niche audience that might not be reached by their competition. However, these content offerings also come with a cost as some titles are only made available in certain countries due to copyright agreements.

As a result, Netflix has to constantly evaluate and refine its strategy. In doing so, they have to make sure that they don’t stray too far from their original value proposition. For example, if they start recommending shows that have controversial topics (such as race or gender) they may risk disenfranchising their subscriber base and potentially damaging the brand image.

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