Another 5.6 million subscribers in the last three months, expanding to 130+ countries, Netflix is unstoppable.
I never had cable, but I have been a loyal customer of Netflix for years.
That got me thinking: how many businesses are in this position?
Just think how many new shows are canceled mid-season on cable networks because they don't have enough viewers.
Netflix, on the other hand, releases the whole season at once, never worried about viewership.
One thing that contributes to Netflix's success is that Netflix knows its customers VERY WELL.
How well? In my own case, Netflix knows me better than myself, the shows are so customized that even though I am one of 50 million subscribers, I feel like the shows are crafted just for me and this customization got me hooked show after show.
You think Netflix got me hooked because it recommended shows to me randomly? That didn't come from guesswork. It's from data, data, and big data.
I know the "big data" talk has been going on for a while, but many businesses are still in the primary state of understanding customers: "My customer is whoever has a wallet or a checkbook". Or "My customer is whoever lives within the 10-mile radius of where my office is".
Netflix has mastered the game. According to Joris Evers, director of global corporate communications at Netflix, there are 33 million different versions of Netflix.
How do you get that kind of data?
#1 Subscriber's volunteer data
If you have a Netflix account, you'd remember that before you got started, you answered questions to help the program decide what kind of shows interest you. Also, thanks to the internet and social media people share information everywhere. They post it on Facebook and they tweet about how much they love "Orange is the New Black."
You'd be surprised how much information people volunteer on the internet.
#2 Behavioral data
Netflix tracks every move of subscribers. What kind of movies and shows they are watching, when they pause or scroll back. Which episode got them hooked on a specific show. And what does that tell Netflix about what you like or dislike about what you are watching? How does the data vary among countries?
Before Netflix launches their own series, they did extensive research on subscriber data. They know a show will be a hit before it is released.
What does it mean for your business?
Here’s what we can learn from Netflix about understanding customers:
#1 Know who your customers really are and know this from data
#2 Not just know them from a demographic level but on a behavioral level