BLOCKBUSTER On The Block: A Business Lesson For REALTORS and Lenders

By
Mortgage and Lending with SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) NMLS 223495

Blockbuster on the block: Mike in Tucson, AZ mortgage lenderBlockbuster on the block:  "STORE CLOSING ~ ENTIRE STORE ON SALE ~THIS LOCATION ONLY"

The problem?  It's not "this location only." One by one, Blockbuster stores in Tucson are closing.  And it's not just Tucson...

A Consumer Shift
September 22, 2010: WSJ's Mike Spector writes "Blockbuster Inc. is in the final stages of preparing a long-awaited bankruptcy-court filing, marking a milestone in consumers' shift away from brick-and-mortar video stores to films delivered by mail and the Internet."

Blockbuster filed bankruptcy the next day.  Chances are very good that you helped put them in the tank.  "Me?" you say.  Yes, you!  ...and me, and your neighbors, even company employees who signed up with Netflix.

That's the nature of a consumer shift in preference for product delivery.  A new method of delivery makes it easier and/or less expensive to buy the product.  Early adopters try it out, find that it works, and they tell their friends.  Their friends try it, like it, and a shift in customer habits creates a groundswell.  The old delivery method withers and dies.

It's not about loyalty to the brand

Early in the life of Netflix (my customer when I was Product Specialist for OPEX Business Machines Corporation) Blockbuster studied the upstart Netflix. 

Someone at Blockbuster came to the conclusion that the alternative business model (originally mailing DVDs through the mail) was not a significant threat because Blockbuster had achieved such significant brand loyalty.  What they failed to see was that technology was changing and evolving, and that Netflix, with its huge database of current customers, was in a superior position to make use of that technology. 

(Blockbuster had a huge database too, but it focused on payment processing and late fee collections.  Blockbuster's use of technology revolved around making things easier and more profitable for Blockbuster Inc., not for the customer.)

Consumers weren't loyal to the Blockbuster brand.  They were loyal to their favorite movies!  They were loyal to convenience.  They were loyal to their pocketbooks and their couches, and this is the lesson for Real Estate Agents and Mortgage Lenders.

It's about convenience, predictability, reliability ...and finally, price

Convenience:  We're a nation of very busy couch potatoes.  We work hard to keep and maintain the lifestyle we want, and we've come to expect that businesses we patronize will make things easy for us.

Predictability: We've come to expect that things will work right the first time.

Reliability:  We've come to expect that things will work right every time

Price:  Price point is not the beginning of the business success equation.  If you're a REALTOR, you know that!  FSBOs (For Sale By Owner) list their homes with realty companies something like 70% of the time after 60 days of not getting what they want ~ the sale of their house. 

Takeaway

Let's look at technology as a benefit for our customer or client, and see how we can innovate for them.  Let's realize that technology is changing more than our marketing strategy.  It's changing the way we deliver our services.

If your company hasn't realized this, if it hasn't taken steps to make the delivery of services convenient, predictable, reliable and less expensive, you might want to start looking for a company who is headed down that road.

Your company may be headed down a dead end street.

_____________________

I'm Mike in Tucson, your preferred Tucson Arizona Mortgage Lender.

NMLS #223495

SUNSTREET MORTGAGE llc ~ Correspondent Mortgage Bank
Offices (AZ) Mesa, Tucson, Sierra Vista, Nogales, and Albuquerque, NM.

 

 

Comments (93)

Doug Kaller
Academy Mortgage, Reno, NV - Reno, NV

 

The way people shop and get information has radically changed. Those who adapt will survive and thrive. Companies like Dell Computer have multiplied their sales by creating marketing strategies based around Social Media. I find learning and utilizing the technology to be very difficult. If I am unwilling to make the effort, I might as well retire.

 

 

Jan 29, 2011 05:39 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Good to learn from this business blunder. I personally still do not like Netflix but I do like RedBox because it's only a $1 vs. Blockbuster which is $4.50 for the same movie for one night. I guess they thought that we can't add?  I saw the same signs on one in my area just yesterday.

Jan 29, 2011 05:39 AM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos
Hi Mike, I kept waiting for you to haul out the " Buggy whips " analogy. Thanks for a great read.
Jan 29, 2011 06:17 AM
Anonymous
Ken Anderson

A good post, Mike, and an interesting discussion.  I've been in real estate in various mutations for over 37 years.  In that time, I've seen many paradigm shifts.  Sometimes I'm in the vanguard, sometimes just behind it.  Always, I've shifted my behavior with changing markets, attitudes and tools.  I began my career in the sincere and heartfelt belief that I was in a service industry and that demanded service to my client.  By that I mean fulfilling and surpassing their expectations.  Maintaining contact all the way through the process.  Hand-holding and understanding their concerns, deficiencies and fears.  As years went by and things changed, I found that I welcomed changes, many of which were helpful to my clients, and also myself.  Some I thought ill-founded and proved to be so, others frivilous and some just pompous.  Mostly though, I enjoy learning, and relish the challenge of something new.  With the right attitude, it can be fun.  It can get carried away, and become confusing, even self-deprecating if not planned well, or if one heeds the wrong advice (which, in this new paradigm, there is surfeit! :)  In the end, it is the attitude of the realtor that still matters.  If it is in your heartfelt belief that service, loyalty and care of your client is the fulcrum upon which your career and business is what success is, you will become one with the vehicles that require you to provide the same.  You will seek out and learn the tools that you will need to do the job.  You will adjust your approach and make the necessary changes.  Success and earnings will undoubtedly follow as light the day.

Jan 29, 2011 06:37 AM
#77
Anonymous
frieswiththat

It is interesting that as Block Buster goes bust, we can witness the explosion of it's replacement, Red Box. That's the kiosk you see at the grocery, Walmart and in the foyer of many big box stores.

It's not the product, as pointed out, it the conveince, the delivery.

Change is not necessary, survival is not guaranteeed.

Jan 29, 2011 06:55 AM
#78
Marshall Brown
Mid America Inspection Services, LLC - Fargo, ND
BSEE, CHI

Mike, Just living in Tucson demonstrates some of the change businesses must endure. When I was in high school there I went to SAS, now Fenster, which was 14 miles up on the edge of the national forest at the foot of Sabino and Bear canyons.  On Saturdays we were bused to town for dates, etc. Imagine that bus ride now in terms of changes. The piece of property on the SW corner of what would become Cloud Road and Tanque Verdi was offered to my grandfather for about $5,000, (1956). I would consider that a significant change from today's price. Incidentally he turned it down because he knew Tucson would never expand that far to the East.

As you implied, what we all know about our businesses today may be dead wrong tomorrow if we don't keep our eye on the changes going on around us.

Jan 29, 2011 07:07 AM
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

In any business you must adapt to teh economy and your potential customer to stay on top and viable.

Jan 29, 2011 07:47 AM
Dennis Neal
RE/MAX, Big Bear - Big Bear Lake, CA
Your Home Sold in 21 Days or We Sell It For Free

We must look ahead, create change or be left behind.

Jan 29, 2011 09:13 AM
R Grodin
Worland, WY

We Have A Duty To Our Clients to Embrace Technological Progress.

Jan 29, 2011 10:03 AM
Jody Moore
Blue Shirt Photography | SendOutCards - Lexington, KY
Great discussion. I loved Blockbuster, but there's 3 Redboxes within the same distance as Blockbuster and Redboxes is only a dollar a night. This year I had to make a change. My customers were wanting invoices electronically and photos ASAP. I changed my invoicing system that made it quick and easy to email. I used to deliver the photos on CD because the files were to large to email. Now I upload the photos to a server and my customer gets notification as soon as they're finished. I guess the next change will be the purchase of a video camera. :-) Jody
Jan 29, 2011 11:31 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Our tiny town once had two "mom and pop" video stores... now only the grocery store offers video rentals.

Your blog offers good food for thought... what is the next trend? How can you put yourself ahead of the curve and be ready to lead the pack?

Jan 29, 2011 11:37 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I liked the people in the local store, but we did the blockbuster mail thing (like Netflix) and they were hard to deal with.

Jan 29, 2011 12:59 PM
Brad Hornshaw
Brad Hornshaw Realtor Lynnwood, Bothell, Everett - Lynnwood, WA
Realtor, Listing Agent, Buyers Agent, Investments

Hi Mike

I think the world has always been that way and probably always will be......Brad

Jan 29, 2011 02:58 PM
Lynn M. Bower
John R Wood Realtors - Naples, FL
PA, ABR, GRI, RSPS, AHWD, PMN, CNE

Mike~ great post...Gee, give the clients what they want even though they may not ask for it. Blockbuster might have not been listening. A lot of good food for thought here....and some great responses as well

Jan 29, 2011 10:43 PM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Haven Express @ Keller Williams Arizona Realty

Ironic for those of us in real estate that "bricks and mortar" establishments continue to fade away.

Jan 30, 2011 01:03 AM
Anonymous
Gayle Martin

It's been known for sometime, via comsumer reports on TV news programs, that Blockbuster was in the business of NOT processing the videos that their customers returned on time so they could illegally charge late them fess, and it was the customer's word against theirs.  Well, guess what, that's a form of fraud, and people don't like getting ripped off.  They told their friends about being ripped off, and their friends told their friend about people being ripped off, so Blockbuster was already in trouble before Netflix came along.  Blockbuster also tried doing a DVD by mail service similar to Netflix, (but with all kinds hidden late fees), and it too failed miserably. Blockbuster was banking on people being stupid, but they weren't stupid.  Netfiix is an honest company, Blockbuster is not, and the public chose to do business with an honest company.

The other lesson to be learned here is about doing business honestly, and treating customers fairly. Blockbuster was a shady company, everyone knew it was a shady company, and it continues to be a dishonest company trying to pull the wool over the public's eyes with their bogus, "this store only closing" shell game.  You can only fool the people for so long, then it catches up with you.  I for one am glad to see Blockbuster go out of business.  They had it coming, and I hope that the higher ups at Blockbuster, the ones who made the decisions to rip off their customers, end up in the poor house, or better yet, the big house.  Since they made their money dishonestly they certainly don't deserver to keep it.  What they deserve to spend the rest of their lives in disgrace and poverty.

Jan 30, 2011 02:31 AM
#89
Scott Bingham
BeaufortHomeTeam / Ballenger Realty - Beaufort, SC
www.BeaufortHomeNews.com

Blockbuster's use of technology revolved around making things easier and more profitable for Blockbuster Inc., not for the customer.)

Dynamtie quote- Should be burnt into all of our brains!  Tech is so much fun, but is it making life easier for the consumer?

 

Thanks!

Jan 31, 2011 04:21 AM
John Bridges
Realty Executives - Tucson, AZ

Mike Great Post!!! and so glad you got featured. I Actually bought a few movies there because I shop at that Fry's.

Here is my first thought about your post. I wonder how the Casa Video is doing on Speedway. It's still there and everytime i drive by there are plenty of people in and out and cars in the parking lot. I bet it has something to do with the HUGE selection that is there. 

I agree with the point you have made. But do not forget that if you have nothing to set yourself apart from the competition you will be forgotten. I think that was Blockbusters fall. A huge national chain outlived by a local business because they have "everything" even netflix can't compete with that.....not yet :)

Jan 31, 2011 05:44 AM
Jerry Gray
Wilkinson ERA Real Estate - Winston-Salem, NC
Serving the Triad Since 1980

Great post! A Realtor has to keep an open mind to ideas and concepts.

 

Jerry Gray CRB,CRS,GRI,SFR / Allen Tate Realtors / Winston Salem, NC / 336-918-2433

Jan 31, 2011 08:44 AM
Ann Heitland
Retired from RE/MAX Peak Properties - Flagstaff, AZ
Retired from Flagstaff Real Estate Sales

Great post, Mike. BlockBuster closed here in Flagstaff over a year ago. Most of the little independants are gone. Hollywood Video's big story became history and is now a big new Verizon Store (large enough to handle the Iphone crowd that will show up soon).

I'm a little ticked at Netflicks right now myself because they are pushing streaming instead of the mail-back service, but they are doing it nicely and, because they have been so good, I trust that I'll like the result in the end.

 

Jan 31, 2011 09:40 AM

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