One can make the argument that there's no company conquering big data better than Netflix. At the iMedia Agency Summit in Austin, Texas, technology expert and author Phil Simon discussed his most recent book, "The Visual Organization," which focuses on the ongoing quest for better big data decisions. Using Netflix as the prime example for marketers to follow, Simon argues that there are valuable data lessons to be learned from the online streaming giant for every type of organization -- not just entertainment companies.
Netflix has roughly 40 million customers, nearly $20 billion in market capital, and -- most importantly -- is responsible for almost one-third of all U.S. weeknight internet traffic. And everyone at this point knows about its $100 million dollar purchase of 13 "House of Cards" episodes, without even seeing a pilot episode -- an unprecedented deal in Hollywood. But Netflix didn't make this decision based on blind luck. The purchase -- and production of other original content -- was justified by its refined user data. It's no question that the company is a complete game-changer. But instead of asking what the company is doing or why it's doing it, Simon focuses on the more important question: How?
When researching his book, Simon came across the three-part "Netflix Credo" that the company uses for its remarkable data strategy:
Data should be accessible, easy to discover, and easy to process for everyone
Data is like oxygen at Netflix. Using refined algorithms, it tracks what consumers are doing, while they are doing it -- every click, selection, pause, resume, and device. Aside from the company's own data collection, there are three other features to note that enrich user data. For one, the company purchases third-party data and meta-data from firms like Nielsen. Second, Netflix's business model -- no contract beyond one month -- supports using data to generate meaningful content and keeps consumers happy. And third, Netflix has redefined the traditional genres (comedy, drama, western, etc.) and created 77,000 subgenres (dark suspenseful sci-fi horror, romantic Indian crime drama, and evil kid horror, etc.).
The longer you take to find the data, the less valuable it becomes
It's important to act quickly. Netflix doesn't just collect data; it uses the data to inform other business decisions -- in real time. For example, many Netflix subscribers watched all 13 episodes of season four of "Breaking Bad" the day before season five premiered. Netflix also knew that 8,000 subscribers joined the day before -- just to watch the new season -- and cancelled their memberships following the premier. This extra data point is telling about online viewing habits.
Whether a dataset is large or small, being able to visualize it makes it easier to explain
Netflix uses the data to foster creativity. Based on what viewers have previously watched -- genres, actors, directors, etc. -- the title covers displayed on the site employ similar colors and images.
Simon touches on the process of visual organization further in his book and highlights these important characteristics to follow when creating your own strategy:
- Avoid the "set it and forget it" mentality.
- Encourage data exploration and discovery.
- Augment creativity with troves of relevant information.
- Buy and build new tools as necessary.
Simon emphasizes that big data and creativity can coexist, contrary to the popular industry belief. And part of this means that companies need to experiment. But remember to "walk before you run," Simon said. No company will go from zero to Google or Netflix overnight, so focus on the journey. Let the data be an encouraging tool to discover your consumers' needs, rather than an overwhelming threat to your company's potential.
Betsy Farber is an associate editor at iMedia Connection.
"Man adrift in tiny boat in binary ocean" image via Shutterstock.