VBG Unleashes Campaign to Lure Back Lost Customers4 Jan, 2002 By: Joan Villa
Consumers who traded in their video membership cards for satellite TV or Web surfing may be ready to end their honeymoon with new technology and return to the rental fold.In fact, this year may just be the most critical time to lure back lost customers with a powerful release slate expected to put Harry Potter, Lord of the Rings, and other fall box office hits on retail shelves mid-year and further invigorate the market, says Minneapolis-based Video Buyers Group (VBG) president Ted Engen. "The opportunity is here right now to really go after that consumer and get them back into renting movies," says Engen, whose 2,000-store buying group will launch a 12-month direct mail marketing campaign in February to do just that. "The timing is right and it's important for our retailers to get very aggressive. We can't just sit back and wait for these [inactive customers] to come in."Postcard & Coupons Out SoonVBG seeks to lure back infrequent and lost customers – especially those converted to satellite TV or Internet use in the past six months – by sending out postcards with coupons, contests and slogans that remind them video is commercial-free and allows them to "watch what you want, when you want." "The focus of this whole campaign is to get the occasional renter in more frequently and to get back that non-renter, that person we haven't seen in six months," he explains.Each postcard will feature one or more new releases for that particular month, beginning with Trimark Home Video's O Feb. 19, that tie into VBG's most successful merchandising sections such as "Now Premiering on Home Video" and "Kids Rule," or their Rental Rewards program for frequent customers. Retailers receive a supply of postcards along with instructions on how to cull their mailing lists to find receptive customers, then the postcards entice those customers back with special offers for free rentals and other rewards, Engen says.Alexander & Associates' research director Greg Durkin agrees the timing is ideal to guide consumers back to video, especially because DVD offers more features that make home entertainment exciting. Retailers have extra DVD rental revenue to spend on advertising and consumers are ready to hear the message because there are fewer Web site and computer ads than a year or two ago to compete for their attention, he notes. "The home video industry right now should be helping the consumer to navigate their way back to traditional entertainment options after the Internet bubble burst and the technology sector marketed an Internet future that didn't exist and probably won't for a number of years now," he asserts.
The Honeymoon is Over
VBG's direct mail idea is based on the buying group's own research showing that consumers who purchase other technologies initially spend large chunks of time exploring what those services have to offer – what Engen calls the "honeymoon" period. For satellite TV, that lasts anywhere from 90 to 120 days, but "once that honeymoon period is over, that's when we want to attack it again as far as getting them back in the video store," he adds.
For Internet use, the honeymoon can extend longer, up to about six months, he notes. "Then after that people find the amount of time that they spend on the Internet becomes less and in some cases it can drop in half, because when they do go on the net it's more for a specific purpose."
Durkin refers to the phenomenon as a learning curve that illustrates how consumers adopt cable or satellite TV in their lives. Initially, he says, they spend hours exploring but after about three months find favorite channels and navigate more efficiently. "The novelty wears off and behavior comes back to a predictable pattern," he explains.
Internet users may take longer to revert to older patterns, in part because a new computer requires a heftier financial investment and comes with the perhaps misguided belief that video-on-demand will soon be available. "They're waiting for it to do something fantastic for their lives but now they realize there's a limit to its functions," Engen says.