Today’s streaming wars continue to make headlines as the major services report subscriber wins and losses amid a period of business model reinvention. For example, while Netflix recently reported steady customer growth – including for its new ad-supported plan – Disney+ saw the loss of 4 million subscribers and Warner Bros. Discovery’s subscriber numbers fell short of analyst estimates.
These subscriber shakeups among popular streaming services serve as a powerful reminder to marketers of the value of taking a data-driven approach to understanding loyalists, as well as customers who are looking to make a switch. Being able to identify and target brand loyalists and switchers in a competitive marketplace is of tremendous value across the streaming ecosystem, impacting both content creators and their advertisers. Interestingly, this same approach provides equal value in many verticals, including auto and telco. Let’s take a look at how to tackle this process from a practical standpoint.
Defining and Identifying Loyalists and Switchers
A key first step to leveraging loyalist and switcher insights for better data-driven campaigns is to define what a loyalist or switcher means for a particular use case. Generally speaking, a loyalist is a customer who has displayed demonstrated allegiance to a brand through repeat transactions, while switchers have displayed a tendency or desire to move from brand to brand over time. However, depending on the industry, time frames and behaviors can look a lot different.
Streaming services, for example, see a lot of fluidity and competitive overlap within their customer bases, and many viewers subscribe to multiple streaming services concurrently. There is little commitment required when it comes to subscribing and unsubscribing from streaming services, and a constant barrage of promotional offers hits consumers. Many choose to subscribe just to tap into a single hit show that’s driving the current water cooler conversation. All these factors, along with macro conditions like inflation and consumer spending constrictions, result in the volatility of subscriber counts we’ve seen in recent years. This is the lens through which loyalist and switcher behavior needs to be defined.
Digging into the Loyalty and Switching Data
Loyalty and switching behavior, and the data needed to understand it, looks a lot different in other industries. Consider automotive, for example. Right now, manufacturers and dealerships are looking to move 2023 inventory to make way for 2024 models. Doing so requires them to know not only who is in market for a car right now, but specifically who currently owns (and loves) their brand vs. who might be looking to make a change with their next vehicle.
Similarly, brands in the telco, insurance, and financial services spaces tend to have long relationships with their customers, by virtue of the types of services they provide, the contracts they employ, and the energy it takes for customers to switch brands within these spaces. Therefore, the signals of loyalty and switching behavior must be examined in that context.
Regardless of vertical or use case, when aiming to put loyalty and switcher data to work for your brand, the process typically starts with a time series analysis of the data. A brand might have several years of consumer purchase data, or only a small window, perhaps a year. The real nuance to building audiences of loyalists and switchers resides within this data prep stage; it is an iterative process to discover the data and identify its most impactful characteristics.
When it comes to identifying loyalists within your own data, the criteria are relatively straightforward: You’re looking for someone with multiple transactions with your brand over a given period of time. Identifying switchers is an extension of the same concept, except that you’re looking for individuals with transactions with one brand for a period of time who then stop and pick up the same type of purchase with another brand. Partnering with a third-party data provider to layer on this other brand data can be particularly helpful in identifying the switch. Other elements to look at when identifying switchers include how many payments were made during a given period of time (including payments with the new brand) and whether there was overlap between competitive services or product purchases.
It’s possible to define and identify loyalist and switcher audiences deterministically from first-party data with good hygiene, but brands shouldn’t stop there. With the right partner, it’s possible to model on these seed audiences and expand efforts via lookalike audiences.
The Importance of Loyalists and Switchers and Looking Beyond
Knowing who loyal customers are and further building those relationships through special offers to increase engagement, cross-sell, and ensure retention and continued loyalty provide tangible value. Likewise, knowing which customers might be looking to make a switch is a useful way to determine who might warrant a particularly high-value retention offer. However, the data and insights gleaned from identifying loyalists and switchers are most valuable when probabilistic third-party data is layered on top to create audiences for acquisition efforts.
A modeled loyalist group can enable brands to target likely new customers, at scale, who display a similar purchase pattern to the most loyal customers. Essentially, modeling based on loyalty provides a back door into modeling for lifetime value. Similarly, it is possible to use loyalist audiences of competitive brands for conquesting. The bar might be high in terms of what it takes to acquire them, but their long-term loyalist behaviors could make it worth the effort.
Identifying and targeting likely switchers who are currently doing business with competitive brands can be a quick win, but brands need to give extra thought to how they nurture this group after they’re in the door. Someone who is tempted by an introductory offer but doesn’t hold a particularly strong brand preference can easily add to your churn rate. Where possible, leveraging insights into the types of messages and offers that help drive repeat business among loyalists can help more firmly establish the brand with switchers once they’re in the door.
For streaming services, the opportunity to put loyalist and switcher insights to work to reduce subscriber loss and acquire viewers looking to make a move is tremendous during this period of industry transition. However, for brands across verticals – including loyalty-centric industries like auto, insurance, telco, fin serv, and others – the opportunity is equally great. While the process starts with a brand’s first-party data, the real magic happens when you extend those insights to find new customers who might otherwise never have crossed your radar.