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Gibson Biddle - Netflix's Customer Obsession

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Leading the Product 2018 Speaker Gibson Biddle was a huge favourite at the conference particularly his talk on Netflix's Customer Obesssion.


For the blog post that goes with this presentation and more speaker talks go to:
https://www.leadingtheproduct.com/behind-the-scenes/

Published in: Business
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Gibson Biddle - Netflix's Customer Obsession

  1. 1. Netflix’s Customer Obsession Gibson Biddle @gibsonbiddle Leading The Product - October 23, 2018 I provide link to PDF of presentation at conclusion!
  2. 2. Are you a Netflix member?
  3. 3. No Late Fees Net Promoter Score How likely is it that you would recommend Netflix to a friend or colleague?
  4. 4. No Late Fees Net Promoter Score How likely is it that you would recommend Netflix to a friend or colleague? 4% 14% 82% 78 78%
  5. 5. “Customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.” Jeff Bezos CEO, Amazon
  6. 6. Sesame Street: Elmo’s Preschool
  7. 7. Creative Wonders
  8. 8. Customer Focus Satisfy Listen Compete
  9. 9. Customer Obsession Delight Experiment Invent
  10. 10. 1999
  11. 11. Today
  12. 12. Customer Obsession 1 The DHM model 2 Consumer science 3 Free trial case
  13. 13. The product leader’s job: • Delight customers in • Hard-to-copy • Margin-enhancing ways.
  14. 14. Balancing act Delight v. margin
  15. 15. Consumer insight • Surveys, focus groups & CS data The A/B test • Perfect New Release Delivery The result • Cancels: • “Save” 5,000 customers • “Worth” $1M • But, additional inventory = • Launch NR test to all or No launch? • No launch NEW on DVD Improve from 4.50% to 4.45% = 5,000 x $100 x 2 $5M
  16. 16. Hard-to-copy
  17. 17. Hard-to-copy No Late Fees
  18. 18. Hard-to-copy Brand Network effects Unique technology Economies of scale
  19. 19. Hypotheses Personalized Instant: • DVD • Streaming Easy Exclusives Open APIs Entertainment Friends (social) Movie-finding tools
  20. 20. Hypotheses Personalized Instant: • DVD • Streaming Easy Exclusives Open APIs Entertainment Friends (social) Movie-finding tools
  21. 21. Hypotheses Personalized Instant: • DVD • Streaming Easy Exclusives > Originals Open APIs > TV devices Entertainment Friends (social) Movie-finding tools
  22. 22. Tactics Ratings Wizard, new algorithms From 20 to 100 hubs; streaming Day One experience API launch; Xbox, Playstation Price & plan testing Product Strategy Personalization Instant Easy Device ecosystem Margin-enhancing
  23. 23. Product Strategy Personalization Instant Easy Device ecosystem Margin-enhancing Metrics % members: 50 + ratings at M2 % members watch > 15 min./mo. % with > 3 titles in queue, day 1 % of demand weighted TVs Lifetime value, gross margin
  24. 24. 2 Consumer Science: Personalization
  25. 25. Consumer insight via • Existing data • Qualitative • Surveys, and • A/B tests
  26. 26. No Late Fees 2005
  27. 27. Tactics Ratings, demographics Queue-Adds, streaming Collaborative filtering Acquire great movies Personalization strategy Explicit data Implicit data Matching algorithms Improved movie quality
  28. 28. Personalization strategy Explicit data Implicit data Matching algorithms Improved movie quality Metrics % members with 50+ ratings % > 6 Qadds/>15 min. stream RMSE Average movie rating
  29. 29. No Late Fees What % of customers give 50+ ratings by six weeks? Pop Quiz 1
  30. 30. 0 0.075 0.15 0.225 0.3 2004 2005 2006 2007 2008 2009 2010 2011 Percent of members who rate 50 + ratings by 6 weeks30% 15% 0%
  31. 31. No Late Fees The more you Rate, the better we’ll help you to find Movies You’ll Love The Ratings Wizard
  32. 32. Will demographics help predict movie taste? Pop Quiz 2
  33. 33. 0.6 0.7 0.8 0.9 1 2004 2005 2006 2007 2008 2009 2010 2011 Taste prediction improves over time
  34. 34. Collaborative filtering algorithm
  35. 35. Improve algorithm by 10%, win $1 million!
  36. 36. Will the new algorithm improve retention? Pop Quiz 3
  37. 37. New Category Interest algorithm
  38. 38. 0 20 40 60 80 2004 2005 2006 2007 2008 2009 2010 2011 % Members who add more than 6 DVDs/month to their movie list DVD by Mail
  39. 39. 0 20 40 60 80 2004 2005 2006 2007 2008 2009 2010 2011 % Members who watch more than 15 minutes/ month Streaming DVD by Mail % Members who add more than 6 DVDs/month to their movie list
  40. 40. Is it helpful to know you’re French? Pop Quiz 4
  41. 41. 0 0.95 1.9 2.85 3.8 2004 2005 2006 2007 2008 2009 2010 2011 Average movie rating improves over time
  42. 42. But Movie rating does not equal movie enjoyment
  43. 43. Casino = 98% Match
  44. 44. Netflix Instant Originals Simple Personalized All devices
  45. 45. 2000: Get Big on DVD 2007: Lead Streaming 2010: Expand Int’l
  46. 46. 3 Free trial reminder case
  47. 47. Free Trial Reminder Test Consumer insight: • Customer service data • Trials/Visit conversion: • Month 1 retention: Let’s A/B test it! Month one retention: Launch test to all or Not? Launch test to all 2% 90% 85% (All data are guesstimates)
  48. 48. Free Trial Learnings Delight trumps margin Cost of ethics & brand Low stakes (reversible) Debate, decide, do
  49. 49. One last thing required:
  50. 50. No Late Fees Patience
  51. 51. Existing data Data focus Customer & Bus. Qualitative 1-1, usability, focus groups Survey data Demo, cancel, quality, NPS A/B testing Measure change Delight v. margin Strategy Hypotheses DHM model Are You Obsessed?
  52. 52. Customer Obsession Putting the customer at the center of everything you do, to delight customers in hard-to-copy, margin- enhancing ways, to invent a better future.
  53. 53. Thank you!
  54. 54. www.gibsonbiddle.com To complete Net Promoter Score survey To find PDF of presentation To read my “Customer Obsession” article
  55. 55. Questions? www.gibsonbiddle.com To complete Net Promoter Score survey

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