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There are many great examples of how Netflix uses data to personalise user experience.

However, the real lesson for marketers is less obvious and has more to do with the underlying ‘value exchange’ taking place.

Going down loads…

It’s been suggested that Netflix, and other similar services, may actually be responsible for solving what regulators have been grappling with for years –curbing the illegal downloading  of movies. 

According to the Global Internet Phenomena report published by SandVine we are in the midst of a massive drop in illegal file sharing.

This comes as no surprise to most of us as Netflix is simply doing for video what ITunes did for music back in the Napster Era. Providing a good service, wide choice at a reasonable price they’ve created a viable alternative.

What is fascinating is the underlying value exchange taking place here.

File sharers have seemingly not only swapped their unrestricted view of ‘everything’ for a more restricted view of content within Netflix – but they have also shifted from paying nothing to paying an ongoing monthly subscription. 

More for less or less for more? 

Assuming the file sharing community didn’t suddenly wake up one morning racked with guilt and decide to go ‘legit’ then it is fair to think that the convenience, simplicity and added value of these new experiences is worth more than just choice and price alone.

Could it be that there is a symbiotic exchange happening? That the value added services being provided are enabled by something else that the consumer is providing…data.

The value exchange 

Customer data is being used to personalise the experience, create bespoke choices and streaming ‘content’ seamlessly across devices and channels.

You can even leave the ‘experience’ in one place and continue it elsewhere later in a different environment.

If this is all sounding familiar it’s because there is an obvious parallel to the multichannel, tailored experiences brands are trying to deliver through their content marketing.                  

VOD services like Netflix are giving us an invaluable glimpse into how consumers wish to engage and consume information and how they are exchanging their own data in return for added value services. 

They are effectively showing us a ‘trailer’ of what a personalised multichannel brand experience should be like. 

When we swap devices or location halfway through watching a movie we are not overly concerned or obsessed by the delivery channel itself, we just expect the experience to continue where we left it without interruption; it is the conversation that is constant.

Joining up the dots…  

The issue for both marketing and customer service departments is obvious.For the most part consumers continue to uphold their end of this value exchange, the vast majority of organisations are still struggling to join the dots with just a few ‘chapters’ of the customer conversation locked away in various places (email, web, phone, social).  

Real time customer intelligence services present not only a fast way of bringing these interactions together but the means to personalise and continue conversations with customers regardless of which channel or device they happen to be on. 

Businesses that are still struggling to get internal systems to talk to one another using a traditional approach should a) Google ‘real time customer intelligence’ and then b) take a good hard look at Netflix and ask: 

What happens if my competitors start delivering ‘joined up’ customer experiences before we can? 

Daniel Guest

Published 3 April, 2014 by Daniel Guest

Daniel Guest is Director at R-cubed and a contributor to Econsultancy. You can connect on Twitter, LinkedIn or Google  Plus.  

5 more posts from this author

Comments (4)

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Cynthia

Great info! Thanks. Now I just wish there would be a drop in people steeling copyrighted images!

over 2 years ago

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Brian R.

Great article! thank you for the info, I also feel that real time customer intelligence will be the key to holding market strength compared to traditional approaches. Vast Customization will improve popularity for upcoming and established companies such as Netflix, I'm intrigued to see what their next move is.

over 2 years ago

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Michael Higgins

Go Netflix. That is all :-)

over 2 years ago

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Anthony

This article makes great points and I agree with each individual one of them, but I don't agree with the overall conclusion.

Yes, file sharing is dropping; yes, Netflix does it well; yes, Netflix makes it easy; yes, Netflix personalises and value-adds.

I think the critical game-changer is the all-you-can-eat model.

Under a pay-per-view model, people were being nickel-and-dimed for every piece of content they consumed. It's exhausting, makes you feel ripped off, and heightens the cost of individual units of consumption. In comparison, the all you can eat model represents overall satisfaction.

I think it's more a matter of your classic supply and demand curves. The personalisation simply "lifts" the demand curve for a given price because you get better suggestions. This makes the overall transaction more worthwhile and lessens the appeal of file sharing.

I would not say, however, that personalisation has enabled Netflix to conquer file sharing; I think that kudos really belongs to the all-you-can-eat model which got people thinking about how much they value entertainment overall, rather than assessing every individual show and movie to work out if it's worth their money.

over 2 years ago

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