How Analytics can be a Game Changer: A Netflix Case Study

As per Netflix, around 80% of the viewer’s activity is

As per a study by SAS, more than 70% of organizations triggered by personalized algorithmic recommendations.
believe that data analytics plays a vital role in getting Where Netflix gains an edge over its peers is that by
precise insights. The study also said that out of ten collecting different data points, it creates detailed profiles
organizations, six of them said that leveraging analytics of its subscribers which helps them engage with them
makes them more innovative. Analytics is slowly but better.
steadily evolving in the competitive landscape. Industry Netflix collects information on how a user interacted
leaders are using analytics to make decisions that can and responded to a TV show or a movie. If we go into
help them to stay ahead of their peers, besides exploring details, it collects the following data: –
better revenue opportunities, new markets, and building a  Time and date when a user watched a show
better relationship with their customers.  The device used to watch the show
The very reason why business models of Uber,  If the user pauses the show, do they resume
Airbnb, and Spotify are sustaining is data and analytics. watching
When you digitize your interactions with customers, you  Does the user binge-watch an entire season of a
create a window to get immense information. This TV show?
customer information could be utilized for making  If they do, how much time does it take to binge
effective marketing strategies, better products, and watch it?
making more sales. More than that, Netflix has ratings that the viewer
A lot of C-suite leaders now understand the gives to the content they watch, the number of searches
importance of data and understand the risk it carries if not they do, and what they search. The information collected
secured correctly. What is startling is and makes is enough for creating a detailed profile of a user, and this
investment in data and analytics even more important is is exactly what Netflix does. It leverages data analytics to
the kind of ROI it gives. In the Journal of Applied make a robust recommendation algorithm that suggests
Marketing Analytics, Jacques Bughin says, the ROI on the best content to the subscriber as per their needs and
data and analytics is better than the investments done in preferences. The user no more must endlessly search
computers during the 1980s. through streams of content to find out what he or she
The power of data and analytics is also wants to watch. Netflix makes the job easier for them in
harnessed to improvise core operations or create new the process, giving them a better and customized viewer
business models from scratch. The most exceptional experience.
example is Netflix. Netflix has efficiently used its customer The recommendation system of Netflix contributes to
data to refine its recommendation engine and give a more than 80% of the content streamed by its subscribers
better experience to the users. Not only that Netflix has which has helped Netflix earn a whopping one billion via
surpassed Disney as the most valued media company in customer retention. Due to this reason, Netflix doesn’t
the world with a valuation of more than $160 billion. One have to invest too much on advertising and marketing
of the biggest reasons for their success is their their shows. They precisely know an estimate of the
impeccable customer retention rate. Their customer people who would be interested in watching a show.
retention rate is more than a staggering 90% which is far Apart from monitoring the online behavior of their users,
better than Hulu’s 64% and Amazon Prime’s 75%. Netflix has a feedback system in place. They encourage
The second most important reason why Netflix is feedback from their audience, which further helps them
way ahead of its competitors is- Content Creation. The understand their preferences and helps them in
kind of quality shows and movies it makes like “Orange is suggesting better shows and creating better content.
The New Black”, “Sacred Games”, and “BirdBox”. These
shows have received a thunderous response across the Why investing in data analytics is important?
globe resulting in a steady rise in subscription rates. One
of the primary reasons why they succeed in making better There is a data explosion today, and the need for
content is that they understand what their audience wants analytics has been growing exponentially. Tools and
to see leveraging data and analytics. software are being developed to get precise insights from
data. If you want to know your customers better, find
So, how does Netflix leverage big data ad analytics? revenue opportunities, and tap into new markets. You
need to have a mechanism that helps you gain better
Netflix has digitized its interactions with its 151 million insights. As an organization, investing in data analytics
subscribers. It collects data from each of its users and will give you four significant benefits.
with the help of data analytics understands the behavior
of subscribers and their watching patterns. It then 1. A deeper understanding of customers-
leverages that information to recommend movies and TV Earlier companies would generally categorize customers
shows customized as per the subscriber’s choice and based on age, gender, and location. Now with the help of
preferences. AI, one can map the digital footprints of their customers.
Decision-makers can go through crucial behavior patterns
of customers like price sensitivity, brand affinity, money by identifying patterns of fraud and dismissing
affluence, and preferences. These kinds of data mapping false claims.
help in understanding your customers better enhancing
your ability to build better products and services for them. How to harness the power of data?
As an organization, do not be afraid of change. If you are
2. Early detection of problems in products and yet to use analytics as an organization, start with small
services- steps, fail faster, and make a steady transition. Do not go
More than half of the professionals across North America for overnight results instead practice consistency and
and Europe are heavily dependent on analytics to prioritize your efforts.
enhance the quality of their products and services as per The first step you need to do as a decision-maker is
research from Forbes Insights and Cisco. Analytics can incorporating data and analytics into the core vision of the
give you precise insights on the kind of concerns organization, focus on nurturing a data-driven culture.
customers have, their changing needs, and based on Slowly but steadily create a powerful data infrastructure
that, you can innovate your offerings. and hire talent to operate it, make sure to highlight your
data-driven culture in your employer branding campaigns.
3. Identifying better marketing strategies- Your success doesn’t lie in adopting the most powerful
With various digitization channels for customer interaction technology rather digitization of your organization from
available now, businesses are adopting an omnichannel the bottom. Companies like Netflix, Amazon, and Google,
approach to engage with customers. Using analytics, who are leading the analytics game, gradually
marketers can get inputs on how to have meaningful transitioned to a data-savvy culture. It wasn’t all overnight
engagements with customers across all channels. Also, but a gradual process that took a few years. Not only did
analytics can help analyze successful marketing they heavily invest in analytics but they have also kept
programs and identify strategies that yield better ROIs. themselves observant of the changing trends of artificial
intelligence. They are putting the case strongly before all
4. Finding ways to reduce expenses- other organizations- if you want to survive in the market,
Once you start getting insights at departmental levels, it you need to invest in data analytics, and that is not
will help you identify areas where you can curb your negotiable at all.
costs. Insurance companies saved a good amount of