Gibson Biddle, former vice president of product for Netflix, said his career at Netflix started when he answered “yes” to two questions from founder Reed Hastings:
- Can you delight customers?
- Can you do consumer science?
Those two elements have become pivotal in Biddle’s career and have helped shape his commitment to innovation, he told INMA members on Thursday, the first day of the Media Subscriptions Summit 4.0.
“For me, the product manager’s job is to delight customers in hard-to-copy, margin-enhancing ways,” he said. “There’s a real balancing act between delight and margin.”
He offered case studies on some of the A/B testing from Netflix’s early days as the company still struggled to find the best way to reach and retain customers. For example, in 2005, customers wanted to watch movies as soon as they became available on DVD, but Netflix couldn’t buy enough discs for all those customers. That meant many had to wait days — or weeks — until the DVDs were available.
“We thought, what if we give the customers the perfect new release experience?”
Structuring an A/B test, the company was able to provide members in a test group with DVDs the next day. Using retention as a metric, they wanted to see if the control group would have fewer cancellations than the monthly cancellation of 5%. What they found was that the cancellation improved by less than .5%, and while the customers they saved would have been worth about US$1 million, the cost to Netflix to buy the DVDs would have been US$5 million.
“You have to think about the balancing act between delight and margin. And the only way to discover that is to A/B test it.”
Mayur Gupta, chief marketing and strategy officer at Gannett and former chief marketing officer for Spotify, defines customer obsession as “when you challenge yourself to add more value even to your most loyal user because you want to keep increasing the value and keep them from leaving your ecosystem.”
That approach requires a company-wide mindset and a reconsideration of how to approach not just customers, but competitors.
These days, Gupta said, the only moat businesses have is their ability to move faster than their competition. Everything else, he said, is a commodity.
That can be a significant culture change for companies that have been reluctant to adopt measures that haven’t been thoroughly tested or seem risky.
“You have to keep moving. It’s OK you don’t have all the answers,” Gupta said. “When you come within five feet you will see the next five. That’s one thing that good companies, both big and small, are not afraid to do: They’re not afraid to fail. Not afraid to take risk. They’ll use data … but there’s an emotional sense, because still selling to humans.”
Moving at that speed creates chaos and requires “a lot of pivots, lots of change.” Gupta said to thrive in that chaos, the culture must allow people to fail.
“If you don’t have a culture where people feel safe and are given autonomy to make decisions, it won’t be successful.”
Gupta shared five core principles he has learned along the way to that help shift thinking inside a company, including focusing on experimentation over perfection and determing how to organise around outcomes.
“Your growth and your ability to understand your customers’ needs never stops,” he said. “It is constantly running and it … ultimately maximises the lifetime value for your customer.”
The Summit continues next week on Tuesdays and Thursdays throughout February, offering 13 hours of programming. You can register here to watch live or at your leisure.