Cancellation Rates and New Programs: A Lesson From Netflix

Tue, Sep 26,2017 @ 01:10 PM
by Kathryn Lynch-Morin |

 iStock-458070303.jpgIs your cancellation rate high enough?

While a low cancellation rate might look good on paper, a low cancellation rate, especially when it comes to new courses, could mean your program isn’t taking enough risks.

After releasing one successful series after another, Netflix founder and Chief Executive Officer Reed Hastings came out and said that while the hits are great, the streaming giant should actually be cancelling more shows.

“We have to take more risk, you have to try more crazy things,” Hastings said during an appearance on CNBC’s “Squawk Alley.” “…We should have a higher cancel rate overall. Because then, what you get is some winners that are just unbelievable winners…”

And, odds are, you should probably be cancelling more courses, too.

Taking calculated risks with new shows – just like with new programming – can lead to more cancellations but it can also lead to some great successes, too.

Successful programs have a product mix of 70 to 90 percent old or repeat courses and 10 to 30 percent new courses.

If more than 90 percent of your offerings are old, you don’t have enough new courses and you should consider taking more chances. But, on the other hand, if your mix includes less than 70 percent old courses, you may have too many risky new courses.

For old or repeat courses, the goal should be to keep the cancellation rate as low as possible. The cancellation rate for new courses should be much higher – 30 to 50 percent. Overall, the ideal course cancellation rate is 15 percent.

Finding that sweet spot takes work and requires a thorough understanding of your target audiences. Understanding your audience will guide you in the development of new programming and eventually drive the marketing and promotions to support your new offerings.

Ultimately, building from your success, by creating new programs for your current customers, is the best way to expand.

LERN recommends answering the following 10 questions and using the below worksheet to get started developing a new program.

  1. Is this the right audience?

This is the most important question but you should ask it indirectly, not in a survey or questionnaire. If you are trying to reach an audience that is not right for your program, there is nothing you can do to make it the right audience.

By asking this question you will learn whether the group is already served in the same way by another program. This question also leads to finding out the total universe for the audience, and whether you can get or create a mailing list of this audience. 

  1. Is this the right subject area?

You can survey your participants directly about what subject areas they are most interested in. Subject area interest is going to change over time for the same audience, and it certainly is going to vary when you try to serve a different audience or market segment. Knowing what subject area your audience is most interested in is very important. 

  1. Is this the right topic?

This isn't the same as the right subject area. Within any given subject area, there are many topics. Just because a person is interested in management or environment does not mean that any topic in those subject areas will meet their needs. So after you survey for subject, survey for topic.

  1. Is this the right title?

Any topic can be offered using a variety of different program titles. Some titles might be a smash hit while others will be flops. Survey your participants for the right title for your new program.

  1. Is this the right format?

There is no longer just one format that will work for all your various market segments or audiences. And, the same audience may want a different format for a particular subject. Consider all available formats for your new continuing education program.

  1. Is this the right place?

Once again, variety and choice are the keys to success with programming, so don't take the location for granted. Maybe a new site would make a critical difference for the audience.

  1. Is this the right time?

Every audience has different time constraints. For some audiences, the time of day is important. For others, the day of the week, the week of the month, or month of the year. Confirm that the time you have chosen is one that is optimal for your audience.

  1. Is this the right instructor?

For some programs, the type of instructor may make a difference in your attendance figures. Look at various options for your instructor/s or program leader/s. You can have an expert, an outside expert, a peer, and so on. 

  1. Is this the right price?

This you can best discover only indirectly or by conducting a price test with your audience. Asking your audience their best price is unlikely to be helpful. Few people will tell you a program is too inexpensive.

  1. Is this the right promotion?

This can best be discovered indirectly. You can ask a focus group to give you feedback on two different kinds of promotional packages. For example, you can ask them which brochure is more attractive to them. Or, you can look at other types of promotions to the audience you are trying to reach. Depending on the dollar value of the new program, you can also do a promotional test and see which of two packages pulls better for you. 


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