Find out how to move beyond customer focus to “customer obsession” via consumer science to discover what delights customers in hard-to-copy, margin-enhancing ways. Learn how to get insight from four sources of consumer insight, then evaluate these ideas through various research techniques. Gibson will illustrate Netflix’s customer obsession through a series of experiments the company executed to help connect its customer with movies they’ll love through its personalization technology. Last, Gibson will put the techniques into practice with a highly interactive, modern-day Netflix case.

1. Productized: November 22, 2019
N E T F L I X ’ S
CUSTOMER
OBSESSION
Gibson Biddle // @gibsonbiddle
@gibsonbiddle

2. @gibsonbiddle
Are you a
Netflix member?

3. Net Promoter Score
?
Detractors (0-6)Passives (7-8)Promoters (9-10) Net Promoter Score
@gibsonbiddle

4. Net Promoter Score
10%10%80% 70%
70
Detractors (0-6)Passives (7-8)Promoters (9-10) Net Promoter Score
@gibsonbiddle

5. Jeff Bezos
CEO, Amazon
@gibsonbiddle
Customers are always beautifully, wonderfully
dissatisfied, even when they report being happy
and business is great. Even when they don’t yet
know it, customers want something better, and
your desire to delight customers will drive
you to invent on their behalf.”

6. @gibsonbiddle
Electronic Arts

7. @gibsonbiddle
Elmo’s Preschool
@gibsonbiddle

8. @gibsonbiddle
The Learning Company

9. Mattel
@gibsonbiddle

10. @gibsonbiddle
Netflix

11. Speaker, Adviser, Teacher (2015)
CPO, Chegg (2010)
VP Product, Netflix (2005)
SVP, Creative Wonders,The Learning
Company, Mattel (1995)
Director, Product, Electronic Arts (1991)
Gibson Biddle
@gibsonbiddle

12. Customer focus
Satisfy
Listen
Compete
@gibsonbiddle

13. Customer obsession
Delight
Experiment
Invent
@gibsonbiddle

14. Customer
Obsession
The DHM Model
Consumer Science
Free Trial Reminder
Agenda
@gibsonbiddle

15. @gibsonbiddle
DHM
Delight customers in
Hard to copy
Margin-enhancing ways.

16. Balancing act
Delight v. margin
New Release DVD test.
@gibsonbiddle

17. NEW on DVD
Consumer insight
Surveys, focus groups &
CS dispositioning data
The A/B test
Perfect New Release
Delivery
The result
Cancels: from 4.50% to 4.45%
“Save” 5,000 customers
“Worth” $1M= 5,000 x $100 x 2
But, additional inventory = $5M
“Launch to all” or “No launch”?
@gibsonbiddle
Perfect New Release test

18. @gibsonbiddle
“Movie enjoyment made easy”
Personalization
Device ecosystem
Original content
/ ExamplesHard to copy
Brand
Unique technology
Network effect
Economies of scale

19. @gibsonbiddle
Personalized Instant (DVD, streaming)
Easy Exclusives
Open APIs Entertainment
Friends (social) Movie-finding tools

20. Entertainment
Instant (DVD, streaming)
Easy Exclusives
Open APIs
Friends (social) Movie-finding tools
@gibsonbiddle
Personalized

21. Entertainment
Instant (DVD, streaming)
Easy Exclusives
Open APIs
Friends (social) Movie-finding tools
Originals
TV devices
@gibsonbiddle
Personalized

22. Product strategy
Personalization
Instant
Easy
Device ecosystem
Margin-enhancing
/ Tactics
Ratings Wizard, new algorithms
From 20 to 100 hubs; streaming
Day One experience
API launch; Xbox, Playstation
Price & plan testing
@gibsonbiddle

23. / Metrics
% members: 50 + ratings at M2
% members watch > 15 min./mo.
% with > 3 titles in queue, day 1
% of demand weighted TVs
Lifetime value, gross margin
@gibsonbiddle
Product strategy
Personalization
Instant
Easy
Device ecosystem
Margin-enhancing

24. Consumer
Science
@gibsonbiddle

25. Consumer
Science
Consumer insight through:
Qualitative
Survey
Existing data
A/B tests
Hypotheses
Procedures
(Experiments)
Data
(Results)
SCIENTIFIC
METHOD
Findings
(Conclusions)
@gibsonbiddle

26. 2005
@gibsonbiddle

27. Ratings Wizard
Queue-add data
Collaborative filtering
Acquire better movies
/ Tactic
@gibsonbiddle
Personalization
Explicit data
Implicit data
Matching algorithms
High-quality movies

28. @gibsonbiddle
P2 > 50 ratings
% members add > 6 dvds/mo.
RMSE
Average rating
/ MetricPersonalization
Explicit data
Implicit data
Matching algorithms
High-quality movies

29. Pop Quiz #1
@gibsonbiddle
What % of members rate > 50 movies in first 6 weeks?

30. % of members who rate > 50 movies
@gibsonbiddle
0
0.075
0.15
0.225
0.3
2004 2005 2006 2007 2008 2009 2010 2011
30%
15%
0%

31. Ratings Wizard
@gibsonbiddle
The more you rate, the better we’ll
do at finding movies you’ll love.

32. @gibsonbiddle
Pop Quiz #2
Will demographics help predict movie taste?

33. Movie predictions improve over time
@gibsonbiddle
0.6
0.7
0.8
0.9
1
2004 2005 2006 2007 2008 2009 2010 2011

34. Collaborative filtering
@gibsonbiddle

35. Improve RMSE by 10%, win $1M!
@gibsonbiddle

36. @gibsonbiddle
Pop Quiz #3
Will the new algorithm improve retention?

37. Category interest algorithm
@gibsonbiddle

38. @gibsonbiddle
0
0.95
1.9
2.85
3.8
2004 2005 2006 2007 2008 2009 2010 2011
Average rating improves over time

39. @gibsonbiddle
Movie rating = movie enjoyment?

40. @gibsonbiddle
Movie rating = movie enjoyment.

41. From Stars to Thumbs
@gibsonbiddle

42. Mall Cop = 93% match
@gibsonbiddle
93% Match

43. @gibsonbiddle@gibsonbiddle

44. @gibsonbiddle

45. Free Trial
Reminder
@gibsonbiddle

46. @gibsonbiddle

47. (2018: All data are guesstimates)
@gibsonbiddle
2%
90%
$10M
85%
Consumer insight
Fence sitters <> “cancel anytime”
Customer service:
Trials/visits conversion:
Month one retention:
A/B test results
Month one retention:
DHM?
High or low stakes?
Who makes the decision?
Free trial reminder
Launch or no launch?
The A/B test: Day 27 reminder

48. DHM: Double down on delight
Low stakes (magnitude, reversible)
Cost of ethics & brand
Debate, decide, do.
Free trial
learnings
@gibsonbiddle

49. Onemore thing required
@gibsonbiddle

50. @gibsonbiddle
Patience
@gibsonbiddle

51. @gibsonbiddle
Existing data
Data focus
Customer & Bus.
Qualitative
1-1, usability,
focus groups
Survey data
Demo, cancel,
quality, NPS
A/B testing
Measure change
Delight v. margin
Strategy
Hypotheses
DHM model
Are You
Obsessed?

52. Customer
Obsession
Putting the customer at
the center of everything
you do, to delight
customers in hard-to-copy,
margin-enhancing ways,
to invent the future.”
@gibsonbiddle

53. @gibsonbiddle

54. @gibsonbiddle

55. @gibsonbiddle

56. @gibsonbiddle

57. www.gibsonbiddle.com
Complete Net Promoter Score survey
Download PDF of presentation
“Customer Obsession” article on Medium
@gibsonbiddle

58. @gibsonbiddle