Simon Calver, LOVEFiLM: Turning your customers into a community of advocates

12th May 2010

Powered by word of mouth, LOVEFiLM has become the leading DVD rental service in Europe. And Simon Calver is ready to share the secrets to creating customer advocates.

When Facebook unveiled its ‘game changing’ social plug-ins last month, it was fitting that online DVD rental subscription service LOVEFiLM was amongst the 30 launch partners. Although hailing from the dotcom generation rather than the subsequent social media generation, the online DVD rental firm attributes much of its success to its thriving and passionate community of customers. And while the company’s goal of going toe-to-toe with broadcasting behemoths such as Sky and Virgin Media seems enormously ambitious, CEO Simon Calver believes it is well within its potential. "LOVEFiLM inspires passion and emotion, and people love the brand," he emphasises.
Certainly, if history is anything to go by, you wouldn’t put it past LOVEFiLM. Since starting in 2002, it has seen off competition from rival start-ups Screen Select and Video Island – with which it merged in 2006 – and it has carved out a significant chunk of the total DVD rental market, leaping from 100,000 subscribers to more than a million in the past four years. In 2008 it made headlines by acquiring the online DVD rental business from Amazon, making it the leading online DVD rental service in Europe.
Furthermore, while its organic growth rate remains at a healthy 35%, its existing customers aren’t suffering as a result of its aggressive expansion - indeed they are actually a considerable factor in its expansion. 94% of subscribers have recommended the service to friends, with over 20% of all new sign-ups a result of word-of-mouth recommendations. So what is LOVEFiLM’s secret? How has it turned its customers into a loyal community of advocates?
Customer experience based on watch and select
Calver suggests that the company’s approach to customer experience is at the heart of it, a strategy that focuses on the three most important areas relating to their field: how its customers watch films, how they select films, and how they share their experiences. "We think of them as three overlapping circles – with LOVEFiLM in the middle," he adds helpfully.
Expanding on the first part of this strategy, how his company has worked to cater for how people watch films, he explains: "What we’ve done over time is move from just being in DVD rental to introducing DVD retail, and then introducing cinema listings and cinema ticket sales." LOVEFiLM’s latest initiative is to introduce digital services for home computer users to stream content, while a deal with Samsung and Sony now sees LOVEFiLM services embedded into the manufacturer’s TVs – with more manufacturers soon to follow suit.
"What we’re trying to do is give people as much choice as possible to how they want to watch different films at different times as part of the service," adds Calver.
All of which is great, but extra choice can sometimes produce greater confusion. And with 65,000 titles to choose from in the library of DVDs, it could be easy to get overwhelmed by the sheer volume of films at your disposal. "They could look at that number and say ‘where do I start?’" admits Calver. "I think the academics call it ‘cognitive dissonance’," he chuckles.
For this reason, the second customer experience ‘circle’ in LOVEFiLM’s strategy is about finding the right film. Ratings, reviews, recommendations, trailers, search information and some pretty advanced algorithms are all at hand to help customers find the films that they would like. "We need to help people through the process of picking a film," continues Calver. "We challenge ourselves on the algorithms to get films that we know people will more likely want to watch. And we also give lots of access to customer reviews and professional reviews to help people. We have ratings on every film that we use as part of the allocation algorithm. So we’re using a lot of science and technology as well as editorial to help people through the choices that are available to them."
Sharing experiences
Given the valuable informative role of editorial hailing from the customers themselves, it will come as no surprise that the final field in Calver’s customer experience structure is the community element, focusing on how customers share their experience. "It is an exciting and great industry and our members want to be able to talk about it with eachother," says Calver. "So you have to think about how people share their experience."
This has seen the firm develop iPhone apps, the aforementioned Facebook plugs-ins as well as develop an extremely active presence on social networking sites, such as a buzzing and engaging Twitter profile. "We comment and blog, and look and see what is happening on other blogs out there as well. We always let people know we’re LOVEFiLM rather than do it in a clandestine manner," continues Calver. "There are lots of exciting things that we’re doing on the community side and we are doing some interesting new developments with Facebook that will begin to get LOVEFiLM more front and centre of people’s minds."
That’s not to forget the activity on the LOVEFiLM site itself. Having added movie news, reviews and interviews, as well as the more interactive content such as competitions, member polls and the 750,000 member reviews it has generated, the site has established itself as an extremely popular destination for movie buffs, ranking as the third most visited entertainment and movies site in the UK. "Members want to read and chat about what is going on, so if there’s a new James Bond film coming out, we’ll ask them what the best Bond car or Bond girl was. Everybody wants to know and talk about films.
"However, we can talk about ‘community’ as an online activity but the reality is that 90% of community goes on offline. It is you and me chatting. People talking in the corridor. People having dinner parties. In the pub."
And this is where Calver sees opportunity for growth. Word of mouth has traditionally been one of its main marketing weapons, and even though it has started national activity, word of mouth remains a potent part of its marketing mix, with a fifth of new sign-ups a result of recommendations. Entertainment is a popular talking point - and LOVEFiLM's enthusiastic customer base are quite happy to drop the company's name into the conversation.
"The social environment is not just happening online, it is happening offline, and is really driving the business forward. We now have national campaign on TV to ensure that we’re not only focusing on those areas where we have good household penetration but also on those areas where it is low. But we have an opportunity to build the brand and get word of mouth and viral activity working for us."
And having enjoyed such success, LOVEFiLM is also keen to share its experiences via The Consumer Forum, a partnership of like-minded companies focused on the customer experience, which it co-founded along with the likes of King of Shaves and PhotoBox. "It is a great opportunity for us to learn from eachother and we have set up quarterly sessions to focus on how customer services operates, how blogging and social networks operate, and share those experiences," says Calver. "There is a lot of negative press about customer experience in the likes of utilities for instance, but not a lot of press about how we can make it better and what we can do to make it better. So rather than just pointing a finger, we’re trying to fill that gap."
Nonetheless, this won’t mean that LOVEFiLM will be resting on its laurels, and while it may be dishing out advice on customer experience, the day job demands that its own focus on the community’s experience doesn’t go awry. "I think we have helped redefine rental, but over time we will also help redefine entertainment in the home. Our challenge is how we can make the experience of watching entertainment better," concludes Calver. "The consumer response is that they like being part of a business and a member of a club that is absolutely passionate about film, and that helps people want to watch and get great content."

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By Becky Midgley
13th May 2010 16:35

I've been a long-time fan and subscriber of LoveFilm; I am in fact one of the aforementioned advocates, and have recommended the service to at least 3 people, including my Mum!  Their customer service is second to none and I love their passion about their product; I love the way they make me feel valued when I report a damaged disc, they write personal responses to my queries and concerns and even follow up later.  They bend over backwards to make sure I am satisfied with their service, I do not know any other company that gets it right to the extent that LoveFilm does - well done guys, keep up the good work! 

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