Building a business that can last

by Richard Seltzer, seltzer@samizdat.com, www.samizdat.com

This article was heard on the radio program "The Computer Report," which is broadcast live on WCAP in Lowell, Mass., and is syndicated on WBNW in Boston and WPLM in Plymouth, MA.

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Yesterday, I was walking past our neighborhood video store (a West Coast Video) with my 12-year-old son, Tim. We had returned a game there the day before. Now, with no warning, the place was closed -- the windows were covered with brown paper and a sign indicated that the building was up for rent.

Tim asked what had happened, why had they gone out of business?

I pointed out that they rented and sold the very same videotapes and videogames as several other nearby stores. We went to them mainly because they were the closest. But there really wasn't much else to distinguish this West Coast from the Hollywood Video across the street or the Blockbuster a couple miles away. We might "miss" this particular store; but its passing wouldn't have any effect on our overall rentals -- we'd just rent more at the remaining stores.

Yes, they had special deals like rent-two-for-the-price-of-one on Tuesdays, kid rentals were just $1; and for every 10 you rented there, you got a free rental. But the other stores had deals too. Yes, a deal might encourage you to go to this store on a Tuesday, but having once gone there, there was no special reason for coming back instead of going to a different store. In fact, if you wanted to, you could hop from one store to another, taking advantage of each store's specials when they were on, but not giving any of them the repeat business they wanted and needed. Price-related specials wouldn't win them a loyal audience; it would simply reduce their profits.

Then Tim asked what they could have done that would have helped them survive. We speculated a bit:
-- Have game systems available for customers to try out games they might want to rent.
-- Instead of the overhead monitors running the movies that the staff felt like watching, have VCRs and DVD players available for customers to sample movies.
-- Pick one kind of movie (in addition to the latest releases) and build a great/complete collection, so, regardless of how small the store might be physically, it has the very best selection anywhere around of that particular kind of movie.
-- Put their inventory on the Web, so people could check which movies the store stocks and which ones are available now before leaving home.
-- Give in-store customers ready/handy access to that same Web resource.
-- Allow regular customers ("members") to reserve the movies they want (held for them for 6 hours, 12 hours, maybe even a day).
-- Allow "members" to request email alerts and even automatic reservations for when a movie they want is returned and available.
-- Allow "members" to custom-order movies that the store does not currently stock, for purchase and/or for rental.
-- Give "members" a first shot at the latest releases that they have reserved in advance.
-- Set up movie and game "clubs", like the reading clubs run by libraries; everyone watches the same movie or plays the same game and gets together to talk about it, either physically at the store or online or both (with the folks in the store seeing/hearing the online input, and the folks online seeing/hearing the face-to-face input).
-- Have guest speakers (like some bookstore chains do): game designers and people connected with movies (not necessarily "stars"; this could include behind the scenes and business people, such as the key grip and the publicist and the makeup person), both face-to-face and live over the Internet.

In general, give customers many reasons to come back, to want to be "members", to build loyalty and a sense of community.

While the particulars would differ from one kind of business to another, all retail businesses, both online and physical, and especially those that sell/rent mass-produced brand merchandise, need to come up with features and activities like these, designed to empower customers to make better choices, to serve them better, to give them ways to interact with other customers who have similar interests, to give them new kinds of value in ways that they may have never expected.



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