The Power of Focus, Design, and Delighting Customers: Lessons from Pinterest and Netflix

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Aug 06, 2023
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The Power of Focus, Design, and Delighting Customers: Lessons from Pinterest and Netflix
Introduction:
In the fast-paced world of startups and businesses, finding the right balance between customer satisfaction and profitability can be a daunting task. However, two successful companies, Pinterest and Netflix, have managed to navigate this challenge and achieve remarkable growth. By focusing on their strengths, prioritizing customer delight, and making strategic decisions, these companies have become industry leaders. In this article, we will explore the backstories of Pinterest and Netflix, and extract valuable insights on how to achieve success in today's competitive market.
Pinterest: A Design-Centric Journey to Success
Pinterest started as a small team of five employees, operating out of a cramped Palo Alto apartment in 2011. Instead of succumbing to the pressure of gaining immediate attention and funding, the team decided to prioritize perfecting the design and user experience of their platform. This decision allowed them to stay focused and avoid unnecessary distractions. Interestingly, Pinterest never even announced its fundraise, highlighting the importance of prioritization and focus in building a successful company.
One unique aspect of Pinterest's journey is the absence of a full-time technical co-founder. Rather than adhering to the conventional wisdom that every internet startup should have a technical founder, Pinterest's founders, Ben and Evan, played to their strengths and remained design-centric. This decision proved to be a pivotal factor in Pinterest's growth and success.
Over the years, Pinterest expanded its team to include approximately 1,800 members worldwide, generating over $750 million in revenue. The platform's ability to influence shoppers "mid-funnel" can be attributed to its pinner community, who use the platform to seek inspiration for their lives. By staying true to their design-centric approach, Pinterest has created a unique and influential brand.
Netflix: Balancing Customer Delight and Profitability
Netflix, on the other hand, faced the challenge of balancing customer delight with profitability. The company adopted the DHM (Delight customers in Hard-to-copy, Margin-enhancing ways) model, which focused on delivering customer value in ways that are difficult for competitors to replicate. This approach allowed Netflix to prioritize features that customers truly valued, such as a broader DVD selection, lower prices, and next-day DVD delivery.
To gain a deeper understanding of customer behavior and preferences, Netflix relied on A/B testing. This method enabled them to measure behavior change accurately and invest in features that resonated with their members. By investing less in features that didn't hold significant value for customers, such as new release DVDs, social features, and unique movie-finding tools, Netflix maximized its resources and ensured a better return on investment.
Building a long-term advantage through a hard-to-copy brand was another crucial aspect of Netflix's strategy. Despite initially incurring losses of $50 million, the company recognized the value of building trust with customers. The free trial reminder served as a trust-building tool, ultimately contributing to the establishment of a robust, world-class brand. Netflix understood that short-term losses could pave the way for long-term success and customer loyalty.
Actionable Advice:
- 1. Understand Customer Behavior: It's essential to assess customer behavior accurately, as what they say may not always align with their actions. A/B testing can provide valuable insights into behavior change, helping you prioritize features that truly add value to your customers' experience.
- 2. High-Stakes vs. Low-Stakes Decisions: When making product decisions, distinguish between high-stakes and low-stakes choices. High-stakes decisions that are difficult to reverse require careful consideration, gathering ample data, and allowing sufficient time. In contrast, low-stakes decisions that are easy to reverse should be made quickly to avoid ambiguity and maintain momentum.
- 3. Prioritize Focus and Decisiveness: Both Pinterest and Netflix emphasize the importance of focus and decisiveness. By staying focused on their core strengths and avoiding unnecessary distractions, these companies were able to drive growth and achieve success. Avoid postponing decisions, as it can create ambiguity and hinder progress. Be decisive, especially when dealing with low-stakes decisions.
Conclusion:
The success stories of Pinterest and Netflix offer valuable lessons for businesses looking to strike the right balance between customer delight and profitability. By focusing on their strengths, prioritizing customer value, and making strategic decisions, these companies have become industry leaders. Understanding customer behavior, distinguishing between high-stakes and low-stakes decisions, and embracing focus and decisiveness are actionable steps that can pave the way for success in today's competitive market.
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