Like the customer service desk asks for feedback from clients and prospects to make improvements, web-based companies need analytics tools to reach their customers at the points they need to be met.
I, for one as a blogger, make use of analytics tools in the form of cookies and data from the analytics tools and comment section to improve my content. Analytics helps me make informed customer-friendly decisions that help me retain my subscribers.
Well, enough about me!
Netflix is a customer–based service, and to gain and retain subscribers, they need to properly harness the data and analytics tools available for their use.
In this article, I will give a simplified version of how Netflix uses Analytics and data to help the flow of business.
However, before we dive in, take a brief moment to watch this video for an understanding of what analytics does for Netflix.
Why Use Analytics Tools?
A fact that no one can seem to hammer hard enough is the importance of analytics tools. For me, analytics tools help make a difference between detrimental decisions or valuable decisions.
If you have a web page or website, you are sure to have visitors and subscribers. They are meant to play a significant role in your decision-making process to keep them.
Their opinions and preferences being factored in can make a visitor a subscriber and a subscriber a fan.
An understanding of the benefits of analytics and using it is what makes Netflix very popular today. Apart from Netflix, many companies use analytics and have attained the height of customer friendliness and satisfaction.
With the right analytics tool, you can gain the following benefits.
Relevant: Read next how to add powerful and easy Google analytics in WooCommerce here
Know Your Best Performing Content
This factor is a no brainer! When you can track your most viewed content, you can make similar contents; you can use it as your advertisement, it can be the introduction to your page and more.
With analytics tools, you can quickly know what content thrives the most without making long questionnaires.
You Can See How Your Visitors Find You
Site visitors always come from a wide variety of sources. Some come through adverts, affiliate links, subscriptions, and more.
Knowing clearly where your visitors come from can give you an idea of where to make more expenses and where to cut costs.
You may ask, is that not the importance of feedback forms? I want you to think back to all the feedback forms you filled and thought about how stressful it was and gave a halfhearted reply.
With an analytics tool, you can simply see this data without the hassle of making long forms and making your subscribers or customers fill them up.
Analytics Helps you Know Who Your Visitors Are
The whole of society has a considerable variation of people. This variety means that the people visiting your web page may be from a whole different culture as you or a different age demographic.
Sometimes, if you are lucky, you will get viewers from all demographics like Netflix. When that happens, you need to be cautious of their values, age range, sexual orientation e.t.c.
Analytics helps Netflix to promote movie recommendations based on these factors and can help you also.
With analytics tools, once your user accepts cookies, you can gain knowledge of the device they use and optimize your site for easier access on their device.
Track Conversions
Like Netflix, you can track conversions with your analytics tools and take action based on these conversions.
Conversion tracking helps you analyze how long users spend on a page, if or when they move forward if they leave, what attracted them in the first place, and more.
This analysis helps Netflix to make recommendations of what next to play and what to license. For your business, it can be the difference between what content you post.
There are many benefits of analytics tools, but we will save it for an article dedicated to the topic, let me know in the comments at the end of this article if you want to see that.
Netflix’s Analytics Tool: Big Data
Netflix is one of the most valued media companies worldwide due to its high customer retention rate. Also, it is no secret that Netflix originals get quite the attention.
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Although Netflix has never clearly stated that they use a sole analytics tool, I am sure they make good use of all the data available to them with big data technologies along with analytics to discover patterns with their customers.
First of all, what is big data?
Big data technology is a software-utility tool whose design allows it to analyze, extract, and process information from complex, large data sets that cannot be dealt with by traditional data processing software.
In a nutshell, big data technologies organize big data. There are two major types of big data technologies: operational big data technologies and analytical big data technologies.
Netflix uses Presto, Elasticsearch, and Apache Kafka.
Relevant: Curious to know how Netflix makes money? Find out here
How Netflix Uses Analytics
Like other companies that use analytics, Netflix uses analytics to gain insights on their customer’s preferences to optimize the data for better product delivery. With analytics, Netflix can get quantitative data needed to make decisions that are informed and improve their services.
According to the New York Times, Netflix has up to 182.8 million subscribers around the world.
These subscribers are distributed in 190 countries around every continent in the world. Having this large customer base raises the need to put up movies, and TV shows specific to each region to keep its customers happy.
Due to their vast population of users, Netflix has access to a lot of data, and with this data, they can ensure their customers are satisfied in the long term. The most significant part of their data access is the fact that they are an internet-based company, so they have open hands-on access to information.
An example of Netflix’s use of analytics is when you watch a series, they observe for how far each user goes with each tv show. They ask questions like:
- How many users started an episode?
- Did they all watch to the end?
- For those who did not complete it, was there a common place where they stopped?
- What did they watch next?
- What was the time interval between watching each following episode?
Depending on the percentage per question, they will check if a TV show is worth continuing or not. However, more than this, Netflix takes track of the following “events”:
- A user’s pauses, rewinds, and fast forwards
- Your preferred Netflix days–specific weekdays or weekends
- The place (specifically the zip code), date and time you watch
- What device you use for movies, series, for each account user— for kids, your regular account, and other profiles
- When you pause and leave, if or when you come back
- Searches, browsing, scrolling, and ratings
- The movie’s sceneries
- When credits start rolling and what you watch after that (this is why they automatically play the next episode for series or give recommendations of a movie)
The Algorithm For Recommendations
When registering for a Netflix account, you are asked to rate your interest in specific movie genres or movies you have seen. This information will help new users to see what they like, so Netflix can keep them watching Netflix for a long time.
The main PR move behind this algorithm is that once you can’t find a new show to watch, you are likely to cancel your subscription. So, Netflix needs to ensure the accuracy of their algorithms to avoid losing its users to other websites. Check here for a more detailed description of the algorithms.
They also use a thumbs up or down rating system as opposed to the standard five-star rating system. The thumbs rating system started in April 2017 because their product team confirmed the simplified use of this system. Below is an example of a show of which Netflix got the rights based on the algorithm.
House of Cards
Netflix earned the rights for the United States version of “House of Cards” in 2011. Some of the factors Netflix took into account when purchasing rights for the house of cards were:
- Many users completed movies directed by David Fincher from beginning to end
- The British version of “House of Cards” was well received
- People that watched the British version also watched films directed by David Fincher and Kevin Spacey Movies.
The Green Light
These three factors, combined, had a large population of Netflix users. If not, “House of Cards” would have had a different home.
Based on Steve Swasey, their VP of Corporate Communications, a show’s success is not based entirely on the cast members and directors, but also on consumer preference for a genre, cast members and stars, a director, and similar movies.
Concerning the facts shared by Swasey, it was not a question of “If” they will invest but of “how much” they were willing to invest in “House of Cards.” They were willing to put one hundred million dollars into it.
After the Greenlight
After spending so many millions on “House of Cards,” Netflix became partly responsible for promoting the show. Being data and user-oriented, Netflix decided to make personalized trailers.
Usually, every show has several trailers, but not all interest you to watch the movie or show. What Netflix did was make a different version of the trailer for different audiences based on their viewing history.
So, if you watch female themed movies, they will show you the parts where females were featured. If you like Kevin Spacey’s movies, you will see a trailer centered around him.
The first season of “House of Cards” did not confirm its success but the path it was on. For every Tv show, there is a 35% chance it will succeed and a 75% chance that it would not.
When “House of Cards” was on Netflix, they had more subscribers and some that did not cancel their subscription because of it.
The Licensing Decision
As with streaming, Netflix does not merely pick any movie to license. Licensing a movie is expensive, and they cannot just license every newly released film.
They also apply analytics to this decision based on how many customers view a show. This means that the more you watch a show you love, the more the likelihood of continuity and showing related content.
A fascinating factor in their choice of movies to license is piracy site studies.
Other Major Companies That Use Analytics
Apart from Netflix, many companies are using analytics tools to improve their reach and earn customer satisfaction.
I am not excluded from the companies or sites that use analytics. The most popular analytics tool used by people who have web pages is Google analytics.
I also make use of Google analytics to improve my content. Some other major companies that use analytics tools include:
- Uber
- Airbnb
- Spotify
- Microsoft
- Intel
- Barclays
- Dominos pizza
- InFocus
- Yahoo
- Amazon
- Oracle
- Cisco
- Bank of America
- eBay
- Verizon wireless
- Paypal
- Business Insider
Unsurprisingly, the list goes on!
The length of the list is majorly due to the vast benefits of analytics tools.
To conclude
Based on my article, you have seen that Netflix uses analytics to determine what to show, personalized movie trailers, what to recommend per screen, what to license, and much more.
For Netflix, analytics is a game-changer to keep customers happy and maintain their economic side.
If you enjoyed this article, I would be happy to know in the comment section, and please share so that I can also utilize analytics to bring you the best content.
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