±±¾©Èü³µpk10

Ching-Har Wong

Part-owned by Amazon, LoveFilm's reputation for convenience and growing customer base recently led it to be valued at £200m. But while everyone loves movies, Wong's role in juggling channels to deliver more subsubscribers is more challenging than it sounds.

Q: What is LoveFilm's single, most efficient online channel for acquisition?
We measure our activity against acquisition cost, taking into account all media and promotional cost including free giveaways. We calculate how many prospects go on to become paying customers and we end up with what we call SAC or subscriber acquisition cost.
 
Something like LoveFilm-branded paid-for search is a very good acquisition channel in terms of lowest cost/delivery of high value customers.
 
Channels such as affiliates are very efficient in terms of value – they deliver 19% of my volume at a very reasonable SAC. But the quality is not necessarily the best and that’s something we’re working with our digital media agency iLevel.
 
Quant created the mail pack and it’s very good in terms of delivering lifetime value.

Q: How do you integrate your online and offline channels for acquisition purposes?
Our lead generation activity is via email and online and if the customer doesn’t convert after an initial email, they’ll get an outbound telemarketing call. That’s one example of integration.
 
Direct mail comes in with our 'refer a friend' activity – one of our most successful forms of acquisition. Customers seem to love referring LoveFilm to their friends if they have a good experience with us. The pack looks nice and people have pleasure in passing them on. Less valuable segments will get an email.

Q: How does your segmentation work?
We do a lot of propensity modelling and we're becoming more effective because of it.
 
Our most valuable customers are defined as those who are best at referring friends to us. We identify the top 40% referrals – those customers who spend more with us tend to do more referrals. It's all linked.
 
The propensity modelling works by tracking individual customer behaviour, and seeing who they've referred to us and what they buy. The most valuable customers tend to be the most engaged – they’ll rent DVDs but also rate films and write reviews. It’s all about engagement.
 
Q: Could you describe your database segmentation?
We're a mass-market product as everyone watches films, no matter what your age or social group. That said, our data tells us we're very strong in the 25-44 year old age group, with a slight skew towards males and a wealthier demographic.
 
We also have a strong family segment. In a recent summer mailing we did a version of the mail pack that focused on family films.
 
But we prefer to appeal to the mass market and so we haven’t really segmented our communications to different segments.

We did focus groups with over-55s to make the site more accessible to them. We know our over-55s don’t like to be treated as a special segment. We did some creative testing with those older segments and the most popular film was Brokeback Mountain!
 
Q: Do you use cold media, for instance email data?
We do buy email data, or rather EDR do it on our behalf. We introduced a paid performance model last Christmas where list suppliers are incentivised to increase data volume and quality for us. There is some bad quality data out there, but some good data  as well. It’s down to finding the right list suppliers to work with. Acxiom is a one good, amongst others.
 
Q: Do you overlay other sources of data onto your own?
We have done overlays with (media survey) TGI – it’s a good data source and it gave us lot of insight into our data.

Q: What variables do you use for online segmentation?
We have usage behaviour. We’re using behavioural targeting so that when people come on to our site and drop out, or they begin to sign up and drop out. By giving them a cookie we’ll deliver a targeted message to them. Behavioural targeting can be very effective if you do it properly.

Q: Is there a LoveFilm head of retention and if so, how do you work together?
There is a retention manager and we do work closely together. We understand more about what people are engaging with in terms of service and content and we’ll use that in our marketing messages.

Q: Have your acquisition targets plateaued, given the recession?
They’re ever increasing! People have been staying in and that’s helped our business, but through optimised marketing we’ve increased our response and conversion rates.

Q: LoveFilm is in the top 100 brands mentioned on Twitter. How important is social media to acquisition?
It's getting more important, but we haven’t finalised our social network strategy yet because we want to do it properly. You can’t start with social media and then walk away. It needs a dedicated resource to focus on it.
 
In the meantime we’re doing a lot of work understanding what social networking means to our customers and what they want from a social network site.
 
LoveFilm has a Twitter account with over 2000 followers and we have advertised on Facebook. That didn’t work and we are now working on Facebook APIs (Application Programming Interface). We find that if you manage to integrate with things that people are already doing on Facebook, it’s better than just sticking on an ad.
 
So, for instance, we integrate with poker games on Facebook and people can earn chips for signing up to a two-week free trial.

Q: It’s a household name now.. you're trialling a new video-on-demand download service...where does LoveFilm go from here?
We’re looking at developing and understanding our integrating our digital offering into our packages, understanding what our proposition is and integration that into our marketing. Digital will become a bigger part of our offering – from a channel, platform and marketing point of view.
 
Q: About you - how did you arrive at LoveFilm?
I started off agency side – McCann Erickson, KLM, Parade Direct Marketing. After that I switched to clientside, spending a few years in Barclays and Vodafone. I’ve been at LoveFilm for 16 months.

Q: How different is working at LoveFilm to, say, working at Barclays?
Very different. It’s the transition from a big corporate environment to a dynamic small-to-medium sized business. We work hard here at LoveFilm and it’s enjoyable, especially the sense that you can make things happen faster.

- end -