May 08, 2020 - 404 views
How M&E companies can beat customer churn
Here’s how media & entertainment businesses can make smarter use of customer data to retain viewers and reduce customer churn.
The number of streaming subscribers is surging amid the global shutdown. Yet customer churn is one of the direct-to-consumer industry’s harshest realities. It’s also new and uncertain territory for media and entertainment companies: As content producers, their job has been to attract audiences; as direct-to-consumer providers, it’s to keep them coming back.
While there’s no way to tell for certain whether viewers will eventually revert to their binge-and-bolt ways, reducing customer churn has become a core competency for M&E companies.
Smarter use of customer data is the not-so-secret weapon for keeping customer churn low. Customer data forms the foundation for stickiness by providing insights on everything from viewing history and transactions (which all companies have) to social sentiment (which most lack). Equally important – and often far less obvious – customer data enables the flow of communication and experience that needs to happen even for consumers who stop subscribing.
Which we know they’re likely to do. There’s no question that direct-to-consumer is a powerful business model that’s here to stay. At the start of the year, 35% of U.S. consumers subscribed to more than one over-the-top (OTT) service. Yet OTT churn rates are nine times higher than for cable and broadcast TV platforms, according to Parks Associates. And in a streaming market flooded with introductory offers, brand loyalty is nil.
A Steep Learning Curve
Here’s how smarter use of customer data can help direct-to-consumer providers find their footing when it comes to retaining viewers and reducing customer churn.
- Consider subscribers lifetime customers, even when they cancel. It may seem counter-intuitive to pour resources into customers who have left. Yet winning back canceled subscribers is a defining capability in the direct-to-consumer marketplace.
Digital platforms make it possible to continue communicating with former subscribers. (When was the last time a retailer stopped sending you emails just because you abandoned a shopping cart?) AI and nonstop analytics enable media organizations to perpetually learn about subscribers and ex-subscribers alike. By collecting data from social media sources and third-party data providers, media businesses can fill in details on preferences and obtain the insight needed to re-engage and woo them back.
- Advice: Once a customer, always a customer. When a premium cable channel sought to boost viewership for the heavily promoted final season of its marquee series, its marketing outreach included persuading former subscribers to renew. While the pool of data on existing subscribers was deep and dependable, we identified access to secondary data such as social feeds as critical for winning people back. The campaign spurred an uptick in paid subscribers from 1.93 million to 4.86 million by the second week of the season.
- View customer data from multiple channels. YouTube grounds its retention strategy in customer data. But the key to how it keeps viewers coming back is how it uses data to create personalized experiences. YouTube knows its customers’ viewing patterns, and it also continuously accumulates and evaluates advertising data. In addition, through its Google parentage, YouTube accesses search data to infer more insights regarding content – a step that streaming service providers can also take but often have not.
Media companies are, however, making strides in aggregating data from multiple paths. They’re more efficiently gathering and sharing information from mobile, web and other subscriber channels. They’ve gotten better at collecting information from third-party demographic data providers such as Acxiom and Wunderman.
- Advice: There’s no such thing as too much data. Gathering input on customers’ behaviors and searches outside of the streaming platform provides crucial insight into the factors that influence the behaviors of subscribers and ex-subscribers. You need to know your customers as individuals, and that takes data – lots of it.
- Create a data strategy that focuses on customers. This guidance sounds deceptively simple. In most direct-to-consumer initiatives, however, a single business unit typically becomes the primary data owner for the venture. While a logical first step, it becomes yet another barrier to the strategic, cross-organizational view of data that’s needed to reduce churn. Further complicating matters, chief data officers’ viewpoints are typically influenced by where they sit in the company’s org chart: Those close to IT often view data through a technological and regulatory lens, while those within finance tend to adopt a compliance-centric approach.
- Advice: Prioritize customer-facing data. As a TV network conglomerate revved up for a planned direct-to-consumer initiative, it doubled down on efforts to reinvigorate the customer database for its category-leading sports group. Using third-party enhancements from social media and demographic data providers, the company enabled targeted messaging that worked: Auto-renew turn-offs dropped from 10% to just 5%.
- Look to retail as a cautionary tale – and role model. Retailers stumbled in the early days of e-commerce, with stovepipe functions and disparate processes and technology. Today, industry leaders have found their footing with a unified approach to customer data. They’ve adopted a single view of products, no longer maintaining separate master item lists for e-commerce and in-store stock. Online and in-store data is integrated so store associates can view customers’ online activity. In addition, retailers have evolved into skilled communicators, persistently engaging shoppers with personalized offers and loyalty programs that knit multiple channels into a cohesive brand experience. To retailers, abandoned shopping carts are a starting point, not an ending.
- Advice: Consistency wins every time. Direct-to-consumer initiatives are most successful when they operate as a single, cohesive organization. Think Netflix. Create standards that ensure consistency across all channels. It can be as simple as ensuring show titles and descriptions are standardized across channels.
Amid streaming’s “cancel culture,” retaining subscribers for direct-to-consumer media isn’t one-and-done. Instead, it has evolved into a fluid, ongoing process where customers regularly come and go, and data is the connective tissue.
Hear Cognizant's Tiran Dagan, along with legacy media & native digital platform chiefs, talk about new pressures & challenges to entertain audiences through today's #covid19 challenges. Register for the May 11 webinar today: http://variety.com/nabshow