Revenge of the movie buff
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By Stuart Skorman -- Video Business, 2/23/2007
FEB. 23 | In the ’80s, my video rental chain, Empire Video, had the highest-volume stores in the country because we focused on picky, hard-to-please movie buffs. Later, this movie-buff niche strategy would be the secret to my success with the first online video store, Reel.com—which I sold for $100 million in 1998. And I’m now planning a third video business, a new-generation movie recommendation system, also driven by a movie-buff market strategy.
Skorman
You might assume that a movie-buff strategy is only for Web entrepreneurs like myself and Reed Hastings, but you could not be more wrong. For I am convinced that the only way for bricks-and-mortar video stores to survive is to completely focus on movie-buff niche markets.
And if you think Netflix has this niche covered, think again!
Netflix uses computerized collaborative filtering to suggest movies. In other words, Netflix has been stealing customers from you partly because they claim that their computers are better than your people at helping your customers find the movie they want. Don’t believe it. If you have the right people, your clerks can do better.
Look, I’m very familiar with collaborative filtering, since eight years ago, my Web site, Reel.com, was a pioneer in that field. I can tell you from experience that no technology beats a knowledgeable, experienced staff person talking face-to-face with your customer.
The key to beating a software-driven business like Netflix is to have the right people in place. Great service is the best way to fight Netflix, and I’m not just talking about super-friendly clerks. I’m talking about making sure that your entire staff consists of knowledgeable, articulate movie experts who will impress and delight your most picky movie-buff customers.
You need to be constantly training and motivating your employees to achieve this level of expertise. Profit sharing and aggressive employee bonus programs are crucial. For example, our most successful bonus program used gift certificates to local restaurants. We’d give away 10 a week per store. It didn’t break the bank, but it sure made a difference to our employees.
If you want to know which neighborhoods have video stores with great customer service, just ask Reed Hastings at Netflix. He can tell you … because those are the neighborhoods where he has a hard time getting customers.
Stuart Skorman is a former video retailer who founded Empire Video, Reel.com and Elephant Pharmacy. His book, Confessions of a Serial Entrepreneur, was just published by Jossey-Bass.
