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With a record-breaking quarter — a gain of 6.74M new subscribers in the first quarter of 2016, for a total of 81.5 million subscribers worldwide — Netflix is arguably among the top dogs in the subscription model ecosystem, dominating the recurrent billing model market for almost twenty years.

Luis Vargas, head of payments at Netflix, says that there are two fundamental components for their success.

“The difference between a subscription based model and a transactional model is the difference between a happy marriage and a one-night stand,” Vargas says. “In a happy marriage you want trust, and you need a great value proposition.”

“Think carefully about what you’re putting out there,” he continues. “It has to be a great value proposition for the client to be interested, and be willing to provide their payment method.”

That’s because a subscription business is first and foremost a business of trust, he explains, and that will never change. You’re asking customers to take a big leap: to give you the authority to go into their wallet every single month and take their money.

Obviously, reputation — and twenty years of business — builds trust. For new players, their primary goal is earning that reputation, Vargas says, and that’s usually accomplished by customer service: bending over backwards to keep your subscribers happy.

“Sometimes that means measures that initially result in an additional cost for the company, but it’s well worth doing,” says Vargas. He gives the example of a customer who may say they didn’t have access to their account for six months, and instead of taking a hard line, it’s far better to simply offer a refund for those six months to maintain trust — and the customer.

Exceptional customer service also means giving the subscriber control of both their payment and their membership. “I know this not what most businesses want to hear,” he says, “but if you want to build trust, you need to make it super easy to both sign up and to leave the service.”

Leave them with a positive experience with your brand, and they’ll be back, or they’ll recommend you to others.

Trust is also essential if you plan to expand globally. You’ll always find that either your customers do not have the payment method you’d prefer, or they don’t trust online payments. It’s essential to do research to find out how people prefer to pay in different countries, and how to build that trust, Vargas notes. What works in the U.S. won’t work the same in Mexico, and certainly not the same in the middle east or Africa.

Perhaps most importantly, you need to be in constant communication with the largest banks and card issuers in your customer geographies, he says. Banks look at merchants, especially in an ecommerce environment, as a very risky proposition.

“You must be able to prove that you are being transparent with the customers, you have a very low chargeback rate, and good fraud prevention practices in place,” he says, to develop the kind of payment processing partnerships that allowed Netflix to expand into 130 new countries this year alone.

For an in-depth look into how to build success with a subscription model from one of the leaders, sign up for our free webinar today!

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In this webinar, you’ll learn:

  • How to convert users into long term subscribers for revenue you can count on
  • How to improve your payment system to actually increase overall revenue
  • Insights into the changing global marketplace and untapped subscriber base


  • Luis Vargas, head of payments, Netflix
  • Adam Weber, CMO, Dollar Shave Club
  • John O’Brien, VP of Business Development, Worldpay
  • Evan Schuman, moderator, VentureBeat

    This webinar is sponsored by Worldpay.