It was movie magic! Like a scene out of “The Wizard of Oz” when Dorothy and her friends come face to face with the great and powerful Oz, Reed Hastings and Marc Randolph met with the most dominant business leaders in their industry.
Twenty-three years ago, Hastings and Randolph ran a fledging mail-order company that offered a subscription service for movie rentals. Their meeting was with the world’s largest video rental company. Hastings and Randolph approached mighty Blockbuster Video with an offer to sell tiny Netflix for $50 million.
At the time, Blockbuster was on its way to opening 9,000+ stores with revenue of over $6 billion. The Blockbuster board metaphorically laughed the Netflix boys out of the room. You see, that millennium year they had collected almost $800 million in late fees and sold a ton of popcorn and candy in their retail locations. They saw no value in a subscription service that kept customers at home and didn’t care how long someone kept a DVD.
Within six years, Blockbuster was bankrupt. Netflix’s revenue hit $1 billion the same year. Last year, Netflix’s revenue was $24 billion.
The quality of the DVD movies was the same. The difference is that Netflix capitalized on Blockbuster’s customer pain points.
At the top of the pain list was late fees. A $3 rental could cost you $10 if you returned it a week late. Coming in second was the availability of popular movies. Customers never knew what was in stock until they drove to a store. Next, stores weren’t open 24 hours a day. Customers could only select a new DVD during store hours. And they didn’t have to travel farther than the mailbox to get or return movies.
Uber and Lyft became successful because of the pain points they eliminated. Before then, passengers had to hope to find a taxi cab. They didn’t know how much a ride would cost. They couldn’t select the type or size of car they wanted. And they had to pay cash.
Drivers also received pain relief. They could work the schedule they wanted. Drivers knew they were going to get paid. No skipped fares. And they could pick the routes they wanted. Since riders and drivers were vetted, there was little chance of danger on both ends.
Companies like Lyft, Uber and Netflix are known as disrupters. They shake up an industry by casting away or ignoring “Business as Usual.” And the phrase “this is how we’ve always done it” has no value.
You don’t have to wait for the next disrupter to come to your town. You only need to learn your customers’ pain points and work to eliminate them. Here are a couple of places to look.
- Forty percent of all homes purchased in 2023 were bought by people born before 1964. New homes mean new home furnishings. A booming business with baby boomers can be yours if you offer products, services and a path to purchase that is consistent with that generation. Cash is king. Comfort is paramount. Memaw and PawPaw really do shop on the web, but they buy in brick and mortar. They buy from people they like and normally are not in a hurry once in the store.
- Gen Z is the next powerful upcoming purchasing group. They love to text. They often have a negative view of phone calls and see them as potentially confrontational. Adding a text option on your website is a must if you want to capture the dollars they are spending. They value convenience and expect quick delivery and easy returns.
- HENRYs. This group is High Earners, Not Rich Yet. Two high-income working people in one family means not much time for shopping and less time to receive deliveries. They cannot accommodate a normal 8 a.m.-5 p.m. service window. Your website must be e-commerce ready if you’re going to grab this group.
- Helicopter parents are a group that hovers over young Chloe and Caden and take them on every shopping trip. They demand a clean and safe environment in the store — that includes the bathroom. If you don’t meet those standards, they’ll spin around and be back in the Subaru Forester faster than you can say “Have some Purell.” You’d be wise to have some distracting activities for the youngsters so Mom and Dad can shop. And mention the value of sleep for junior athletes and students.
Attracting new shoppers is hard these days. Once you have their attention, focus on the pleasure of the product, and eliminate the pain of obtaining it. Disrupt your own business. Or else someone will disrupt it for you.
