Customize to the Customer

Updated: Nov 9, 2020

Blockbuster’s CEO, John Antioco, will always be known as the man who laughed. After much persistence, Netflix founders, Reed Hastings and Marc Randolph,finally sat down with Antioco to make their pitch—buy Netflix for 50 million dollars. In this partnership, Netflix would run the Blockbuster brand online, while Blockbuster would promote Netflix’s mail-in subscription service instore. Antioco laughed. Blockbuster dominated the video rental industry. With 9,000 retail locations, 60,000 employees, and millions of customers, it seemed absurd to entertain the fledgling Netflix’s offer. They turned it down.

Blockbuster insisted that their customers wanted the complete “movie night experience” they offered: browsing the store’s selection, picking out a video or two, and buying some snacks while they’re at it. The company failed to recognize the rate at which consumers were changing their habits in response to the rise of the internet and the efficiency of online customer service. Their customers were also becoming dissatisfied with the company’s late fee policy, which earned Blockbuster massive amounts of money.

By 2004, Blockbuster’s CEO began to sense that Netflix and Redbox were becoming disruptive to the industry and made changes accordingly. They did away with their late fees and launched the online platform “Total Access.” Unfortunately, they were late to the digital market, and the board was dissatisfied with the downturn in profitability these changes caused. The next CEO promptly reversed his predecessor’s changes in 2007. Blockbuster went bankrupt just three years later.

Identify Specific Needs

Where did Blockbuster go wrong? The company failed to anticipate their customers’ changing needs and operated on a business model that essentially penalized customers to increase profit. Had they understood their consumers, they might have identified these pain points sooner and maintained the changes made. Today, the major streaming companies continue to compete to innovate and cater to customer needs; they strive to provide the best selection at low premiums, create their own content, and partner with filtering companies to personalize their media services.

Predictive Consumption

“You have to spend money to make money” is a well-known English phrase. It means that improving your products to give customers what they need and want is a sound business strategy because consumers are willing to pay more to receive exactly what they want. Companies that operate beyond what customers currently want by anticipating future needs can create a competitive advantage in their industries. Many of today’s online retail services predict what customers want based on their demographic information and search history. By customizing product promotions, companies encourage consumers to purchase more and remain on their websites longer. Predictive services likewise improve customer satisfaction as consumers give preference to companies they perceive as having exactly what they want.

Peripheral Services

Another seemingly counterintuitive practice is capitalizing on returns. A dissatisfied customer can cost far more than a refund; it takes approximately seven positive reviews to offset the public perception of each negative one. Flexible return policies can improve profitability as they “[present the opportunity] for merchants to find success in long-term customer care, stronger consumer engagement, and more sales.”

A 2015 UPS study showed that 67% of online shoppers reviewed the return policy prior to making a purchase. Rigid return policies may discourage those purchases—particularly among new customers or in online venues where product details like sizing can be unpredictable. By meeting the customer’s potential need to return an item, companies set themselves apart from competitors to secure their business. Successful businesses consider this and other peripheral services they can provide.

Customer Collaboration

Developing relationships through high–quality customer service fosters loyalty—a long-term stream of revenue. Many companies employ product testing, where they ask focus groups or media influencers to give feedback on the products they try. This approach can be used to perfect formulas, create positive brand names, and determine target audiences. Others do this through surveys that can be found on their websites, customer receipts, or confirmation emails. 

Asking customers to provide feedback requires that customers believe their opinions are heard and valued. For example, Walmart employs product testers from among their loyal customer base and is currently testing a customer feedback panel that allows its members to earn reward points by taking surveys. Bot technology, like chat bots, can be utilized to ensure a quick turnaround and personalized response using keywords from the customer’s original message. These measures help customers feel that they’ve contributed to the brand and the brand has reciprocated.

Customer Oriented

Effective global leaders are customer oriented. Consumers shape the role of markets and bring purpose and profitability to businesses. Companies that design their strategy with the customer in mind will better meet, communicate, and validate consumer needs.

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