THE CHALLENGE
As a successful entrepreneur running a movie rental business in the small university town of Sackville, N.B., Chris Graham was used to fluctuations in sales. However, he noticed an alarming downward trend while reviewing his weekly sales figures for 2009.
Digging a bit deeper he realized it was primarily due to the ability to legally and illegally acquire movie content from the Internet. The legal side included companies such as iTunes and NetFlix, channels that provided ease of use and convenience for more or less the same cost as hardcopy DVDs. The illegal side consisted of downloaded and shared digital content using a variety of technology tools.
Mr. Graham was obviously concerned about this trend as most of his customers were computer savvy students who could easily shift to the other mediums, leaving him out in the cold. He had to find a way to compete with if his business was going to survive.
THE BACKGROUND
In his high-school yearbook, one of Mr. Graham's friends had predicted he would open a movie rental business. In his spare time, Mr. Graham was often in his basement watching movies. The prediction became a reality in 2003, when Mr. Graham and his wife Lorie branched out from their successful DJ business to set up Back Lot Video in Sackville.
They obtained a small-business loan and Mr. Graham methodically hand-picked every movie for the new venture. The store soon found a niche and thrived in the university-town community.
To counter competition from digital downloading, he and Lorie revisited their experiences in the customer services industry – Lorie used to run a successful hair-dressing business – where the only thing that made a difference was "quality personalized service." He realized that Back Lot Video customers were always interested in his opinions about a movie and over time they started to trust his suggestions and advice.
Mr. Graham leveraged this trust and his "know-your-customer" knowledge to develop his own reviews provide value-added suggestions for other movie picks. He included them on the covers of the DVD jackets and also posted them on his website.
He also realized that although movie reviews were available on the Internet, what they often lacked was an element of trust – the person reading the review may not know the writers or their tastes and preferences. Movie trailers could be deceiving and not provide pertinent information about a film's content.
Another element of Mr. Graham's strategy was to be very selective in his hiring practices by only employing people who had a genuine interest in movies. Once hired, he spent time training them in the "know-your-customer"
mantra.
THE RESULT
By focusing on elements a virtual world cannot provide, Mr. Graham has been able to arrest the downward sales trend and get his business back on terra firma. The strategy is working and he has received positive feedback from customers. Mr. Graham has also been able to attract new clients, primarily through word-of-mouth.
Things look good for the future as he and Lorie continue to come up with new ideas to improve their quality, personalized service.
Special to The Globe and Mail
Nauman Farooqi is an associate professor and chair of the Research Ethics Board in the Ron Joyce Centre for Business Studies of Mount Allison University.
This is one in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Your Business website.