Blockbuster Closing 20% of Stores
Blockbuster announced yesterday that due to continued competition and economic conditions, they are considering closing 960 stores leaving 3,440 open. Now I am not a video rental market researcher, but how did Blockbuster miss the boat again on changing demographics and convenience?
First, NetFlix came in and changed the video rental business model and Blockbuster was forced to eventually follow suit allowing you to rent online and return in store. Second, RedBox secures prominent retailers such as Wal-Mart, making renting videos as convenient as opening a browser. I’ll admit, with a community Wal-Mart across the street, it’s become very easy to get the latest releases. Lastly, the advent of movies on demand with my TV service provider (Verizon Fios) has been the most convenient of all, albeit a limited selection.
I used NetFlix for a while and found it promising, but for me, renting movies just seems to be more spontaneous and I found I was sending them back unwatched. Additionally, with community centralized mailboxes, it was one more thing I had to remember to do. Almost as big of a hassle as having to send my mom physical pictures because she’s not on Facebook, email or Flickr. I can’t even get her to surf the web. She’s too afraid of fraud and identity theft. I think I still have a newspaper article sitting around that I was supposed to send her because it featured a quote from me. Back to the topic at hand, I know a ton of people who rave about NetFlix and use it regularly.
Contrary to this post, I still think there is a place for video rental stores. If anything, to browse an old favorite that you can’t recall the name of but will recognize when you see it on the shelf. Think “Three O’Clock High“. I swear I watched parts of that movie 6 times but never saw it completely through. Now “The Onion News” video in that post is right on. How often would you get there and the movie isn’t available? NetFlix would argue you could just browse online, but not sure I would always find it by category or by surfing.
Was it the Innovator’s Dilemma?
Often times, as Clayton M. Christensen pointed out, a new business idea will arise in a large company and it won’t be investigated or trialed because the projected rate of return doesn’t meet Finance’s established internal rate of return for investment. I would be surprised if someone mid-level in the company or even lower, suggested an online rental model or shared retail model and it was shot down as either not a big enough market, too complex, or not a high enough return. However, in RedBox’s case, the idea may have been so disruptive and new, it was incomprehensible for internal decision makers to even consider as viable.
Grow Bigger Ear’s with Social Media
Social media has demonstrated to be an effective platform for engaging customers and prospective customers in honest conversation. However, more important is the power in listening to conversations about brands, technologies and demographics as part of an ongoing research effort. You can still engage in expensive focus groups, ask all sorts of questions 8 different ways, but actually listening to activity can be very powerful.
A Few Ways to Engage Customers on Social Media to Listen a Get Feedback?
- Monitor RedBox, NetFlix and Blockbuster with Google Alerts, or an enterprise social media monitoring platform such as Scout Labs or Radian6. See a review by @jasonfalls here.
- Seek out blogs, in the process above, that are talking about about your brand and their experiences vs. competitors to get a feel for their pain, joy, or concern and how those behaviors can affect loyalty and business models
- Create polls on Twitter, Facebook, LinkedIn, and YouTube with incentives for customers to participate. I know I get a request to take a Starbuck’s survey or grocery store survey fairly frequently face to face. Were they doing this at all in store to get feedback?
- Leverage social media for customer service and address it head on as ComCast, Dell and many other companies are.
- When you discover a customer talking about using the competitor, invite them to comment on their experience and what they liked or disliked. If they seem willing to give you honest feedback, pick up the phone and call them. You never know when that person has broad social influence or a top ranked blog. My goal is AdAge 50 or Alltop in Marketing.
- When a customer mentions blockbuster in a positive light, RT and potential offer them an outright promotion for mentioning your brand to build loyalty
- Sponsor TweetUps or other events to candidly talk with potential customers in a social setting with street teams armed with the ability to capture feedback and ideas. You would be surprised how honest customers will be. Heck, come out and sponsor our TweetUp for the Social Media Club Dallas 9/24 at 8pm and you are bound to get some good feedback. Especially if the $4 Mojito’s are still rolling. Bengal Coast is hosting on Oak Lawn in Dallas.
This is just a short list to start a discussion. I’m sure many of you in market research have some other brilliant ideas. Let me know your thoughts below.
Mike D. Merrill (@mikedmerrill)
Mike Merrill is Director of Marketing at ReachLocal and Chief Bacon Maker and Marketing Strategist of Bacon Marketing. He is also Chairman of the Social Media Club of Dallas and co-organizer of Ignite Dallas.