Netflix has one of the highest customer loyalty ratings in the entertainment industry with approximately 74% of current subscribers continuing to renew their subscription with Netflix on a month-to-month basis. In addition, many customers have cancelled their cable or satellite subscriptions and rely almost exclusively on streaming services such as Netflix for their entertainment. Netflix offers three different payment options or plans for customers-the basic plan at $7.99 per month, standard plan at $8.99 per month, or a premium plan at $11.99 per month. Thus, subscribers who renew on a monthly basis would pay between $95.88 and $143.88 per year to continue their Netflix service. If 74% of subscribers continue their service on an annual basis, Netflix is able to build a stable revenue stream based upon repeat purchasers. A quick snapshot of one customer revealed that the customer had subscribed to the Premium plan for five years and generated over $700 in revenue to Netflix. Which of the following marketing terms best captures the importance of customer loyalty and its impact on Netflix?

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Customer lifetime value (CLV) refers to the total amount of money a customer is expected to spend over the entire lifetime of their relationship with a company. In this case, the loyalty of Netflix customers who renew their subscription on a monthly basis is contributing to the overall stability and long-term profitability of the company. The example of the customer who generated over $700 in revenue for Netflix over five years is an illustration of CLV in action.

Netflix Has One of the Highest Customer Loyalty Ratings in the Entertainment