Blockbuster Client Loyalty Program Case Study,Jonah Guo, Queen's MBA
Client Loyalty Program Study Note: The presentation is designedJonah Guo & Team for the discussion based on the assumed scenario of video service in consumer research course.
We would like to go through this presentation with movies, which are the reason Blockbuster has business and we are here today. Movies remind us of beauty, freedom, and most importantly dream. We enjoy movies because they give us experiences we might never have to a chance go through, they give us different perspectives and inspirations, and they make us to feel scared, angry, and happy. Now let’s start our dream journey>> 0 >> 1 >> 2 >> 3 >> 4 >>
Now Let’s jump to the AGENDA1) Company Overview2) Current Situation3) Consumer Behavior4) Alternatives5) Recommendations6) Take-away
Blockbuster is a leading video rental servicewith 5300+ store in 15 countries.They had some financial issues and are facingchallenges from various channels.But we believe the retail channels will survivebecause people still want options and the retailexperience to explore new films.
Current Situation(Given by Case) Customers purchase coupons up-front loyalty program : each month every fifth rental is free.e.g. If you are a Rocky fan, you can get all the fivemovies to maximize the utility of the coupons. Free
But that’s not the way we watchmovies. What if there is a 6thRocky movie? 4 more movies ?
Or movie series like Harry Potter?Consumer will try to get the “perfect” quantity of filmsto maximize the coupon value. Yet this ruins the experience.2 more?
That’s why we are here today to make the change.For the case practice reason, we will have to makesome assumptions to design our loyalty program.
The coupon is valid for all types of rentalsCustomers rent more than one movie/visit
Consumer Behaviour Complexity the program is simple and the communication is clear
Consumer Behaviour Financial Savings Savings are easy to calculate However the program focus on only financial saving
Consumer Behaviour Payment StructureBecause the customer usually pays thetotal amount of coupons in the beginning,the value of each rental is diminished, so ifa customer rented a movie and decided hedoesn’t want to watch it, or doesn’t havetime, the feeling of the loss is notmagnified because he didn’t pay anythingRIGHT now.Paying the total amount upfront is hard forcustomers, especially for non-regularmovies fans
Consumer Behaviour Time All coupons will expire eventually, which restricts the customers in terms of time, customers will hesitate to participate if they are not regular watchers and they will feel they are spending too much money with no gain Even if you are a regular, you will probably watch a movie per week, which means you might not get to this free 5th rental anyway
Consumer Behaviour Execution Style Coupons are an outdated concept and give a feeling of old, also these coupons require the customer to remember to save the coupon and bring it with them when they next visit the store. Also they can lose their coupons, because they won’t typically keep all of them in their wallets
Consumer Behaviour ValueThis unifies the value for all customers with nodifferentiation between heavy and lightcustomers
Consumer Behaviour The program focuses on satisfying the customer in the traditional way, but it doesn’t Satisfaction increase loyalty or produce delight
Recommendation Pursue Option 1: Gold Membership Develop best customers as brand ambassadors Increase loyalty, ease of rental and improve experience Most popular alternative based on research Option to pursue Option 2 in the future once cost is more feasible