Netflix Case Study August 15 2013 Introductions Leah
- Slides: 27
Netflix Case Study August 15, 2013
Introductions • Leah Brady, Product Marketing Providence College, 2014 • John Del. Signore, Bank of America Boston College, 2015 • Kathryn Mc. Kennon, Customer Experience Boston College, 2014 • Connor Mc. Namara, 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
• Strengths: SWOT Analysis • 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 Options Marketing Automation 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. 4 MM 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 Mc. Mullen
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