Netflix Case Study

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Transcript Netflix Case Study

Netflix Case Study
August 15, 2013
Introductions
• Leah Brady, Product Marketing
Providence College, 2014
• John DelSignore, Bank of America
Boston College, 2015
• Kathryn McKennon, Customer Experience
Boston College, 2014
• Connor McNamara, Mid-Market Sales
University of Vermont, 2014
• Alex Wu, Kellogg’s & Unilever
Northeastern University Master’s Program
Agenda
1.
2.
3.
4.
5.
Netflix Overview
Business Strategy
Technology
Customer Retention
ISP Partnerships
Epsilon’s Vision
client/brand needs
• Macro and micro insights
• Integrated, multi-discipline
marketing competencies—
”marketing technologists”
• Direct customer engagement
• Channel
• Content
• Cost-effective value
• Proprietary platforms and
customization
• Accountability
customer needs
• One-to-one engagement
content
• “Know me”
• On their terms
• Media Channels
• Timing
• Brand relevance
• Authentic experiences
• Recognition
• Value
Netflix Overview
•
Marketing expenses dropping consistently as percent of sales.
Netflix Stock
IPO
Today
Streaming Introduced
Qwikster Proposal
SWOT Analysis
• Strengths:
• Strong brand:
• Top provider of streaming content in the U.S.
• Value of brand name on the rise since release of original content
• Weaknesses:
• Undertaking large amounts of debt:
• To fund the mass licensing packages used to acquire content from
other providers.
• Physical media delivery service has suffered greatly since the
growth of the digital LOB
SWOT Analysis
• Opportunities:
• “Cord-cutting” trend creates new demand for
internet-based TV
• Original, in-house programming
• Redirect percentage of marketing budget
• International growth
• Threats:
• Internet Service Providers
• Competitor growth
Netflix Business Needs
• Interested in developing new strategy that
would allow for growth in both markets,
including:
• Improving analytic capabilities
• Forming strategic partnerships with ISPs
• Developing transmedia properties
Business Strategy
Epsilon’s End-to-End Solutions
Portfolio
Leverage Our Partners
• Streamline multi-channel technologies
• Smart TVs, Tablets, Game systems
• Develop new capabilities
• Integrate “app store”
Marketing Solution
Tools
Marketing
Automation
Options
Recommendation
or
Query &
Reporting
Epsilon Hosted
WB Campaign
Marketing DB
Campaign
Management
Marketing
Resource
Management
Data Mining
&
Analytics
(Hosted at WB)
Email/Mobile
Deployment
Loyalty
Program
or
Future?
Technology
• What is CDI?
A data processing domain relating to the accurate and
consistent representation of customer data across
enterprise systems.
• What does Agility do?
Helps to realize the full potential of valuable customer.
information
Customer Retention
Customer Acquisition
Cost of subscriber acquisition:
$16
Monthly cost of service:
$7.99
Average subscription lifetime:
25 months
Customer lifetime value:
$291.25
• As of April 2013, 5.7% of Netflix users
were not paying for the service.
• Abuse of free trial offer.
• “Virtuous Cycle”
• Challenge: getting users to follow up
free trial with a paid subscription.
Epsilon Solution
• Maximize free trial conversions.
• Mimic success of Hilton case:
CHALLENGE
To increase transactions of program
enrollments and no longer have any
“stagnant” members
SOLUTION
• Educate members on program and
franchise offerings and improve
customer engagement through a
reactivation strategy and campaign
• Increased likelihood that a new
program enrollee would transact and
ultimately become a valuable customer
RESULTS
• Realized $3.4MM in incremental spend in the first year
• New member activation communication open rates
averaged over 34% vs. the promotional average of
22%
Customer Retention
• Last reported churn rate: 5% (2009).
• “The company doesn't report churn,
but Sanford C. Bernstein puts it
between 40% and 50% annually”
(Wall Street Journal).
• Customers cancel subscription
once they finish a certain show.
• Challenge: Implement a more
accurate recommendation
software to keep users coming
back.
Epsilon Solution
• Data Analytics
Services.
• Modeling and
Profiling.
• Discover why
they go and
where they go.
• Cut down on
attrition.
ISP Integration
•
Internet Data Usage and Netflix
Today
Internet data usage in the U.S. has jumped 120% in the
past year.
•
Netflix continues to be the largest user of Internet
Bandwidth in North America,
with its video traffic jumping
more than 35% in one
year.
•
Accounts for one-third of
peak-period downstream
traffic in North America.
•
Netflix is working to create relationships with ISP’s to save money on contentdelivery costs.
•
They have started program called Open Connect aimed at broadband service
providers to directly connect with ISP’s.
•
Netflix has signed up Cox
Communications, Cablevision
Systems and Suddenlink
Communications, but wants
to continue to expand their
program.
Epsilon’s ISP Relations
• Epsilon has a great relationship with ISPs.
•
Marketing Policy Summit
• We are in contact with more than 100 major ISPs globally.
• Our deliverability team monitors ISPs on a daily basis.
Netflix could greatly benefit from Epsilon’s relationships with ISP’s globally.
Future Engagement
• Strategic Consulting:
• Recognize decreasing marketing budget.
• Develop unique solution set:
•
•
•
•
•
Agility
Email campaigns
Loyalty Program
Technology enhancement
Leveraged relationships
Thank You




Lisa Kenney
Jill Draper
Matt Ryan
Ned McMullen