How NetFlix Uses Big Data To Improve Customer Retention
Netflix uses big data to make their streaming video videos easy to view. Netflix has more than 100 million subscribers worldwide and with that comes an abundance of information they can study to enhance the consumer experience. Big data is helping Netflix determine which movies and shows will be of interest to you, how the viewing habits of television viewers change over time, what movies and shows are most popular, and which sites and apps people use most often when they watch a movie or show. Netflix uses data obtained from the internet-monitor records of when people log onto the site, how long they stay, what type of content they prefer, and what types of movies and shows appeal most to them at any given moment. The research is done on all this data is detailed and impressive. Netflix even published their findings in a white paper called A Study of viewer Attention at Netflix.
Netflix uses big data to drive success by providing relevant content at the right times. The DVD rental business suffered because of bad timing. Netflix knows exactly when the consumer needs a good movie and can order it instantly. The DVD rental business is now billions of dollars a year and Netflix could easily become the biggest provider of video rentals in the world if they implemented a recommendation system and utilized big data to drive successful and high retention customers. Netflix has taken the first step and is now rolling out a recommendation system to help consumers find the movies and shows they want.
One of Netflix’s primary goals is to have an experience that is great on demand and at no cost. They have done all the planning and infrastructure for this and it is easy to see their efforts paying off. Netflix uses big data analytics to understand user behavior and cultural norms and apply programming to their service to deliver movies and shows that are the most enjoyable and successful based on past customer behavior. Netflix uses several different kinds of customer data including their own user data, Twitters data, BING data and online, active users from Facebook, Twitter and Google+ to understand how people interact with their service. These data analytics allow Netflix to make smart choices about what movies and shows to make available.
Netflix’s data analytics program also helps them improve the customer retention rate. Currently, about 90% of their customers return to Netflix for more and better entertainment. By understanding what keeps people coming back and how to retain them, Netflix is achieving great success. Their success is partly due to the fact that they have an excellent customer retention program, but the recommendation system is crucial to increasing that success rate. Recommendation systems help a lot to retain customers and keep them coming back.
Netflix’s social media marketing strategy of creating a community around their website makes recommending the movies and TV shows even more important. The more people who know about a movie or show, the more likely they are to watch it. It is as simple as that. Netflix has also recently started using big data to understand why certain TV shows and movies are more popular among certain demographics. The purpose of this strategy is to find ways to target their content to viewers that are more likely to want and enjoy it.
Netflix uses big data to understand user preferences, what sequences people prefer and which TV shows and movies people are most likely to recommend. The recommendation system works by collecting data points on the preferences of a Netflix customer. The system then applies these points to past viewing habits and creates a recommendation engine. It is not enough to just tell a customer how to rate a movie. The system must be able to provide quantitative results so that Netflix can understand the value of a recommendation system and how to leverage it to improve their overall customer experience.
Netflix is not the first streaming media company to use big data analytics in order to build better customer relationships. Amazon has been actively using it for years as well. What makes Netflix unique is that they apply it to all of their core activities, including their streaming video. They also have a number of different tools that they have developed in-house or partnered with third party companies to expand their ability to understand and utilize big data. This includes things like Kibbitz, Forex Funnel and the Shopping Component Extraction Tool. All of these tools work to collect large volumes of customer data and then process it into meaningful information that can improve Netflix’s overall ability to give its customers a better experience.
Netflix’s approach to big data analytics makes perfect sense and represents a sound investment in customer retention. As Netflix itself has proven, having customers return to a service is one of the most valuable long-term advantages there is. It takes a bit of time for a new customer to become familiar with a company’s offerings, but the effort is worth it because they are more likely to purchase from a company that has a strong recommendation system and that is able to create meaningful insights from the massive amounts of customer data that it pools in on a regular basis. In fact, Netflix’s TV show House of Cards is the first foray into this area with a commercial that is worth watching to see just what kind of impact it has on the company.