How Netflix defined a brand that helped it to build a great product, and vice-versa. (I was VP Product from 2005–2010.)
Twenty years ago, no one recognized the Netflix logo. But today, with more than 100 million members, customers instantly identify the logo and trust Netflix in a way that counts — with their credit cards. But it wasn’t always that way. Remember when Netflix announced its plan to split its streaming and DVD service with the launch of “Qwikster” in 2011? 800,000 customers cancelled Netflix that quarter.
I grew up in marketing, switched over to product, and became interested in branding after success building Sesame Street, Schoolhouse Rock, and Madeline software. I signed well-established brands to long-term relationships, then brought the brands to life within children’s educational software.
When I joined Netflix as VP of Product in 2005, I wanted to do more. My goal was to help a young company establish a world-class product and brand. As a product leader, my job was to delight customers in hard-to-copy, margin-enhancing ways. Based on experience, I viewed building a brand as one of the most important of these “hard-to-copy” tactics.
By the time I joined Netflix, I had a somewhat nuanced view of how marketing and product should work together: marketing defines the brand and product brings the brand to life by building a great product. Together, the two teams hope to create a world-class brand and product.
Here’s my definition of a brand:
Below, I outline two models to apply to your product or company, then show how these models provided direction for the Netflix marketing and product teams as the brand and product evolved:
1.) The positioning model describes the first three components of the brand definition: positioning, customer benefit, and personality.
2.) The brand pyramid adds the two remaining elements: aspiration and emotion.
3.) The evolution of Netflix shows how the non-member homepage — the “store window” of the site— evolved in tandem with the brand over twenty years.
You’re already an expert in positioning and don’t know it yet. Want proof? What’s the first word that pops into your head when I mention the car brand, “Volvo?” For most, the response is “safety.” This example demonstrates Volvo’s ability to place an idea in your head, relative to competitors, and that’s the definition of positioning.
To apply the first model, ask yourself three questions:
1.) In simple terms, how do you describe your product or company?
2.) How does it benefit customers?
3.) How do you define its personality? (The question behind the question: how do you want your product to relate to customers?)
Here’s the model applied to Netflix:
If you try this positioning model on your own, here are some tips:
- Use clear, precise sixth-grade language. Consumers are busy and don’t have time to parse complicated ideas.
- Be brief. Most teams begin with lots of complicated ideas. The key is to simplify and focus on a few, easy-to-communicate ideas.
- In answering the “personality” question, ask yourself, “If someone met my company or product at a cocktail party, how would I like folks to describe him or her?” Defining the personality of your product describes how you want your brand to relate to customers.
Volvo is a ninety-year-old company. They have spent billions of dollars on advertising and have consistently invented new safety features to own the word “safety.” Netflix is only twenty-years-old, but my guess is decades from now the one word they will own is “entertainment.”
In the long-term, what’s the one word you’d like to own for your product or company?
This framework builds on the positioning model and “ladders up” to define emotional benefits for customers as well as the “something bigger” that inspires your team. For this exercise, think long-term.
Why does the brand model incorporate emotion? The simple answer: it makes things memorable. Think for a moment about your childhood memories. My guess is they all have emotional elements. The joy of a surprise birthday party? The sorrow of losing a grandparent? Maya Angelou describes this phenomenon best:
Acknowledging emotion in the brand framework helps make products memorable.
The brand pyramid has four levels, and the intent is to read it from bottom to top. The base contains product attributes or features and the other elements ladder up from this foundation.
Below, I explain each level of the pyramid along with advice on how to approach the exercise on your own. Again, start at the bottom, with the product attributes as the foundation.
What are the product features that deliver benefits to customers?
As in the previous positioning model, how does your product improve customers’ lives? (You can cut and paste your description of customer benefits from the first positioning model.)
How does your product make customers feel?
In the long-term, if you fully deliver the product and its emotional benefits to your customers, how might your product dent the universe? Think twenty years into the future.
The headline provides an executive summary of the model. In cases where you develop an advertising campaign, it is the title of an ad campaign.
I’ll illustrate the model first using Apple as I think it’s helpful to see the pyramid in the context of a well-established brand:
For Apple today, the product attributes — the “bits and bytes” of what they deliver to us— are mobile hardware devices, along with the digital products and services they provide on these devices.
The benefits to customers are the ease of use of Apple’s human-centered design that makes customers more productive and creative.
How does Apple make customers feel? We feel imaginative. We feel free.
The “something bigger” of Apple products? Think for a moment about the Apple “Think Different” ad campaign, featuring Martin Luther King Jr, John Lennon, Steve Jobs, and Albert Einstein. All four are revolutionaries of their time. What is Apple’s “something bigger?”
It’s “Revolutionary Innovation.”
Consider the power of the Apple brand. Would you pay a few hundred dollars more for an electronic device that promises “revolutionary innovation?” Each year, hundreds of millions of customers do. This premium illustrates the economic power of a brand.
Here is the brand pyramid applied to Netflix:
At Netflix, Neve Savage was one of my marketing partners. I joke that he tattooed, “Movie Enjoyment Made Easy” to my forearm so I wouldn’t forget the phrase.
If you think back to the early days of Netflix, we were a startup competing with Blockbuster, a retailer with 8,000 stores and $8 billion in revenue.
But the Blockbuster experience sucked.
I can remember walking to our neighborhood Blockbuster, wandering the aisles, waiting in line to pay, then bringing a movie home to discover that none of my family wanted to watch the movie. Even worse, I had to pay late fees when I forgot to return the film.
Netflix’s early DVD-by-mail service had an unlimited monthly subscription. The goal was to delight our customers with lots of great movie choices, which arrived the next day in the mail, and later, instantly via streaming.
The “something bigger” was to deliver an entertainment experience that transported you to the magical place movies can take you — to escape reality. The intent was that the service would be so simple that the technology and interface would fade into the background so customers could immerse themselves in the movie.
Here are the tips I give to product and marketing teams as they apply the brand pyramid model:
- Product attributes. What are the features or components of your product that consumers buy or use to enjoy the benefit of your product? In the early days of Netflix, it was 100,000 movies on DVD, with one-day delivery, no late fees, and a website where you built your queue. Today, it’s tens of thousands of streaming movies & TV shows and, increasingly, original content. Product attributes can and will change over time — that’s where the innovation happens. The other levels of the pyramid, however, stay relatively constant.
- Product benefits. These are the same benefits from the first positioning model. Just make sure that the product attributes enable the product benefits.
- Emotional benefits. If you built a world-class product that delivers the benefits you describe, but ultimately exceeds customers’ expectations, how would customers feel? Make sure the words describe feelings.
- Something bigger. Many teams struggle with this part of the exercise. My coaching: Think Big. Apple delivers revolutionary innovation, Nike enables customers to fulfill their full human potential, and SpaceX is working to save the human race by colonizing Mars. The “something bigger” is meant to inspire your team to build a great product and company over fifty years.
- The headline. It took Apple tens of millions of dollars to create their “Think Different” campaign. So don’t expect a few hours of work to be as impactful. In the case of Netflix, “Movie Enjoyment Made Easy” was not intended to be seen by customers, but the headline summarized the brand pyramid in a way that I can still remember.
The important thing is to take your best shot at defining the model, then explore the various ideas with consumers via focus groups, surveys, but most importantly, A/B tests.
For years, Netflix marketing and product teams experimented with various product features and how to best present them. As much as I have described the positioning and branding models as static, this was not the case. The positioning model was updated continuously. The upper levels of the brand pyramid stayed more constant, however, providing consistent direction for the product team.
Netflix steadily evolved the product — from DVDs by mail, to streaming, to original content — and also tested the best ways to present the service to customers. In some cases, we evaluated new ideas through exploration of mock-ups and concept summaries. In other instances, we experimented with how to present new features we had already developed. The product and marketing teams worked together to continually innovate on both the product and its presentation.
While many regard brand as amorphous and hard to measure, Netflix did its best to measure its impact. We continually A/B tested different positioning and branding approaches on the non-member homepage. We focused on two key metrics:
1.) Trials/Visitors. Historically, 2% of visitors to the non-member site started a free trial.
2.) Conversion from free to paid membership. At the end of a free trial, about 90% of customers converted to paid membership.
A/B testing enabled us to measure the efficacy of both our positioning and brand. We tested new approaches every two weeks, and almost everything you see on the non-member homepage is a proven winner.
Looking back on my time at Netflix, I consider the work in this area to be the result of a dance between marketing and product, judged by customers via ongoing qualitative and quantitative research. Below I share nearly twenty years of non-member page iteration. I think you’ll be surprised by how much the positioning, brand, and product evolved.
In 1999, Netflix was an e-commerce site, focused on selling DVDs — only 1% of its transactions were rentals. There were just 2,600 titles, and the DVDs arrived 3–5 days after you ordered them. I like this page as it reminds me that all startups suck in the beginning. It’s fun to look back to see how far you’ve come.
At this point, Netflix made a “bet the company” pivot to focus exclusively on DVD rental. The team added the Queue and eliminated both due dates and late fees for their fledgling DVD-by-mail rental program. They made this decision based on a few focus groups and the correct assumption that Amazon would eventually dominate DVD sales.
In 2004, Netflix was an “all you can eat” DVD-by-mail subscription service. With no due dates or late fees, the service was well-positioned against Blockbuster, and the DVD library had grown to 35,000 titles. The couple on the couch hint at the emotional benefit of “movie enjoyment made easy.”
By 2008, there’s constant testing on the non-member page as Netflix explores how to combine its growing DVD-by-mail library with its nascent streaming service.
The Roku launch in 2008 was the first step in Netflix’s long-term strategy to create a hard-to-copy network effect by giving all TV manufacturers the tools they needed to make their TVs “Netflix Ready.” But in 2008, Roku was the only device that enabled Netflix members to watch movies on their TV.
In 2009, there was a clear, family-friendly positioning and the non-member site is now simpler. But the homepage still positions streaming as a minor “bonus” to its DVD-by-mail service.
By 2010, Netflix commits itself more fully to streaming, recognizing that its huge DVD-by-mail library will have a diminishing competitive advantage as the industry shifts from DVD to streaming. Netflix is now “streaming first.”
By 2011, Netflix presents its DVD-by-mail service as an “add-on” to its streaming service — it has come full circle since 2007. The company is now aggressive about promoting the ability to watch on TV, given the service is now on all three major tv-based gaming platforms.
In 2011, Netflix was also experimenting with Facebook Connect as a means to sign-up and get movie recommendations from friends. This social approach eventually failed — twice. Customers weren’t interested in sharing their movie tastes with friends, and when they did, their friends thought they had terrible taste!
Finally, in 2012, the site gets simpler. Netflix now has more than 30M members, and the brand now communicates real meaning to consumers. The site no longer commits as much space to describing what it is and how it works. The DVD-by-mail service still exists as an add-on, but there’s no reference to it on the non-member homepage. Netflix is now a streaming service.
The non-member site is now substantially simpler. Simpler versions of the site had been A/B tested for years, but more complicated versions consistently won. It’s counterintuitive that the earlier, simpler designs failed — simple typically trumps complete. But more “stuff” on the screen was an efficient way to communicate value at the time. In 2013, the Netflix brand finally provided this value instead.
A last note: 2013 is the year that Netflix launched its first original series, “House of Cards,” so original content is now an attribute of the company’s offering. At this point, Netflix began to invest its marketing dollars in its original content — something they didn’t do when they were an aggregator of other studios’ content.
By late 2013, there’s increasing focus on the ability to “watch anywhere” as you can now watch on tablets, mobile devices, and hundreds of “Netflix-Ready” TV-connected devices. There’s also a continued trend towards a simpler, non-member experience.
What says “Movie Enjoyment Made Easy” more than a happy family on a couch? Note that there’s no hardware or interface on the page. Netflix now lets you fade into your couch with no technology or complexity to distract you from your movie-watching experience.
She looks delighted, right? Netflix is both well-known and trusted, so there’s no real estate required to explain what the product is and the free trial continues to be the best way to enable folks to enjoy the experience. And for the reluctant “fence-sitters,” the ability to “cancel anytime” reduces their perceived risk.
Today, the site focuses on movies with a hint of Netflix’s growing original content library. (Note Season Two of “Stranger Things” at the center of the screen.)
What will Netflix experiment with next? I’m sure there are lots of hypotheses being tested right now. As in the past, Netflix will continually experiment on its non-member site, both to identify which potential ideas resonate with customers and to determine how to position new features they have already built.
Over the last twenty years, Netflix has evolved from a DVD e-commerce site to a worldwide Internet TV company. The dance between product, marketing and consumers continues as teams work to define and deliver both a brand and a product that delight customers in hard-to-copy, margin-enhancing ways. Today, Netflix is a world-class company with a distinct advantage in its hard-to-copy brand.
I’ll leave you with one final thought, highlighting the importance of teamwork between marketing and product to enable product and brand innovation:
“Today, brands are not the preserve of a marketing department. Brands are too important to be left to the marketing department — or any other ‘department,’ come to that. Organizational ghettoes do not create vibrant world-changing brands.” — Thomas Gad
I hope your marketing and product teams will work together to apply both the positioning and brand pyramid models. The models will help you define a “true north” for your product and build a product that brings your brand to life.
Please clap if you found this article helpful. If you have a moment to give feedback, I have also included a SurveyMonkey link, below. I can’t A/B test this essay, but Net Promoter Score survey feedback is very helpful to me:
My Other Product Management Articles on Medium:
- My First Podcast! I interview Todd Yellin, VP Product at Netflix
- Netflix’s Customer Obsession
- How to Run a Quarterly Product Strategy Meeting
- Hacking Your Product Management Career
- Leaders Lead
- How to Find a Great Job
- What Your Next Head of Product Looks Like
- Six Tips for Making Wicked Hard Decisions
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Many thanks to Kelsey Biddle, John McMahon, Ashita Achuthan, John Russell, and Fabian Fischetti for their editing help.