Your free trial has expired: Improving streaming services
Fueled by Disney’s image and impressive content catalogue, Disney+ has made a huge debut. Within 6 months of launch, Disney+ reported 54.5 million subscribers. While the growth can be attributed to a number of factors, including strong brand recognition and a pandemic that accelerated SVOD (streaming video on-demand) growth, roughly one-third of Disney’s initial sub-base was due to a partnership with Verizon that offered the streaming service free to new mobile customers. While subscriber acquisition has clearly been a success for Disney+, what happens when all those free subscriptions expire?
Streaming and subscription services, in general, tend to struggle balancing the cost of acquisition with subscriber retention, working to manage the classic “leaky bucket” problem. As consumers hit their ceilings on the number of streaming services they’re willing to subscribe to, which right now appears to be four, it will become a duel for eyeballs on screens. Executing a digital engagement strategy in order to retain those hard-won subscribers becomes paramount.
Digital engagement roadblocks
Even if you’re Disney with a long legacy of serving consumers and pulling on the heartstrings of emotive bonds with your brand, adapting to a digital engagement mindset and business strategy presents multiple hurdles. When pursuing a digital engagement transformation, there are three common roadblocks to be navigated.
Lack of capabilities for mining, structuring, connecting and acting on behavioral data
Every day our clients encounter challenges with data. Even the most iconic brands struggle with mining, structuring, connecting and acting on the right data at the right moment and the right channel in the customer journey, or what we call “meeting them in the moments that matter”.
As we like to say, personalization is a data problem. For streaming services to differentiate themselves from their competitors, they’ll need not only the AI and machine learning to personalize content and recommendations, but also the human context to avoid the kinds of rote “you might like this” suggestions you see on e-commerce sites.
Absence of dynamic product infrastructure
Any fundamental product change can be a slow and involved process—even at digital natives but even more so at complex legacy brands. Most companies struggle with dynamicism, or the ability to make micro-pivots in their customers’ digital journeys, quickly and easily releasing new features and tactics.
A company as large and multifaceted as Disney may struggle with connecting transactions and interactions across in-store and digital channels and to build a 360-degree view of the customer. In order to obtain a full view of each customer’s journey, Disney has to connect data not just across its streaming services, but also other sources such as theme parks, POS data from merchandise sales, not to mention existing loyalty programs, like Disney Movie Insiders.
Lack of buy-in and organizational alignment
Lack of buy-in and organizational alignment across all groups responsible for customer touchpoints can create a significant hurdle. Marketing, Digital and Media teams are often jointly responsible for the customer experience. These teams also need to influence other teams that make these tactics happen, like Product and Engineering. A centralized strategy requires cross-organizational buy-in and alignment—this means implementing advanced Digital Engagement goes well beyond one team.
These roadblocks can be overcome—and generally, that starts with data. Even with a dynamic product infrastructure in place and organizational buy-in secured, brands cannot effectively engage customers and create personalized experiences without actionable data—from customer profiles and behavioral data to customer satisfaction data.
Building a digital engagement strategy
Building an advanced digital engagement strategy may seem like an overwhelming initiative but starting with a thoughtful approach will pay dividends throughout development. The following recommended approach has proven successful throughout our work with clients across industries.
Step 1: Define the vision
Lay the foundation for the type of engagement that needs to be built to enable future customer experiences and bring that vision to life.
With an increasingly crowded SVOD market, streaming services, like Disney+, will need to pivot from costly acquisition to a strategy that is equally focused on retaining customers. Disney’s unique ability to offer subscription packages, which includes Hulu and ESPN, two other streaming services Disney owns, gives them an advantage over competitors like Netflix. Expand that vision to include their other business units and bundle in offerings such as streaming radio subscriptions, park passes, cruise passes, merchandise and one-of-a-kind collectors’ memorabilia, and there is nothing else out there like it. In the SVOD market, that type of added value and feature differentiation is priceless.
Begin segmenting customers based on attitudinal and behavioral dimensions into rough buckets and exploring their needs at a deeper level. These needs will inform what digital engagement experiences should be built and will ultimately enable emotive bonds with the brand.
Netflix uses massive amounts of behavioral data to create personalized recommendations, influencing 80% of the content consumers stream. Powerful algorithms go beyond personalizing the genres and titles that are recommended: consumers even see different artwork for the same titles depending on inferred preferences. Netflix advances images that are fine-tuned to the viewer. For example, if you are an avid Tom Hanks fan, his face will appear in thumbnails for his movies to further draw you into the content.
Even with all its behavioral data, Netflix is prone to an overreliance on AI and ML that produces rote recommendations like the one I recently received for yule logs. Yes, last Christmas I cozied up to a digital fireplace, but is that something I really need on a 90-degree day in August? Streaming services need to further fine-tune behavioral data so it’s more than just a smorgasbord of previously watched and six degrees of separation from Kevin Bacon.
Step 3: Build the data product
Determine how to collect, connect and activate the data needed to bring the engagement strategy to life. Every tactic or nudge developed should have the broader data strategy in mind and be actionable for the data model to build or purchase.
Netflix collects massive amounts of data that is funneled back into relevant content creation and recommendations. By setting up an integrated marketing technology stack Netflix is able to identify trends, like how much content a user needs to watch monthly to not cancel their subscription or scaling marketing efforts for the 700 original series that launched in 2018.
Step 4: Design the experience
Experience design—the thoughtful development of the customer experience to drive specific behaviors and invoke specific emotions—increases customer engagement and deepens the brand connection. We believe this process creates a more bespoke and personalized solution to address each brands’ unique audience needs and achieve desired outcomes.
Spotify designs experiences like Wrapped, the personalized end-of-year playlist using a ton of listening data. Their audience of 140 million listeners stream throughout the day, across devices, allowing Spotify to capture a deep understanding of who their listeners are, how they stream and what context they’re in. That streaming intelligence enables them to create a hyper-personalized experience for listeners, like Release Radar or Your Time Capsule.
As customer retention comes to the forefront of the fray in the streaming wars, subscription services like Disney+ will need to go beyond personalization and better content to keep customers engaged. Having a digital engagement strategy built on a foundation of customer data that leverages all the brand assets while being geared towards calcifying emotive bonds to the content people love will help ensure when the free trial expires that those customers re-up again and again.
About the authors
Clay Walton-House serves as managing director of Integrated Loyalty Services at PK. He helps Fortune 500 companies create and implement new customer engagement strategies that accelerate growth and build loyalty. His expertise lies in understanding consumer behavior and translating it into actionable customer insights. Clay has a proven track record of successful program design and optimization, helping uncover ways to build retention and loyalty strategies into a company’s broader business model.
Jodi Rausch serves as director of Integrated Loyalty Solutions at PK. She has deep experience developing, transforming and managing differentiated loyalty programs, customer marketing activities and customer experiences driven by data, customer insights and financial rigor. She enjoys building and growing relationships with internal teams, clients and end customers to best understand their needs and exceed expectations.Tags: Streaming, subscription service, SVOD