Customer churn is a major threat to every streaming company. Companies lose $1.6 trillion per year to churn1. With more and more streaming providers jumping into the ballooning market, streaming services can leverage conversational AI chatbots to reduce churn. With the latest in machine learning and real-time interactions, these intelligent chatbots and the systems that power them can autonomously resolve issues and preemptively intervene to increase customer retention.
More Choice. More Churn.
Customers have more choices today than ever before. The number of homes expected to cut the cord is estimated to reach 44 million in 20202. More and more massive media and tech companies are spending vast sums in marketing and promotion to capture customer attention. Disney+, Apple TV+, HBO Max and Peacock have launched their own other-the-top (OTT) offerings, in a bid to steal viewers from Netflix, Hulu and Amazon Prime. There are also emerging subcategories. ESPN+, for example, offers exclusive access to some British Premier League games in the U.S and the new Disney-owned service focuses heavily on smartphone consumption – meaning, streaming users.
As companies dangle free trials, bundles, and other deals as incentives, customers are exploring their options. The biggest drivers for subscribing to OTT Services are: access to a specific program or event; free trial; and the customer enjoying the service and deciding to keep it. The fight for customer attention has only skyrocketed during COVID-19. In a press release, Steve Nason, Research Director, Parks Associates, says “With movie theaters closed and cinematic productions and live events cancelled or postponed….overall video consumption is accelerating.3”
“We are seeing a record number of consumers experiment with new OTT services as a result of the COVID-19 crisis and the shifts in strategy in the industry.”
— Steve Nason, research director at Parks Associates
As new entrants flood the market, though, churn increased. The churn rate rose to 41% during Q1 2020, compared to 35% during the same period in 20194. While churn is going to always be a factor for streaming companies, taking steps to retain customers is essential to the bottom line. Acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one5. Increasing customer retention rates by 5% increases profits by 25% to 95%5.
The role conversational AI chatbots play in reducing churn for streaming companies
Arguably the top-dog in the streaming space, Netflix is notoriously data-driven. The company analyzes troves of customer data to provide a personalized experience and hyper-relevant recommendations, as well as dictate content decisions. The company analyzes things like: the completion rate for content; how much a person paused, rewound, fast-forwarded or, rewatched; the time-lapse to completion for a piece of content; the day of the week and date a person engages with content, and much more. In addition to altering the titles displayed on a person’s home screen, this personal data is used to understand and anticipate churn.
By analyzing churning customers, companies like Netflix can start to pick up on profile attributes, changes in viewing behavior, lifecycle, and customer service contacts that are likely to lead to churn. Companies can then preemptively intervene to try and retain an at-risk customer who is demonstrating similar behavior. For instance, it could be a customer who has reached out two times in a certain time frame with streaming or downloading issues. Or, a person who has abandoned all content that they have started in the past four weeks without completing any title. Conversational AI chatbots can put this entire process on autopilot, intervening at the exact moment that churn is a risk to nurture the relationship. Here are three ways streaming companies can use conversational AI to reduce churn:
- Reach out in the moment of max impact to keep customers hooked and wanting more: 57% of customers churn passively, partly because they were disengaged with the company’s services6. Within the platform itself (on mobile or desktop), via email or through a messaging platform like Facebook Messenger, streaming companies can proactively reach out to a customer to help them discover new content via a conversational interface. Companies could also tease upcoming content that the viewer is likely to be interested in to keep their subscription active.
- Automate resolutions to customer service issues: 39% of Americans who canceled a contract with a company cited customer service6. When a customer has an issue – whether it’s billing or account issues, streaming or technical issues, or difficulties logging in – they expect instant resolutions. Leveraging AI chatbots to get back to customers instantly when they need help is critical as customers now expect effortless, fast, and convenient support, and therefore reduce churn.
- Engage in an ongoing conversation with the customers: The best way to keep customers around is to keep them happy. Conversational AI chatbots can check in with customers throughout their lifecycle to check on satisfaction and ask for feedback. Leveraging AI chatbots, companies can automate truly intimate 1:1 conversations. While it would be cost-prohibitive to hire live agents to engage in this proactive communication, AI has matured to be able to think like a human in many circumstances. For instance, AI agents can now pick up on the sentiment of a person based on their use of words, time delays, caps, punctuation, and use of emojis. If an AI agent determines that a customer is defecting, the AI agent could provide a targeted incentive or offer to keep them around.
Conclusion: Streaming companies need conversational AI chatbots to reduce churn
Traditional media companies (NBC with its Peacock service, for instance) are, for the first time, selling directly to the consumer. It’s harder and more expensive than ever to grow an audience, captivate attention and command wallets. As competition heats up, retaining customers is more critical than ever, especially as customer retention is the foremost contributor to a company’s revenue.
For customers, churning is easier to do than ever before. In an article in Reuters, Rich Greenfield, an analyst at LightShed Partners said: “…churning off of a service once meant finding the phone number of your cable operator, navigating an automated menu and waiting on hold. We now live in a world where with a couple of clicks of your finger on your phone, all of the friction from cancellation is gone.”7
This combination of ease of canceling and more choice for entertainment represents a real risk for streaming companies. Conversational AI is a great tool that streaming companies can leverage to reduce customer turnover.
Interested in learning more about conversational AI for media and entertainment companies? Check out our new ebook here.