This is a viewpoint from Matt Walker, chief storyteller at LikeWhere
Netflix knows something about you. Something that you don’t know about yourself, or at least you will not admit: You are poor at making decisions.
We like to think of ourselves as reasonable beings, weighing the options and using mathematics and the position of the sun to inform our final decision. However, you are more likely to make a decision based on the shimmer of the object than by any grander insight.
Every book you have read you judged by its cover. Why are good looking people liked more, and have better opportunities in life? We are surface animals, often superficial and only going skin deep. So if that's the case, then experiences must be built around rapid-fire judgments that help consumers quickly identify what they want.
The Netflix experience
Netflix, the behemoth streaming service offers one product but continues to satisfy 120 million unique customers.
Netflix has an extensive inventory. Its service is on-demand, so nobody can argue with availability. But, neither of these ensure a satisfied customer.
“Satisfying customers is the source of sustainable value creation,” says Robert Kaplan and David Norton.
There is no such thing as a satisfied customer; with every great experience a brand provides for a customer, the customer’s needs evolve, and there presents an opportunity for the brand.
The brand that commits to anticipating their customers’ evolving needs will discover new opportunities to add value to their experience. This added value adds benefits beyond the cost of the product or service the brand provides.
Brand building through behavioral targeting
At the heart of the streaming service are two core understandings of human behaviour:
- Customers do not know what they want.
- Humans are poor at making decisions, and increasing choice further decreases a human’s ability to make a decision.
Netflix behavioural data reveals
when a customer arrives on the Netflix platform most have not decided on the content they want to consume, so they begin to browse. However, the same data also shows how overwhelming the vast library can be. From the point the user arrives on the homepage, they have 90 seconds to make a decision and choose a show. Once that time lapses the bounce rate goes up, significantly. There are just too many choices.
How does Netflix help a customer make a well-informed decision they will not regret, against a ticking clock? Netflix inspires conversions in two ways: personalised recommendations and limiting choice.
The streaming service combines a number of different algorithms to power segmentation of content and users. This surfaces data, that when applied in a collaborative filtering model (used by Amazon and Spotify too) will produce recommendations personalised to each user.
Internationally, Netflix has 13,500+ titles in their catalogue, but for licensing reasons not all titles are available in every country. For example, the US has about 5,000 titles on their service, only 40% of their global inventory. What do you see, when you land on the Netflix platform?
Netflix curates the recommendations into columns under various headings, each a different value proposition that is personalised to the user. Content is the product, and while the user has access to all 5,000 titles, the added value is in how Netflix curates the experience, showing a permutation of content unique to that user, limiting their choice.
Headings like Trending, and Popular on Netflix have a powerful psychological trigger of social proofing. MyList and Because You Watched leverage the power of context, brand new content with a familiar access point to that user; we are drawn to familiarity far more than one thinks.
Netflix estimates that its approach to converting customers saves $1 billion per year in attrition. This is a massive sum of money!
How travel brands can adopt the Netflix approach
Airline and hospitality brands may have the inventory and availability. But how can they inspire a customer who is inherently poor at making decisions to book? A customer overwhelmed by choice?
- the options for travel are endless. Travel is a true global industry–even within a single city there are endless permutations of experiences to be consumed, and each traveller navigates the city based on their unique set of criteria.
- booking travel requires a greater commitment than choosing a show or even buying a higher ticket product.
- the disconnect between the values of the modern traveller and technological culture of travel brands (the restrictions in personalisation are rarely a technological shortcoming, and often the pre-digital entrenchment of an organisation)
- the competition is high, especially in a mature, global market like travel and hospitality.
While the industries of streaming content and travel are not like for like, the human behaviour is the same.
Inspiration phase: The most lucrative phase in the travel lifecycle
Many in the travel industry have a limited understanding of the travel lifecycle. They only start personalisation at the moment a customer shows intent to book, which is usually a generic cycle of retargeted ads and ancillary offers begin. This overlooks the critical inspiration phase, or the phase before planning and booking.
Travel is an industry where the customer defines the product as access to an experience and/or the transformation from the journey (if you’re not convinced, 42% of all posts on Facebook are about travel, go read them). Yet when it comes to the inspiration phase, the very best of travel brands have a paltry understanding of inspiration when compared to brands like Netflix.
This is evident in airline email marketing that uses only the one-size-fits-all approach to inspiration. These approaches cede the inspiration phase to Google and Facebook. This has serious ramifications for the travel brand/customer relationship, on which depend ancillary revenue and loyalty. It’s simple mathematics.
If a customer takes 4 trips a year, out of the 52 weeks of email offers which typically read “seat sale for X amount of destinations, Book Now,” only 4 emails will arrive at the point when a customer is ready to actually book now. 90% of those email offers will be irrelevant to that traveler's lifecycle: arriving when the customer is in another phase, or when they are not ready to book.
This is detrimental when one considers the findings of a Google study which revealed that the travel brand that adds value to the customer in the inspiration phase of the life cycle are 67% more likely to earn the booking in the booking phase.
Let's all learn from Netflix
Netflix defines inspiration as that which is uniquely relevant to the user. We are not inspired by pretty colours, per se, we are inspired by our hero-selves. That’s why each Netflix recommendation is inspired by the user.
In turn, Netflix limits choice to increase the conversion of the personalised recommendation. Amazon does the same in retail. Spotify does the same in music streaming. The technology exists for travel brands to adopt this approach to destination discovery and personalising inspiration.
Who will become the Netflix of Travel?
Should airlines be looking to the likes of Netflix for standards?
This is a viewpoint from Matt Walker, chief storyteller at LikeWhereOpinions and views expressed by all guest contributors do not necessarily reflect those of tnooz, its writers, or its partners.
Photo by Charles Deluvio ?? on Unsplash.