[Re: Loose Cannon: Blockbuster Bets: Will Customers Lose?, Direct Newsline, December 20, 2004]:
This is an excellent article. In looking at the press release on Yahoo, the spin is great but the substance is lacking, and depending on how Blockbuster markets this new program they might do more harm to their brand than the good they hope to create. No late fees sounds wonderful. I love it. Knowing my kids, they will, too, and they will take advantage of it until they violate the “grace period,” which is nothing more than a longer time to return without penalty.
What Blockbuster has cleverly done is replace late fees with a penalty. Miss the return date and you own it. Complain, and Blockbuster will gladly take it back and credit your credit card for a “nominal handling charge” which they do not define and could be more than the late fee was.
As a marketer who believes that a business should do everything possible to stay connected with customers, and do it in the most friendly way possible, I would suggest to Blockbuster management that they build in a contact strategy to “remind” renters that their grace period is about to end and what the consequences are. There are two opportunities: (1) E-MAIL reminders; ask the renter for their e-mail address and send a quick simple text e-mail a couple of days before the grace period ends. (2) TEXT Messaging, the newest, hottest medium that can be sent from the big Blockbuster computer at no cost to the renter. Unfortunately, renters are not always ready to give this information because they fear what will be done with their information. That’s a marketing challenge for Blockbuster.
Blockbuster has a fiduciary obligation to protect its inventory assets, but it must also recognize that its customers are an equally important asset. Without developing a customer-friendly contact strategy, Blockbuster’s New Year announcement may turn into a bust once the penalties kick in.
Bart Foreman
President
Group 3 Marketing
Wayzata, MN
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Excellent analysis of the Blockbuster move, and I agree with your repercussion conclusion. I have one question and two comments.
Question: how many movies do people watch each week? I don’t watch lots of TV to begin with. I have kids with homework, things to read and write, and so on.
Comment One: This could be something David Bach could look at. In The Automatic Millionaire he has something called the “Latte Factor”: if you save and invest the $3+ you spend each day for a latte, you could retire rich. If you saved the movie rental (and late fee/restocking fee) and invested it, you could probably buy a small movie studio by the time you retire.
Comment Two: If I like a movie, I will probably watch it more than once, so I’ll buy it. This is worth it to me for several reasons, not the least of which is I don’t have the extra time to go to a store to rent movies. My time is worth much more to me – and my clients – to waste it on that.
Mark Amtower
www.FederalDirect.com
Ashton, MD
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I’m with you. Isn’t it amazing how many marketing plans are implemented prior to exploring all the ramifications?
Shirley Stevens
Senior Account Executive
The Horah Group
New York, NY
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When I heard about the new Blockbuster policy I was wondering how in heck they were going to make it work. Your explanation was not only entertaining but useful – now I won’t fall victim to the “you just bought it” scam. One other stumbling block to this new policy that occurred to me — aren’t they going to have a lot more out-of-stocks when people come looking for the new releases? Lost sales, disgruntled customers … gee, what a great business plan!
Lauretta Harris
Write Communications Inc.
Scarsdale, NY
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Very good writing and good points! I agree, as a businessman and a customer. I use Netflix. But nothing’s forever in business. I wouldn’t buy any Blockbuster stock just yet.
Lawrence Lee
CEO
I-Designworks, a production of Green Mango Trading
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I enjoyed you insightful critique of Blockbuster’s new rental policy. As I read about the new policy, I recalled my dad’s copy of “Chariots of Fire” that went missing for over a month. Our local video store presented us with a bill of more than $150 (this of course was back in the days that videos cost upwards of $100). Oh, sweet memories!
Rachel Hunt
Demaree Public Relations Group
Germantown, MD
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