Sunday, May 29, 2011

BIG’s Blog: Are Netflix and Just Lucky?

Do you think the folks at Netflix and are just lucky? Let’s review . . .

Netflix, a monthly subscription-based movie service that ships DVDs directly to customers, was started in 1997 by founder and CEO Reed Hastings who was inspired to start the company after being charged late fees for returning a copy of Apollo 13 after the due date. Netflix built its customer platform online and customers go to their Web site to make their movie selections which are shipped for free.

Netflix upended . . . or disrupted . . . the established business model of renting movies at your neighborhood video store. When Netflix first made a public offering of its stock on the New York Stock Exchange, the price per share was $15. Today, the stock trades at over $250 per share.

And what about Blockbuster, the neighborhood brick and mortar movie retailer that was seemingly on every corner? It went bankrupt in 2010. started as an online shoe retailer in 1999. Their CEO has famously said that their sales in 1999 were near nothing. By 2009, they did $1 billion in sales. And Zappos free shipping, 24/7/365 customer service and one year return policy, have set a new standard for traditional mail order merchants.

You can only subscribe to Netflix or purchase merchandise online. They have no brick and mortar stores.

Would either Netflix or Zappos have been successful if they would have printed and mailed catalogs or opened stores in the local strip mall?

When nonprofit fund raisers began using direct mail to solicit donations, weren’t they just using the direct marketing methods modeled after the successful retail mail order companies of their day such as Sears Roebuck and Montgomery Wards?

It can easily be argued that all marketing in the digital age is direct marketing. Aren’t smart nonprofit fund raisers going to again adopt successful direct marketing approaches from today’s successful direct marketing online merchants like Netflix and Zappos?

Isn’t it clear yet that there are alternative fund raising models to direct mail?

Are you going to play around with online, but really not commit to develop a viable cohesive strategy, depending instead on direct mail even as your margins collapse? That sounds like a Blockbuster of a strategy.

The alternative is to adopt new successful strategies and tactics that successfully model methodologies used by Netflix and Zappos to not just keep your fund raising flat, even as direct mail inevitably falls of, but actually growing it to new levels that you never even imagined possible.

By-the-way, the Postal Service reported last week a $747 million dollar net loss in April. In case you are keeping score, that’s $3.3 billion in net losses for this fiscal year.


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