Strategies to Re-Engage 1 Million Inactive Netflix Users

Gerard Kolan

Objective

Maximize the revenue from the inactive userbase of 1M

Method of analysis

Marketing Mix, the user base is getting as of now

1. Understand the pricing points they were on? Like which subscription plan

2. Understand how they have interacted with the product? Like content type, content usage etc

3. Understand how they have consumed the product i.e. web, mobile

Company’s internal analysis

1) Analysis of the advancements company has made in terms of price, product and distribution in last 1 year.

2) Analysis of the customer lifetime value

Strategies

1. Implementation 1

2. Implementation 2

Userbase Audit

Userbase analysis

1. Category 1: Who has signed up but didn’t come back in the last 1 year

2. Category 2: Who has gone through the trial period but have not become paid in last 1 year.

3. Category 3: Who has become paid for some time but have cancelled and have not come back in the last 1 year.

Factors impacting user behaviour

1. Segment based on demographics

2. Segment based on lifestyles like interest

Analysis of Category 1 Users

Try to understand what may impact the user behaviour

Total Segment Size: 500K

Analysis of users

Segment these users based on various demographics like Country, state, age, qualification, if possible lifestyle like interests

Assume we got two segments

Segment 1

Country: US

Age range : 45 – 65 years

Segment size – 300K

Segment 2

Country : India

Age range : 20 – 30 years

Interest – Bollywood thrillers

Segmeent Size – 200K

Mix user base are getting as of now

Price: Elements with which they have interacted / What plan did they use, Basic, Semi HD or HD or any other at that point of time.

Distribution: From which device did they last use the platform – Web, Mobile or any other at that point of time.

Product:

1. Did they see any of the series

2. Did they interact with customer support?

3. Did they give any reviews?

Analysis of Category 2 Users

Mix user base is getting as of now

Price: What was the last pricing point, they have picked up.

Distribution: How they were consuming the content like web, mobile etc

Product :

1. What kind of last content did they watch?

2. Did they interact with customer support?

3. Did they provide any reviews?

Analysis of Category 3 Users

Mix user base is getting as of now

Price:

1. What was the last pricing point, they were on

2. What was their customer lifetime value

Distribution: How they were consuming the content like web, mobile etc

Product:

1. Did they see any of the series

2. Did they interact with customer support?

3. Did they give any reviews?

Company’s internal analysis

Analysis of the advancements company has made in terms of price, product and distribution in last 1 year.

Advancements in Price

1. Now Netflix helps to share the cost of the plan with other friends using multiple customer profile

2. Netflix support Debit cards of Indian Banks

Advancements in Products

1. New content for user base of age between – 40 to 60 years, Country = US

2. New content for Indian audience for age between 20 – 30 years

3. Better quality of content

Advancement in distribution

1. Now netflix is available on Ios app also

2. Netflix is available on smart TV as well.

2) Analysis of the customer life time value

Customer life time value for Indian userbase is : 5000 INR

Customer life time value for US user base is : 140$

Netflix budget analysis to spend on these user base = 14285$

Strategy

Netflix should try to win back users in the following order

Category 3 Users

Users in this segment would have not found the value with the content of the Netflix so netflix should pitch around its content

1. For users from Country = US, age : 20 – 30

As Netflix has generated good content for this audience from US and this age group,

2. For users from Country = India, interest: Bollywood thriller

As netflix does not have much content to cater this, Netflix should not invest much in this

3. For users from Country = India, interest: Documentaries

As netflix has developed good content around the interest of this target group, Netflix should invest in this

Category 2 Users

Users in this segment would not have satisfied with the content PLUS pricing points so netflix should pitch around pricing and new content

1. For users from country = US, age: 30 – 45, product usuage > = average product usuage (content consumptions)

As Netflix has better pricing point and content, so netflix can introduce the new pricing point and content

2. For users from country = India, age: 30 – 50, product usuage < average product usage (content consumptions)

Netflix should not invest in these users

3. For users from country = China, product usuage >= average product usuage (content consumptions)

Netflix should invest in these users and introduce the new pricing point and content which is align with chinese audience

Category 3 users

Users in this segment would not have found the pricing attractive so netflix should pitch around pricing

To winback, netflix can provide deep discounts to win them back

Conclusions

1. Users in segment 2 need to win back based on if Netflix has developed enough content for them and have their content consumption usage more than average of those who have consumed when moving from Trial to paid subscription

2. Users in segment 2 need to be dropped if they do not have enough content consumption based on the above-outlined criteria

3. Users in segment 3 need to win back solely if Netflix has developed content for the users in this segment, otherwise drop users in this segment

3. Users in segment 1 need to be gauge around pricing discounts only and distribution etc. Netflix should try to win back these customers only and only when enough budget and resources are available. It should be third priority of the netflix

Pankaj Jain

Use this framework when answering this type of problem solving question in a pm interview.

Clarifications

Could you define the ‘Inactive Netflix Users’? Can I assume these are the users who is paying for the subscription, but not consuming any contents in the past 3 months? [Yes]
Does the user mean individual household accounts? or profiles under the household? [Household]
Are they from the United States alone? [Yes]
Is there a sudden change of # of inactive users over the past few month? [No, increasing gradually]
Is our goal here to improve the engagement of such users and convert them back to active users? [Yes]

Analysis

Even though those users are still paying, it’s critical for the long term success of Netflix to make sure users are getting the most value out of their subscription. 1Million User is about 1%~2% of Netflix users in the US.

Firstly, I will first make sure those users are not inactive because of netflix’s sw/hw problems preventing them. To determine this, I can check the distribution of such users, their location, device, client version, Android or IOS crush reports and customer service contact history. If such problem is identified, I will work with Eng to fix the problem, and notify those users. Depending on situation, I may also offer promo discounts.

Secondly, after we rule of access problems, there can be many user personas that can be inactive, to list a few:

[subscribed and forget] New users who subscribed and forgot.
[discoverer]New users who are still figuring out what contents to watch.
[uninterested] New users who subscribed, doesn’t like the service, but haven’t decided to cancel.
[fraud victims] New users who don’t know they are subscribed.
[busy user]Existing users who are too busy to watch, and forgot to cancel.
[remote traveller]Existing users who are no longer able to access the service, like travelling in Africa, but forgot to cancel before hand.
[physically challenged] Users who are no longer able to manage the service, due to age, health condition, or other exceptions.

The first 3 personas are likely target to convert back to active. We can determine their rough sizing by looking at the distribution of their demographics, account age, service usage history. To attract them back, we can

1. Send them an email to remind them they’ve been idle, introducing the latest hit contents, and that they can easily cancel the subscription and offer them a promotional discount if they stay with the subscription.

2. Consider personalized content recommendation in the email, based on their demographics and past watching history

If we see any evidence of Fraud causing inactive subscribers, I will work with legal team to investigate and respond immediately.

For the remaining 3 user personas, where the user wasn’t able to use the service, they are not possible to convert back to active users. We can

Proactively cancel their subcription after repeated notification to protect the user. Anyway, this might introduce legal complexity without the users’ consent, as the user will need to manually activate the service later.
To provide better user experience, I may propose to change the subscription model so that we will automatically waive the monthly fee if the user have been idle for 3 months, and resume the charge when the user use the service again. This will probably incur cost to Netflix in short term, but it will possibly boost Netflix users’ trust and loyalty to the service.

Summary

In short, I will rule out possibility of hw/sw reasons, understand the addressable user segments and propose comprehensive measures to win back the users through outreach, discounts and tailored content recommendation, and try to protect the users who cannot benefit from a subscription at the moment.

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