We hope Blockbuster's lawyers have a lot of free time on their hands... because they may get very busy dealing with a class action suit should they decide to proceed with their proposed plan to raise the price of some of their online memberships.
Hacking Netflix shared an e-mail earlier today from Blockbuster that is being sent to some Blockbuster Online members. The e-mail invites them to take a survey about a potential price increase for its Total Access plan. That's Blockbuster's highly touted - and highly successful - new initiative that enables its members to return DVDs rented online at a Blockbuster store, with the option to exchange the returned DVDs for "free" rentals at the store.
Blockbuster Online has been exploring different ideas of how to meet the needs of members who can not take advantage of the Blockbuster Total Access program for one reason or another.
Really? Don't you mean you wish to raise the rates of the far greater number who do take advantage of the program, because it's unprofitable? This reminds me of stores who charge more when you use your credit card and say they're offering a "cash discount."
One of the ideas is to offer Mail-Only plans, which would allow members to receive and return DVDs only by mail, without the option to return them at a Blockbuster store and exchange them for free in-store movies.
At the same time that the Mail-Only plans are introduced, Blockbuster Total Access may also experience price changes to reflect the added value that this program represents compared to the Mail-Only options.
You can read the full text (and weep) here, along with a proposed e-mail announcing the change(s) and the price increase.
You know, in sales and marketing, managing expectations is key. And Blockbuster has bungled this one Big Time (as the Vice President might say). First, they announced a "complimentary upgrade" to their new Total Access service. Then they promoted the heck out of it with TV commercials and in-store signs.
The strategy not only worked to change existing customers' minds regarding the value of their Blockbuster membership, but helped them close out the 4th Quarter of last year with greater growth than their online rival Netflix and meet the 2006 subscriber goals that many doubted they could. The Total Access program is a significant point of difference with the service offered by Netflix, and was instrumental in convincing many Netflix members to switch to Blockbuster.
Now, they want to impose a fee (the one-at-a-time membership currently at $9.99 would go to $14.99 according to the e-mail quoted on the Hacking Netflix site) to all those folks who took advantage of the "complimentary upgrade."
That's what's called a "negative option" - you have to specifically opt out of the plan or you'll be charged - and the courts generally frown upon that practice. Nobody liked it when TCS did it back in the 80s when they launched Starz and Encore and nobody liked it when Netflix proposed it last year to settle their class action lawsuit.
They have every right to charge whatever they like, but they'd keep more customers if they tell them upfront what they're doing and that their new service feature, while initially free, may be available later only at an additional charge.
Maybe that's what they thought they were doing when they referred to it as a "complimentary upgrade." Or maybe they genuinely thought the increased foot traffic would lead to increased sales of high margin items like soda, candy, popcorn and previously-viewed movies. That would certainly pay for the increased costs associated with the Total Access program... but those sales haven't materialized.
That may have more to do with poor training of the Blockbuster clerks than anything else. I was at a Blockbuster store this weekend with Mrs. Dossier doing the free in-store exchange thang (she's a Total Access member) and the clerk checking us out was very eager to "upsell" us... asking if we needed candy or soda and imploring us to check out the bin of movies marked "4 for $20."
Clearly, they have some kind of incentive in place for their store personnel who hit required sales targets. But the whole thing reeked of desperation and insincerity... she was completely lifeless and never even looked up at us throughout the entire transaction. Then she asked if we wanted a bag for our DVDs, which made me think that Blockbuster really must be in serious financial trouble.
It's always the little things that go first, isn't it? The olive in the salad on the airplane... and now the bag at Blockbuster. (Without fail, one way to tell if a long-running show is about to close on Broadway is to visit the box office on a sweltering Summer day. if the air conditioning is not on, the show is cutting costs and will soon shutter.)
Of course, they could just be going "green," you know, becoming more friendly to the environment. (On second thought... it's not easy being green: while in the store, I saw that they had a bunch of copies of "An Inconvenient Truth" that had been taken out of their biodegradable post-consumer-waste packaging and placed into standard plastic packaging.)
Mrs. Dossier - who, by the way, has not received the Blockbuster survey e-mail - and I love the Total Access program. In fact, it's why we've stayed with Blockbuster. There's a brick and mortar location just a few blocks from our house and the in-store exchange rocks!
We doubt that Big Blue is losing any money on us, though, even if we don't buy candy and popcorn. We're one of those couples who keep the DVDs we receive through the mail on top of the TV for two weeks or more gathering dust.
The problem is not just a lack of time... it's mostly because our rental queue is filled with artsy fartsy esoteric and foreign fare and when these DVDs arrive, we each point fingers accusing the other of ordering it and neither of us wants to see it. Eventually, we take a walk and exchange them for some flicks we're actually in the mood to see.
Without a doubt, the Total Access program has tremendously enhanced our relationship with Blockbuster, but there's no way we'd pay more for the privilege of returning in-store, especially since they gave us a "complimentary upgrade." The only reason we go to the store is because the rentals are "free." Once we're there, we encounter the same problems - lack of titles, rude or disinterested staff - that drove us to online rentals in the first place.
And, not for nothing, poor queue management often means we're sent through the mail the same DVD we just rented in-store. Where's the added value there?
So if Blockbuster chooses to radically alter the Total Access program, we'll cancel. And I believe many others will, too.