Despite declining retail sales in the home entertainment industry triggered by changing consumer preferences and the rise of streaming and subscription services, one leading entertainment company set out to double profits in the next few years.
EntertainmentCo* understood that a small number of customers accounted for a disproportionate amount of their business, and leadership believed that focusing on these valuable consumers could both improve their customer experience and generate growth.
However, with limited direct customer interaction as a result of selling through retailers, EntertainmentCo lacked the necessary actionable insights to develop a customer-focused growth strategy and turned to Bain for help.
EntertainmentCo's lack of consumer data handicapped their ability to create a customer-focused growth strategy that would allow them to achieve their growth targets. Bain's team, supported by experts in our Advanced Analytics Group (AAG), set out to help by gathering insights and performing analyses in a number of different efforts:
- Customer segmentation: Using large sample customer surveys and focus groups, we micro-segmented EntertainmentCo's most valuable consumers to better understand what they watch and buy, as well as their motivations and frustrations.
- Data collection: Our AAG solved EntertainmentCo's data access challenge by partnering with retailers to capture point of sale information. AAG merged data from the client, the web and retail partners into a massive, one-of-a-kind dataset. The dataset, complete with extensive metadata fields, provided the basis for complex analyses that unlocked substantial value for EntertainmentCo later on.
- Affinity analysis: We evaluated product bundling opportunities through market basket analysis, which finds relationships between purchases, and inputs from online and in-store transaction data. This analysis helps to refine content recommendations for consumers, prompting cross-title promotion of films and positioning related titles near each other to encourage consumers to purchase multiple products.
- Test and learn pilot: The affinity analysis model AAG developed to predict the relationship between products and was refined through repeated test and learn pilots with retail partners. Through regular and iterative refinement of the model, EntertainmentCo and their retail partners found success and expanded the pilot program.
In addition, we believe that an organization needs to embed analytical tools and insights into its day-to-day operations to deliver the most value. To that end, we reviewed and defined the organizational requirements EntertainmentCo needed to support a robust big data analytics capability.
Insights in hand, the EntertainmentCo and Bain teams developed a number of recommendations to guide the company's growth strategy:
- Implement new strategic initiatives that focus on the needs of EntertainmentCo's most valuable customers
- Develop and embed a data analytics capability to support the strategy with key insights and analyses
- Implement test and learn efforts to continuously tailor and refine entertainment offerings to the most valuable customers
EntertainmentCo's ambition, combined with Bain's advanced analytics expertise, set the company on course to achieve its growth targets. Most notably, the affinity analysis and test and learn capabilities supported by our Advanced Analytics Group paid dividends almost immediately for the company, yielding a 500% increase in sales of related titles in pilot tests.
Bain's efforts helped bring EntertainmentCo closer to its customers by directly connecting them to their point of sale data. We developed custom analytical tools to embed data analytics in EntertainmentCo's operations so they can continue to adapt to consumer activities and preferences.
* We take our clients' confidentiality seriously. While we've changed their names, the results are real.