Blockbusters billion-dollar blind spot: a lesson to all Membership organisations

The thought of visiting the local Blockbuster store with your membership card in hand, brings a warming sense of nostalgia for an 80s child like me.

But what’s the story behind the demise of this iconic membership business?

In its prime in 2004, Blockbuster boasted 9,000 stores worldwide, with revenues of $6 billion and a strong reputation in the form of a firm family favourite for entertainment.

Yet, by 2010, it had filed for bankruptcy.

What went so wrong in such little time?

In short, Blockbuster rested on their laurels. For a long time, they had a strong membership with revenues significantly reliant upon late fees. Yet they failed to realise that this very revenue stream was actually a cause of major frustration amongst their members. Blinded by their short-term gains, they overlooked the building long-term impact of their members dissatisfaction.

Pair this up with a lack of investment in consumer research and creating strategies on what’s building revenue rather than insight, was a risky move waiting to materialise into one heck of a problem.

Now, in a world that stands still, this may have been ok, but we all know too well, nothing stands still for very long. In this case, Blockbuster’s blind spot was brought into clear view by the rise of Netflix; a competitor that shook the industry up, like a spicy Margarita.

Netflix, in stark contrast to Blockbuster smartly invested heavily in consumer research, to then build strategies and a business model that used the ever-so-important insight to put their membership wants and needs front and centre. Nor did they stop at just listening to their members, they analysed the data and what it was telling them to anticipate what their members would want next. Smart ay?!

Learning from hard lessons

For membership organisations, the lesson is very clear.

Your value proposition is not set in stone.

Using stats from MemberWise, 72% of membership professionals cited ‘improving member engagement’ as a top priority. Yet only 38% believe their current proposition is fit for the future. This speaks volumes and demonstrates that a gap between strategy and action can be a monumental risk to the survival of a membership organisation.

Blockbuster tried to respond to the moves and shakes of their new competitor, but it was too little and too late.

How to create a dynamic proposition

Keeping your proposition fit for the future doesn’t have to feel like you’re changing the world. But there is one key that unlocks the door if that key is forged with precision.

That key is creating a culture that is always member focussed in every single way. I’m not just talking about marketing or slick processes. I’m talking about embodiment, values, HR policies, taxonomy…the list goes on. If you can achieve this, you will find the ongoing review and evolution of your proposition becomes second nature because being wholly member focussed is the DNA of your organisation.

Here are some steps you can take to begin your evolution:

Research: What do your members want, what do they value, what causes them pain. Look at your data and identify which persona’s represent your most loyal members, what services/benefits do they consume the most? What are competitors doing? Who has disrupted your industry and why?
Involve & engage: Invite your members to be part of a steering group to keep you grounded and to review and shape your proposition regularly. Create an internal steering group that examines every aspect of the business to assess what could change to embed a truly member focussed culture. Think outside the box on this one because how you treat your staff often reflects on how you treat your members so leave no stone unturned.
Review & refresh: Use all your newfound insight to review and refresh the organisation in every way with your members at the heart of all you do.