Churn is one of the biggest challenges that paid TV providers need to solve for in this age of media fragmentation. As viewership and engagement diversify to new platforms, and customers look to these platforms to get their content, cable companies are scrambling to figure out how to combat consumer behavior changes and possibly how to reverse some of the activity altogether.
A way to gain more insight into consumers and keep them in the pay TV subscriber base is to analyze churn activity, which offers valuable insights on what viewers are watching and what other actions they’re taking around particular content. With this strategy, service providers and marketers can attract audiences with personalized content at the right times, help keep potential cord-cutters on their platforms and improve the company’s internal operations.
Customize What Viewers Watch
Increased engagement and higher viewership numbers are the key outcomes when churn rates are lower. Providers need to use these insights and analytics, powered by machine learning, to evaluate TV consumption and make viewing as personal as possible.
The individualized approach is especially important for customers in Generation Z. This demographic is connected for more than 10 hours a day and will account for 40% of consumer spending by 2020, so it’s critical to give these young viewers a personalized experience. That way, they can become long-term audience members instead of early churners.
While relevant content is crucial to engage viewers of any age, it’s also important to take the way they find that content into account. For holistically implemented user experiences, consumers who interact with personalized discovery carousels and results churn three times less than those who do not. Increased video-on-demand (VOD) options and discovery features like predictive analytics can also help reduce churn.
There are also important risk factors that can predict when users will churn. One example of this is increased viewing on weekdays as opposed to weekends. Examples like these can not only be informative, but they can be actionable. In those cases, providers can, for instance, offer a free weekend VOD offering that aligns with consumption patterns to keep users engaged. This strategy could help cable companies retain multiple customers, especially because about half of U.S. TV watchers “co-view” content with friends and family.
These streamlined personalization methodologies help increase viewership and contribute to a better consumer experience, since customers are now discovering and enjoying new content increasingly over a generic set of content. As a result, providers can set themselves on a path that may see a notable reduction in churn.
Pay TV and video providers also need to think of cord-cutters and cord-shavers as potential customers. Consumers who have cancelled or reduced their cable subscriptions often cite price as the biggest factor. They also say they’ll only come back to TV if they can pay on an a la carte basis for the channels they want to watch, as opposed to a full bundle.
Despite this, Moody’s Investors Service said in a recent report that pay TV will remain “positive” and “stable” in 2019, with margin growth expected to outpace subscriber losses.
One reason for this is that media companies are using churn analysis to retain reticent subscribers and bring cord cutters back into the fold through the strategies outlined above. Providers can efficiently address issues and use the churn analysis to drive their own marketing tactics to bring users back. It’s vital to create a better customer experience with these insights, so consumers don’t change the channel in the year ahead.
Improve Marketing and Operations
Churn is a critical metric for cable and video providers, because multiple groups need to work together internally to ensure customers are satisfied.
Although the industry is in a state of upheaval, pay TV still holds on to the largest part of the market share and it doesn’t look like that’s going to change as soon as we think. Recent studies have shown that 97% of consumers want to keep their paid TV services. Even millennials can’t give up the tube: More Than three-quarters of them have bundled cable packages with subscription streaming video services.
Data like this helps providers’ overall performance, because marketing and operations teams can join forces to drive efficiency and ensure loyal customers get discounts and rewards related to their activity.
Once churn analysis tools are up and running, marketers can use these analyses to expand capabilities and drive return on investment. On the operations side, workers can analyze profile information and get relevant analytics about what customers watch. And finally, service providers can optimize their content after better understanding their users which will help reduce churn and improve retention. Cable companies need to be smart about attracting and retaining subscribers, and one of most effective ways to get actionable insights that ensure viewers keep watching is through churn analysis. This crucial touchpoint helps providers engage audiences, reduce cord-cutting and operate more efficiently. Armed with churn reduction tools, paid TV will survive the streaming wars.
Chris Ambrozic is vice president of product management at TiVo.