Might As Well Close That Barn Door, Blockbuster
Blockbuster is drowning in 1 billion dollars in debt and like the recording industry they’ve long been students of the “One person closes the barn door and three people chase the horse down the street” school of business management.
In his fantastic piece exploring the music industry’s latest attempt to keep CDs relevant called Music Industry Drops CD Prices – Too Late, Damon Brown says of the Johnny Come Lately prescriptive approach:
It’s commendable that the largest music conglomerate, as well as other music companies, has realized that 25% of something is better than 50% of nothing. The problem is it should have happened at least three years ago. When it comes to CD sales, hopefully they’re not expecting a miracle — because there won’t be one.
Blockbuster’s latest venture – rolling out Redbox style kiosks – seems to be another shining example of clearly not getting the point. As a film fanatic and an former Blockbuster customer, none of their new business tactics are going to attract my dollars. I don’t care if they put a kiosk in my bathroom; I’d never use their products/services again. Here’s why:
• In January of 1994, a week after the Northridge Earthquake, Blockbuster charged my mom’s account $109.50 for the destroyed VHS copy of The Crush, when we were finally able to contact them and let them know what had happened. Never mind the valley looked like a war zone, people were living in tent cities in Petit Park or the fact that previously we had been good and loyal customers. No, there were no accommodations made for our circumstances.
• In the summer of 1995, my car was broken into IN MY CARPORT and my bookbag – housing a VHS copy of Terms of Endearment – was stolen. Again, despite proper documentation, Blockbuster was unmoved by my plight and painfully liberated $74.95 from my wallet.
• In the fall of 2007, I returned a copy of Midnight Run to the wrong store and despite correcting my mistake, which involved an hour of searching the store for the DVD only to find it on the manager’s desk with a note saying, “Do not charge customer’s account” – Blockbuster still felt $29.99 was an appropriate punishment.
To be sure, folks do need to be held accountable in cases of neglect, theft or intentional destruction of property. However, neither of the three examples would be indicative of such. Moreover, these are hardly isolated events. Multiply my own losses times the numerous customers with matching tales of woe, who have opted to kick Blockbuster to the curb and most likely you’ll find a decent chunk of that 1 billion dollars.
In writing this entry, I spoke to several former Blockbuster customers who offered similar tales of unreasonable fees, unhelpful customer service reps and billing mistakes, which often involved weeks of phone calls, emails and frustration before being corrected.
Analysts can do all the chow chowing they wish, but Blockbuster’s woes cannot be entirely attributed to shifts in customer viewing habits or new technologies. Customer service – rarely mentioned when companies face economic hardships – is a large factor in the equation and should not be ignored.
Ask Circuit City. When Circuit City instituted its wage management initiatives and fired over 3k of its workforce in favor of cheaper, less knowledgeable sales staff, they were rewarded with an embarrassing erasure from the marketplace
…if you can prevent 5% of your customers from leaving you, you can increase your bottom line profit by 25 – 95%. 82% of lost clients goes somewhere else because of a customer service issue!
Keith Lee states:
So again, 82% of the customers who leave one business and go to another do so because of service related issues… and what’s really key and sad for you and me is that most of those customers don’t bother to complain. They just leave and don’t come back. And then you’re stuck spending a bunch of time and money trying to get new customers into your store, when with some consistent and persistent messages and training to both your team members and customers they would never have left in the first place.
Okay, so it’s likely that Mr. Lee is trying to sell us something, but his point is still valid.
We do want to feel good about the places where we spend our spacebucks. And companies who realize this will always have more business than those who don’t. Of course there are a few, “The game might be crooked but it’s the only one in town.” style industries, but home entertainment is not ONE of them.
Blockbuster does need to innovate and step up its game, but first it needs to remember their customers have choices. And in most cases folks are not eager to shell out large amounts of cash for marginal products and piss poor customer service.