Analysis of Spotify's Customer Management Framework for all phases: development, creation, growth and retention. Recommendations focusing on some executional and strategic issues.

1. Staying Strong in a Crowded Marketplace
TEAM G:
Çağan Koç Silvana Iriarte Maryam Al
SaleemJoey Jabra Clara Schuller-Delaval Vincent Thielke

2. About
30 million songs
20 million paid users
75 million total users
“Free-mium” business model
~$3 billion paid in
royalties per year
(70% revenue)
An Executive Summary

3. Outline: A Preview
• CMF Development
• Looking Toward Growth
• An Underutilized Company Culture
• Retention in an Evolving Marketplace

4. Outline:
• CMF Development
• Looking Toward Growth
• An Underutilized Company Culture
• Retention in an Evolving Marketplace

5. Early Market Mainstream Market
Spotify currently…
Customer Adoption Curve

6. CMF Development
Market Hypothesis
 First-mover advantage in Europe
 Focus on: Total Addressable Market
Served Available Market
 Competitive barriers:
 Have to pay to music industry back
 Signing contracts with record labels

7. An Evolving Marketplace
Downloads StreamingPhysical

8. CMF Development
 Immediate, unrestricted access to personal playlists from any computer
Pain points: Pleasure points:
 Time consuming
 Expensive / illegal / viruses
 Limited storage capacity
 Synchronization of all devices
 Immediate access
 Extensive catalogue
 No downloading required
Individual Hypothesis
(Responsive behavior)

9. CMF Development
 Accessible to everyone
 Instant music and accessible from everywhere
 Social experience
 Discovering new music via personalized
recommendations
Product Hypothesis

10. CMF Development
Strategy Hypothesis
Pre-Product
 Social media to reach early adopters
 Press / websites / bloggers
 Informing consumers of benefits
 Invitations & word of mouth
 Stop using alternatives
 Personalization
At Launch
Post-Purchase

11. Customer Management Framework
Creating Customers
 Viral marketing & Twitter
 Comprehensive catalogue
 UPSELLING
(Seasonal promotions,
free trials, info about benefits)
 Educating the mass market

12. Outline:
• CMF Development
• Looking Toward Growth
• An Underutilized Company Culture
• Retention in an Evolving Marketplace

13.  Global expansion
 Partnerships
 Social sharing of playlists
 Attracting mass audience
 Available on every device
 Sign record labels and raising trust in
the music industry
CMF: Growth
Market penetration in a growing market

14. Growth
Problems lying ahead…
 Conflict with music industry concerning royalties (e.g., Taylor Swift)
 Conversion of free users to Premium
Active Users
Premium Subscribers

15. Growth Recommendations
How to get more Premium users
 Greater awareness of Premium features
(e.g., Spotify Connect, BMW, Discover Weekly, running)
 Display ads to attract free users
 Exclusive features (music videos, live
sessions)
 Offering plans that give more value for money

16. Network Effect & Customer Lock-in
 Unwillingness to lose cherished playlists
 Exponentially increasing value
(word of mouth, new features, new benefits)
 Encouraging non-users to join via shared content
(e.g., partnership with Facebook)
 Customers that get locked in creating playlists

17. Outline:
• CMF Development
• Looking Toward Growth
• An Underutilized Company Culture
• Retention in an Evolving Marketplace

18. Great in-office vibes, but not being used to drive CMF
 In-office jam sessions
 Regularly scheduled artist performances
 Equipped with stages, amps, drum kits
Company Culture
“It’s all about music” “Make music social”

19. Headquarters (Stockholm, Sweden)

20. Partnering with SalesForce Work
“Giving high fives from different parts of the world”
—Jonathan Forster,
VP Sales
 Follows Objective Key Results to align team goals
 The “Personalized toolbox” for communication around
the globe
 Working from anywhere
 Team communication and feedback

21. Outline:
• CMF Development
• Looking Toward Growth
• An Underutilized Company Culture
• Retention in an Evolving Marketplace

22. Retention
Making the customer feel special
 Personalization via data and classification system
 Using Echo Nest (music-intelligence platform)
 Creating value with:
 Top Recommendations
 Moods Music
 Discover Weekly
 Constant negotiations with record labels

23. Retention
 64 out of every 68 comments are negative
“It is so disheartening to realize, having enjoyed your
music this month & can’t get a real person’s voice on the
other end to help me”
1.0 / 10
1.4 / 10
3.2 / 10
Issue resolution
Reachability
Friendliness
Threatened by terrible customer support

24. Price $9.99 $9.99 $9.99
$9.99 / $19.99
for HD audio
$99/year as part
of Amazon Prime
Free Trial 3 months
30 days or
3 months
for $0.99
30 days 30 days
30 day trial of
Amazon Prime
Free
Version
Available
No Yes No No No
Competitive Landscape

25. Retention
More than just a music provider
Generating Emotional Connections
 Share the fun company culture with customers
 Music is social
 Sense of belonging to something greater (through music !)
 Immediate 24/7 chat support
 Making customers feel like ROCKSTARS !
Improving CRM

26. Outline: A Review
• CMF Development
• Looking Toward Growth
• An Underutilized Company Culture
• Retention in an Evolving Marketplace

27. Staying Strong in a Crowded Marketplace