Revenge of the movie buff
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.
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| Submitted by: | Rodger Visitacion (rodgervisitacion@yahoo.com) 7/18/2008 6:09:29 PM PT |
| Location: | San Fran |
| Occupation: | Crook |
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| Submitted by: | Matt 2/26/2007 12:59:00 PM PT |
It is true that Netflix does not have an absolute advantage over the friendly, knowledgable store clerk, but I think the argument you are making is more along the lines of "Netflix will never eliminate the well run independent brick-and-mortar store." I don't think a chain could afford to pay the movie buffs with highly specialized knowledge enough to give them a competitive advantage over Netflix *and* still turn a profit. Netflix will never reach 100% market share, but it would take thousands upon thousands of these friendly movie gurus to seriously threaten them- and I don't think you could find more than 100. Netflix does offer a "Critic's Picks" section with a nice variety of suggestions that aren't based on the recommendation engine, and I'm not sure that the local video store guy can overcome that combination.
| Submitted by: | Rodger Visitacion (beta@iletyou.com) 2/26/2007 11:35:24 AM PT |
| Location: | La Jolla, CA |
| Occupation: | CEO |
I absolutely agree with Mr. Skorman''s comments here. I''m a computer science guy and technology is wonderful, but you have to understand its limitations. No computer will beat a knowledgable, personable human who gets to know his customers - I applaud independent video store owners who have mastered this to succeed. I am co-founder of iLetYou, a new online rental community for DVDs and video games that wants to bring back the feel of personal service (along with diverse choices to suit every movie buff''s desires) to the online video store: If you a video store interested in how we plan to merge technology and personal service, please do contact me and I can provide you with an invite code to our Private Beta.
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