Lessons from the local DVD shop
by Juarez Lowe in People+Organizations | 1 Comment | Add your comment

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I teach classes on leadership and professional skills. One of the frequently asked questions in my classes is for an example of a well-run business. People often look at GE, Nike, Apple and other multi nationals.

I like sharing the example of the local pirated DVD shop. This shop is quite small (less 500 square feet) and ironically located in front of a police station.

1.Keep your overheads low but invest in what matters.
By only using such a small space, the shop maintains low overheads. “Keep your costs down!” is something you will find in any business handbook. Here, the DVD shop has invested in online inventories, handheld radios, computer systems but they have cut down on the costs they don’t need.

Focus on the key things that your business needs. Prioritize your purchases for your businesses and your business will be more likely to succeed.

2. Know your customer.
Here’s where these guys are great. When you have only one main outlet, you have to find alternative ways of reaching your customers. They keep track of what type of DVDs (especially box sets) you like. They send you a text message when the next season comes in. They also have a password protected website listing all the DVDs that they have in stock.

How often do you talk to your existing customers? Strangely enough, existing customers are often neglected once acquired. Make sure you touch base at least once a quarter with your key customers.

3. Have a clear product range
In the shop, they help you chose DVDs by listing the top box sets and movies based on yahoo lists. They are also quite open about the quality and tell you which copies where shot in the cinema (generally poor quality copies), 95% (from digital sample videos), 100% (which are from the digital master – yes don’t ask how they get it) as well as Blu-ray copies (which are taken from a Blu-ray disc) and actual Blu-ray discs. The customer is made aware of the differences, educated about the differences and this is reflected in the pricing scheme.

If you have many products in your line up, make sure everyone in the company knows, believes and is able to communicate the rationale behind the different products so that your customer understands what they are paying for.

4. Have great service
They are one of the few shops in Malaysia that have a no questions asked returns or exchange policy. They also help recommend DVDs to you based on your preferences (similar to an Amazon style recommendation).

Good service is essential, great service gets talked about. Which one do you want for your business? Define what great service is and ensure that everyone in your organization practices that.5. Get your existing customers to use more
A loyalty card tracks your DVD purchases. When you reach 10 discs, you can redeem it for a free disc. This makes you want to get two more discs if you have already purchased 8 just to get that free disc.

The cost of acquiring customers is increasing. Be smart by focusing on your existing customers to use more as well as making them a source of referrals.

6. Implement process excellence
The DVD shops rarely have any fake DVDs on the premises. This is probably due to the fact that they are illegal and not due the adoption of any Toyota-like just in time practices. Within 5 minutes, they are able to deliver the DVD and put it into the packaging. Their processes could probably be a just in time case study. Even my colleagues working in supply chain are impressed by the speed and error-free operation.

Spend time ensuring that your processes are working well for everything from the customer experience to customer recovery. This will ensure that the business runs smoothly even without key personnel.

Implement these six lessons today and your business will be on the way to breakthrough performance!

ABOUT THE COLUMNIST

Juarez is the CEO and founder of juarezlowe Sdn Bhd (juarezlowe.com). As a lawyer, he has conducted negotiations for the Kuala Lumpur Stock Exchange, Securities Commission, Nestle, Petronas, Boustead, Fima and RHB. In 2002, he received the prestigious Fulbright grant to pursue an MBA at Thunderbird, the Garvin School of International Management where he also became a certified mediator. During his spare time he plays and watches tennis. He also enjoys cooking and eating the results of his cooking (which he shares with his family).

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