Blockbuster finally gets a strategy. Uh huh.

Kiosk at BART/Muni Station, Photo from Metropolitan Transportation Commission, mtc.ca.gov. Not representative of Blockbuster's kiosks.

I teach customer experience management. In the context of customer relationship management, CEM includes the usual stuff: identifying your customers, differentiating your offering (which now comprises product, service and experience, chopped up in new ways), interacting with customers (or letting them interact with you in new ways), and customizing your offering (or letting people customize it themselves). You know, IDIC.

Well, I teach people about Blockbuster and Netflix when I teach customer experience management, and I gotta say, it drives the point home. All the things you have to do in modern IDIC are done really well by Netflix, and terribly poorly by Blockbuster. Blockbuster has improved things quite a bit, but they basically affirmed their traditional retail model with their new CEO pick. Their online service, designed to compete with Netflix, is OK, and getting better, but Blockbuster does not have a customer culture. Process improvement in their online offering, and supply chain improvements and store closures in their brick-and-mortar offering, just don't show the passion for the customer that Blockbuster needs to show.

That said, check this out. Reuters is reporting that NCR and Blockbuster have joined forces to create DVD vending kiosks. The idea may be the beginning of a new strategy.

And a flawed one. 

Think of it this way: They are trying to put lots of kiosks in convenient places so people can get a movie NOW, no lines, no waiting for something to be mailed to them. The value proposition is CONVENIENCE. And it might work to move some DVDs.

But will it work to restore Blockbuster's brand? Will customers become loyal to Blockbuster through attitude and behavior? That's what wins total return to shareholders.

Think how this is going to play out. The kiosks go in your drug store, your grocery store, maybe your gym. In a corner. With a skirt of trash and obstructed by chairs or baskets or candy bar racks. 

Kiosk at BART/Muni Station, Photo from iekiosk.com. This is an NCR kiosk that may not be representative of Blockbuster's kiosks.

Not a lot of brand building going on. Not a lot of customer data being grabbed and stored and used to serve the customer better next time (although I suppose Blockbuster may have something up their sleeves here, exploiting online channels cross referencing your credit card with your email address). No, it's just Blockbuster leveraging what they know how to do better than Netflix: ship things forward and store them. 

Where's the customer? Where's the exerience? Where's the increasingly intelligent level of service? 

Here's what I see. Netflix will continue to keep medium- to high-use customers, those folks who feel as though they want to have more than some low threshold of DVDs in their queue at all times. 

And Blockbuster will get the rest -- people who don't want to commit to a Netflix subscription, so they can just rent the occasional DVD. 

These are, behaviorally, the worst customers.

Go for it, Blockbuster!