Blockbuster: In Search of Customer-Centricity

By most accounts Blockbuster will soon seek bankruptcy as a last ditch effort to address its mountain of debt and incredibly shrinking business model. While Blockbuster’s immediate term issues are capital structure related, the Blockbuster story is one of a company that has neglected to embrace even the basic tenets of customer-centricity for more than a decade.

Yet again, we have a once dominant category leader who has failed miserably to respond to shifting customer needs and preferences, despite possessing a brand that is virtually synonymous with on demand home entertainment and its ownership of a vast retail network. Most incredibly to me, however, is how Blockbuster–under various regimes–has neglected to utilize what should be their primary asset: a rich customer database and the ability to leverage it to deliver relevant, personalized products and services.

Think about it. Blockbuster’s business model lends itself beautifully to the foundational elements of a customer-centric growth strategy.

Deep Customer Insight. Yup, since it’s a membership driven model they have a pretty good idea of who’s buying what, how often, etc.
Actionable Segmentation. Check. Tracking current value is easy and customers’ needs can be reasonably inferred from the frequency and history of the genres of movies that they rent and buy.
Segment Specific Differentiated Experiences.  Pretty easy too, since they can readily treat different customers differently and have the ability to deliver in store, through direct mail, via email or on the web.

My personal experience demonstrates Blockbuster’s missed opportunities.

Nearly six years ago, when I moved from Chicago to Dallas I had to get a new Blockbuster membership card because I was told membership and customer data was location specific. Never a good idea to have to restart the relationship when you already have my data.

About two years ago, my spending at Blockbuster plummeted when I joined NetFlix. Presumably any kind of rudimentary data analytics would reveal this disturbing trend to the CRM department (if in fact Blockbuster had one) and trigger some sort of marketing campaign to try to win me back. No dice. And while this is my own sample of one experience, I’m pretty sure this has been going on for lots of customers as NetFlix and RedBox’s businesses have been on fire.

During the last few months I’ve been back into Blockbuster several times to rent movies (apparently I have a high tolerance for pain). Did I receive any kind of messages that they were happy to see me back? No, but I did notice each time that the space they had devoted to a snack bar was devoid of customers (“honey, let’s drive past these seven other places that surround Blockbuster because I hear Blockbuster’s Diet Coke is really good”). Did I receive any kind of personalized point of sale offers, or perhaps a request for my email so they could communicate with me in the way I’d like to be communicated with? No, but each time I did get pitched soft drinks, candy and popcorn. Gee, if I didn’t know any better I would think your management were trying to turn Blockbuster into 7-11.

It seems to me that what the Blockbuster brand needs to stand for is home entertainment on my terms, anytime, anywhere. And given the vast amount of product choices out there and that my habits are reasonably predictable, you should be able to curate the options for me and make it easy for me to do business with you. And that all requires great customer data, personalized marketing and business models that are relevant and differentiated. It doesn’t have a lot to do with magazines, candy and soda at the cash wrap.

Unfortunately Blockbuster wasn’t paying attention to these things years ago when they had far more degrees of freedom to act and hadn’t lost many of their valuable customers to the competition.

Blockbuster’s history may have been written. Hopefully you can still write your company’s. If you truly embrace customer-centric thinking it doesn’t have to be an obituary.
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