When I meet people and tell them that I work for Netflix, the topics that they usually bring up are the cool content and the amazing technology that powers our service. It takes a few minutes of explaining that we are one of the largest recurring merchants in the world who process payment and how a data driven approach to payments processing helps minimize friction and allow customers to continue enjoying Netflix TV shows and movies. People appreciate that. It’s a humbling experience; in this post, I’d like to share some of the impactful work that we do and the opportunities that lie ahead.
Analytic opportunities in payments
We renew tens of millions of customers every month, driving over 1 billion payment transactions annually. This unprecedented scale means that a small basis point change in approval rates is enough to move the needle. This scale also enables us to apply analytic techniques to identify insights thereby minimizing friction while collecting our monthly subscription fees.
In established markets like the United States, data analytics enable us to determine the nature of Payment declines and help us develop resolutions and/or optimizations. In emerging markets, our objective is to determine the ideal mix of payment methods—both for consumers and for us given our recurring business model. For example, in Germany, we support Direct Debit payments and made it work well for recurring payments. We design and run A/B tests, analyze the results, and use analytics as a “trusted partner” to make such business decisions.
For Netflix, analytics are like prescription sunglasses; they don’t block the view—they enable focus and forward momentum.
Data and tools which power us
A data product must solve a business objective. For Netflix Payments, the business objective is to be proactive in identifying issues and optimization opportunities outside of (and within) Netflix’ control and work with our partners to resolve them to the benefit of our customers.
Our partners often learn from us and may apply our types of optimizations to other merchants that process payments when the customer is not present. We’re viewed as leaders in the recurring payments space. This aligns with our values and legacy as contributors to the wider tech community.
Our success factors
The Swahili proverb “A boat doesn’t go forward if each one is rowing their own way” applies to any team striving for success.
To be data-driven, we need great teams with varied skills which are loosely coupled and highly aligned. We have one of the best cross-functional Payments teams in the industry. We have Payments Managers managing a wide array of relationships in the payment industry. We have engineers developing best-in-class payments systems. We have analysts who use a wealth of data to help drive global relationships and optimizations. Finally, we have the team which I lead—the Payments Data Engineering and Analytics team which builds the data and analytics products that enable all of the above.
We are a small team, but working on a niche area with a big dream of driving forward the data-driven nature of well-optimized global payment processing while influencing broader change in the payments industry.
In January 2016, Netflix went global and is now available in more than 190 countries. We have a long way ahead of us in tackling payment challenges in countries where online payments are still evolving. We identify partners, engage them, take risks, run tests, learn, and keep improving recurring payments experience all over the world. In established markets, we still continue to find optimization opportunities, test them and learn from them.
At Netflix, we drive improvements in recurring payments; like all Netflix technologies, this is the outcome not of accident but of design and development.
Shankar Vedaraman is manager,payment analytics, at Netflix. He is based in the San Francisco Bay area.