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Why Netflix Is Winning The Big Data Game


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By Rob Nelson, Founder and CEO at Grow

Netflix is revolutionizing the entertainment industry. With over 65.5 million subscribers globally, Netflix may overtake viewer numbers from the major television networks by 2016. The company plans to expand into Japan, China, Portugal, and Spain by the end of the year – marking only the beginning of their international expansion strategy. Netflix shares have doubled this year, culminating with a 7 for 1 stock split yesterday.

The success of Netflix can be attributed to business intelligence principles and metrics. Here are three ways Netflix uses data – and how you can apply their big data methods to your own business strategy and company scoreboard:

1. Netflix focuses on customer experience metrics.

In 2000, three years after Netflix launched DVD rental services, Netflix used customer data and ratings from their movie recommendation system to predict content choices for all Netflix members. As soon as Netflix started streaming movies and TV shows via the internet, they acquired and measured extensive customer behavior data. Netflix measures things like the time of day movies are watched, the time customers spend selecting movies, and how often shows are stopped.

Customer behavior data informs businesses if a product is working and what can be changed. Real-time customer experience metrics allow Netflix to keep a pulse on their core products and content.

The customer experience should not be a guessing game. Measuring customer data on a company dashboard allows you to understand your customers on a deeper level. You can then modify products to match customers’ needs or develop even more specialized products in the future. Data helps you build customer loyalty and improve customer satisfaction. How can your company measure immediate and overall customer engagement and satisfaction?

2. Netflix categorizes their products with metadata.

Netflix created an algorithm to place their films within genres and microgenres, with over 80,000 ways to categorize movies and shows. Based on what a specific user watches, the Netflix platform recommends further movies. The Netflix platform gives users exactly what they want based on their own ratings and the time spent watching previous shows.

Metadata is essentially “data about data.” Businesses with scoreboards are able to take customer experience metrics to the next level. Granular details about a particular client experience can be monitored. Ralph Kimball called metadata the “DNA of the data wharehouse.” As with all data, the metadata on your scoreboard must be actionable. You can perform searches such as how many male customers have purchased the 8 ounce shaving cream in the last 30 days – and even measure against a recent marketing campaign. A dashboard helps you organize and see all your metadata – enabling everyone to analyze and make correlations between business activities.

3. Netflix uses data to develop product strategy.

With almost 90% of Netflix subscribers engaging with Netflix original shows and movies, such as House of Cards, Netflix is getting something right. The data is guiding the strategy for acquiring and creating new content. Netflix original shows are not accidents – the storyline, actors, and plots are all products of extensive metrics and analysis.

Data analysis means focusing on the right data and KPIs to guide strategic decisions. Netflix knows exactly what their customers want. Do you know how to improve your product based on your current customer metrics? How does the data inform your product strategy for the next 5 years?

Companies with a data-driven culture encourage everyone to be a data scientist. One of the benefits of measuring and acquiring data in a cloud-based system is the time save. When key performance indicators update in real-time on a company dashboard, CEOs can make quicker decisions. A scoreboard allows CEOs to spend more time on strategy and less time putting out fires. Solid data prepares, informs, and leads. CEOs can’t afford to miss critical correlations and metrics when developing product strategy.

Netflix has proven that data works for predicting product success. International expansion will bring a new set of challenges to Netflix data analysis as countries will vary on their preferences. However, the principle of using data to make decisions and develop products has proven successful so far. It’s only a matter of time until all small-to-medium sized businesses have adopted the Netflix “data-driven” mentality.


Rob Nelson- Grow.3

Rob Nelson is the Founder and CEO at Grow, a cloud-based software service that gives entrepreneurs beautiful business dashboards that track their key metrics, inspire their teams and make better decisions.