This post was originally published on Jennifer Fong’s Direct Sales and Social Media blog at http://www.jenfongspeaks.com.

Last night I signed up for NetFlix.  Now I realize that I am probably the last living American to do so.  But I’ve been a Blockbuster Video loyalist for decades, and wasn’t in any hurry to change that status.  But the Netflix business model finally hooked me, when I discovered we could stream videos on demand to our TV through our Wii, and have 1 DVD at a time, all for a monthly fee that was less than 2 videos a month at Blockbuster.

And it really got me to thinking about business models, and how getting too comfortable with ours can cause us to lose touch with what appeals to even our most loyal customers.  You see, Blockbuster was on top for a really long time.  And holding that percentage of the market share, in my opinion, made them short-sighted.  They didn’t even consider the competition anymore.

Yet the competition was innovating.  It started through a mail order service…where DVDs from a list you create online would be shipped to you to keep as long as you like. Then, when you’re done, you ship it back (postage free) and get another DVD on your list.  For some people this was super convenient.  Yet for people like me, their loyalists, we wanted to choose the movie we were in the mood for the night we wanted to watch it.  The NetFlix model didn’t meet that need, and so we stayed with Blockbuster.

The next thing I was aware of was the on-demand model.  We’re not big TV watchers in my house (heck, I’ve still got a VCR!), so we didn’t upgrade to a cable box until we were forced to by our cable company.  At that point we got a whole collection of on-demand programming that we could access for a fee similar to what we would pay at Blockbuster (as well as a collection of free children’s programming).  Without leaving our house.  You couldn’t keep your movie for a week (my kids like to watch things multiple times), but it was sure convenient to not have to leave the house on rainy nights.  We took advantage of some programming through the cable company. Yet we still remained loyal to Blockbuster too, signing up for the loyalty program, etc.

But then Blockbuster began to betray our trust.  They switched from 7 day rentals to 5 day rentals, and didn’t tell anyone (well I assume it was on our paper receipt, but they failed to mention it.)  We racked up late fees as a result (didn’t Blockbuster a while back do away with late fees?  Yeah, not anymore.  We didn’t know that either.)  The loyalists that they should have been rewarding and courting were experiencing betrayal after betrayal.  We didn’t matter to them!

Then I saw a blog post about how we could have 1 DVD at a time in the mail, plus on demand programming to our TV, for under $10 a month through NetFlix. I fiddled a bit and saw how easy it would be to set up. It was a no-brainer.

By the way, have YOU seen any online social efforts to reach me through Blockbuster, either through sponsored blog posts, Twitter, etc.?  To retain my business?  I certainly haven’t. Other than the regular email I get trying to sell me stuff, I never hear from them at all.

And so Blockbuster has lost another loyal customer.  Because they weren’t listening.  And they weren’t paying attention to my needs.

As direct sellers, we have to be very careful that we don’t make the same mistake.  We are VERY fond of our business model, and very slow to change.  And that’s because it works.  But if we don’t continue to adapt to modern technology, and the way our customers want to shop, we could easily go the way of Blockbuster.  It’s hard to believe, but in this day and age there are still direct selling companies that don’t provide their reps with personal websites for shopping.  There are still companies that aren’t reaching out to customers through the social web.  And yet consumers are telling us, loudly, that they EXPECT to be able to interact with their brands online.

Look at Stella and Dot as an example.  How did this direct sales jewelry company get so big so fast? By taking advantage of the social web, and encouraging its reps to do the same.  They haven’t abandoned direct selling principles.  But they’re smart enough to add online technology to the mix, in order to provide their customers with the shopping experience that fits into their lives.  And as a result, they are on par with the Silpadas and Cookie Lees of the world, who have been around a LOT longer.

Customers aren’t going to bend to your traditions.  At least not very long.  They expect you to adapt to them.  Are you prepared to do so?

Your thoughts?

Jennifer Fong

Jennifer Fong helps direct sales companies leverage the power of social media marketing to increase sales and recruiting, and manage online brand perception.  She provides strategic social media consulting to companies, as well as conference speaking and training. To learn more about how Jennifer can help your company, visit http://luceandassociates.com/Jennifer-Fong.html.  You can also check out her direct sales and social media blog at http://www.jenfongspeaks.com, and her Facebook Page at http://facebook.com/jenfongspeaks.