Client Company
a European video streaming platform offering 50.000+ films, series, and cartoons, and providing their content by a subscription model
Challenge
The problems the client faced were the following:
- 60-70% of new subscribers left in the first three months'
- The monthly loss of regular subscribers was up to 20%;
- Monthly revenue loss of 15-20%;
- Low response rate to the advertising campaigns.
Solution Description
A subscription revenue management system that minimizes churn, increases loyalty and optimizes the client’s advertising budget.
Inventale used ML direct and indirect uplift modeling techniques as the basis for LoyaltyManager. Uplift modeling predicts the influence of treatment (like a direct marketing campaign) on a person’s behaviour and helps to answer questions like:
- Will my marketing campaign upset or inspire the clients about to churn?
- What clients will buy anyway, so is it necessary to waste money advertising to them?
- Has this client purchased it because of my ad?
- How do we use our marketing budget effectively?
How It Works
- Churn Minimization
Identifies 90-95% of the clients willing to subscribe or churn. Provides clients’ «health» picture;- Gives personalized recommendations on how to win new customers and retain the ones about to churn by estimating diversified treatment effects for each client.
- Ad Campaigns Optimization
- Analyses the users’ behaviour based on historical data and groups clients into the 4 described categories by their anticipated reaction to the specific planned ad campaign;
- Gives recommendations on:
- whom to include in the campaign as they will have a favourable response to the ad (engagement, conversion, sales);
- what clients to exclude as they either purchase anyway, or the campaign will have a negative effect, leading to churn.
Results and Current Status
The implementation was done with close cooperation with the client, who gave Inventale access to their internal systems and data, so we could check the results, and test and tune the algorithms on the fly. As a result, LoyaltyManager proved successful and addressed all the client’s set goals and needs, retaining current clients and bringing new loyal ones on board. At the moment, the client uses the system on a daily basis.
After six months of system usage, the customer saw the following benefits:
17-20%
increase in the customer lifetime value through a 40-50% reduction in voluntary churn
11-13%
increase in the average revenue per user because of quicker and more advanced customer acquisition
7-10%
overall customer base growth
Later the developed approach was applied to help a British online media company monetizing content via subscriptions.
If you want to learn more about this project, leave an email, and we will send you our presentation.
