A Case Study : Customer Retention For A Video Rental Retailer

I was supposed to prepare a case study for the final round of selection by a Bangalore based start-up which specialized in CRM solutions.The following data was provided to me and I came up with this case study.

NetFlicks is a DVD and video rental retailer operating in India, and other countries. NetFlicks has several databases:

1. A customer table, containing names and addresses for all their customers and when they joined, and other information.

2. A product table, containing the descriptions of all products stocked. The products stocked include videos, DVDs, computer games, and also snacks and drinks.

3. A transactions table, containing all films, DVDs and games rented by each customer and when they were rented. This also includes sales of any snacks and drinks.

Currently they treat everyone the same - could and should they do anything differently?

In order to grow further and compete they have identified that they need to take a more structured and strategic approach; putting customer data at the core of their decisions.

How would you use this data to get an understanding of NetFlicks customers?

How would this understanding help NetFlicks in marketing to the customers?

What else, besides marketing could this information help NetFlicks with?

How should they analyse the market to assess where they would be able to expand into?

“How Data Analysis Can Help NetFlicks To Have A Better Understanding Of Its Customers and Thus Give A Marketing Push To Increase Its Sales”

                                                               A Case Study by:

                                          Rohit Kachhawaha

 

Client’s Info

NetFlicks is a DVD and video rental retailer operating in India, and other countries. 

Their products stocked include videos, DVDs, computer games and also snacks and drinks. 

The target consumer base is mostly teenagers and youngsters.Also, keeping in mind the other age groups as well, kids and senior citizens etc.

The stores have data recorded at customer, product and transaction level.      

Data Available and Its Application

Data is available for customer’s info, inventory info and transaction info. This available data can be combined to form a single compounded dataset.And, we can look for the meaningful patterns in data using analytical tools.

Based on the data, products could be segmented as per their respective demand; this would help in efficiently managing the inventory. Large stocks for the products that are in high demand. And, also clearance sale for the products not in demand.

Effect of sales of one product on another could be studied through data which would help in identifying the customer’s buying patterns. For example- People who buy more computer games tend to buy more drinks as well.

Based on the data customers could be segmented into categories as: 

a) Frequent visitor with high quantity

b) Frequent visitor with low quantity

c) Occasional visitor with low quantity

d) Occasional visitor with high quantity

These categories could be depicted on a mock graph as:

Customer Quality

 I quadrant depicts the (a) category customers, these are loyal and buy in high quantity as well. These are the most favorable customers.

·     II quadrant depicts the (b) category customers, these are also loyal but don’t buy in high quantity.

·     III quadrant depicts the (c) category customers; they contribute least to the sales.

·     IV quadrant depicts the (d) category customers, these visit occasionally buy in high quantity.

Marketing Measures Based on Different Customer Segments:

  

Customers in category (a):

These are the top priority customers,they bring maximum business, loyalty programs and incentives (in the form of discounts on bulk purchases or discount coupons for referring their friends) should be given so that they don’t migrate to other retailers.They must be informed in a timely manner about the new videos,movies.

Customers in category (b):

These customers come in second priority, they are high potential customers. Promotional offers with attractive discounts should be launched for these customers to convert them into category (a) customers.

Customers in category (d):

These customers come in third in the priority list; they are also high potential customers. They should be given regular updates about new product launches via SMSs, emails etc. Social media sites and promotional mails could be used for this purpose.

Customers in category (c):

These customers visit occasionally and thus have little information about the product range available with the retailer. They could be given promotional pamphlets describing the available product range with the retailer and also giving information about loyalty programs and promotional offers.

Based on Customer’s Buying Patterns:

By giving special discounts on snacks and drinks for bulk orders for DVDs/Computer games.

By launching festive season discount offers to give further push to sales which are already high during these times.

By arranging for special gaming sessions for gamers both online as well as in house which would attract new customers as well.

By having the facility of free home delivery to the most favourable customers.

Miscellaneous

Market survey to get an idea about what kind of product is in demand, services expected and if they are satisfied with the current service provider.

Having a dedicated service portal for customers where he can raise his query or call for any help, which must be immediately looked into.

Being Proactive – asking about how a customer finds a particular service. For eg, the store can ask him about the quality of the DVDs, videos rented to him.

What a brand asks for is a happy customer. Free advertisements are always welcome.

If a customer is buying only action movies, then on release of an action movie, he can be targeted.  Same goes for movies,videos of other genres.

If someone like to try movies of different genres then he can be targeted by non-popular yet good rating movies. So, if targeted suggestion system works out, customers starts becoming loyal to Netflix, it can then really boost sales.

The address of the customer is another important data type. We can easily find out from where the major chunk of the customers are coming.Lets say the majorly are located in southern India, then we can communicate those customers about the regional movies.

If a customers rents a movie, lets say, every 6days and he hasn't rented any movie for the last 10days, we can assume he has started renting movies from any different store/site, so before he becomes a dormant or inactive customer, he can be easily pulled back by giving an aggressive offer.

I have had a lot of help in making this case study ,especially from Puneet Chouksey, who almost co-authored it, Gaurav Agrawal - without him I would not have had the opportunity of having such an amazing selection experience, Ishan Jain and Harsh Vaidya for being the mentor. Thanks to you guys for making it possible for me.

Presidential Form Of Governance : Will It Work In India?

The following post is inspired by a debate in the Economic Times in the mid 2012. There is an atmosphere of political distrust that has been prevalent in the country since I can remember.  Political apathy towards the common man, rotten system, scams and not to forget the disconnect that exists between the masses and the leader (even the most celebrated) isn’t helping the situation either.

Democracy, I agree, may not be the ideal form of governance but it is certainly the best form available to us. But, ‘politics for the benefit of the common man’ is a far cry in modern day India, no need to explain that. It has been reduced to a mere fight between two groups hungry for power, the common man is just a spectator (victim) and is the ultimate sufferer. Our forefathers definitely didn’t dream of this India we are living today. They for all the righteousness deserve a better India and we owe them what they dreamt of.

Presidential form of governance can definitely work in India given the present states of affairs; cash for votes, more than often stalled Houses, irrational behaviour of our leaders, rampant corruption in public spheres, 'aya Ram gaya Ram' approach of our leaders, the list goes endless, it is definitely worth a try (dreams do come true, FAITH :) ).

Just two months back, the world's oldest democracy elected its 45^th President. It was a closely fought election but the American voters were well aware of the choices ahead of them. The positions of the two candidates—Barrack Obama and Mitt Romney—on issues ranging from medicare to taxes to gay rights were well known and much discussed. The Presidential debates leading upto the elections gave them an opportunity to further define their differences and appeal to the undecided voter. By the late evening of November 6, a few hours after polls close, the Americans knew the name of their 45th President.

Sometime in less than two years, the world's largest democracy will elect a new government. It is possible that for the first time since independence, neither of the two principal political parties will go to the polls with a clear prime ministerial candidate. The chances of a 79-year old Manmohan Singh leading the Congress for a third term are remote. And so far, the logical successor — Rahul Gandhi—has shown little enthusiasm for the top job.

The situation in the BJP, if anything, is even less clear. While there are several candidates who fancy themselves as prime ministers, they will work hard to sabotage each other's prospects. The fact that the BJP will have to chose a nominee who is acceptable to its allies only compounds the confusion.

But its not just about who will be the next prime minister. As things stand now, it is highly unlikely that any political party or formation can secure a working majority. A fractured mandate will result in a prolonged bout of political uncertainty at a time when the country needs decisive governance. As the current Lok Sabha has shown, an obstinate opposition can make it impossible for the government with a clear majority to transact business and pass laws. A fragmented verdict will make matters much worse.

When you compare two systems :  one that provides clarity to the voters about who they are electing to be their leader and what their policies are, against the second where confusion reigns supreme, which one would you prefer? Maybe, its time to debate whether India should abandon the Westminster System and shift to the Presidential System.

Traditionally, there have been three criticisms of the Presidential form of government :  the President can assume dictatorial powers; the executive is not responsible to the directly elected legislature; and finally, if the President belongs to one party and the legislature is controlled by another party, it can lead to conflict and paralysis.

Each of these criticisms can be dealt with. As the US experience has shown, there are definite checks and balances in the Presidential system. Scarred by his run-ins with the Republican-controlled Congress, Obama is known to have expressed surprise at the limits imposed on the power of the President. Second, does anyone in India really believe that accountability to Parliament is helping the executive perform better? As a matter of fact, straightforward administrative decisions like allowing foreign investment in retail have been held back because the executive is a hostage of Parliament. And as the last session of the Parliament has demonstrated, even if the government has a majority in the house, paralysis can still prevail.

The benefits of a Presidential system are compelling and far outweigh the negatives, particularly in the current Indian context. Here are some of them.

First, it will force political parties to be more democratic and robust. All political parties will have to choose their best candidates as there will be a direct head-to-head contest. The people will not accept anyone less. There will be no alternate power centres, no remote controls, and no backseat drivers. Those not in the magic circle will get an opportunity. Bill Clinton and Barrack Obama did not belong to the Democratic Party establishment. But they ran such brilliant and inspiring election campaigns that they wrested their party's nominations.

Second, the voters will know their candidates intimately as in the recent US Presidential elections. Obama has been President for the last four years and will be judged by his track record. But his opponent, Romney, has also been through a gruelling primaries process, and as Presidential candidate the spotlight was firmly on him. From his religious beliefs to his leadership of Bain Capital to his refusal to disclose his tax returns to his wealthy funders, its all there in the open. The electorate has enough data to take calls on their candidates.

Third, the President will be fully in charge of the executive. He will be able to attract the best and brightest to his cabinet, irrespective of their political affiliations. They will serve at his pleasure and be accountable to him. He won’t have to fix quotas for allies or give important positions to senior but incompetent leaders. Nor will he have to waste time thinking about their loyalty.

Fourth, the government will be stable. The President will be elected by the people and will be voted out by them. He will not have to appease unreasonable allies and indulge in compromises all the time. He can raise FDI sectoral caps, increase the price of diesel, and hike train fares without thinking that his job is in danger or that he will be forced to rollback these measures.

Fifth, the legislature will be free to do its work. The job of Parliament is to pass laws. But opposition law-makers have begun to believe their duty is to bring down the government. Once that power is taken away from them, it will bring them back to their primary task of discussing bills and passing laws that will improve the lot of the people.

Finally, it will truly engage the electorate with the democratic process. Think of a Presidential election between Rahul Gandhi and Narendra Modi. Or even P Chidambaram versus Arun Jaitley. These will be high-voltage, riveting contests.

Summing up, this is just an analysis which seems a better way to go but surely with its own demerits.As of now, I can only say, go and cast your vote on the election day, its the least you can do. Think before 'YOU VOTE'.

Till then enjoy this apposite composition by Abhaey Singh.

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