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Learning from Netflix

Dec. 1, 2010
Don't think DVDs have much to do with the electrical market? Think again.

Like many consumers who did their part to support the U.S. economy by doing some power shopping during Thanksgiving weekend, I purchased a flat-screen television. It looked awesome on the wall of my man-cave (even when it was turned off), and I got it working just in time to see the Kansas Jayhawks get thrashed 35-7 by their bitter rivals, the Missouri Tigers. While watching the game, I began dreaming about how cool it would be to watch future games in — you guessed it — surround sound. My “ancient” DVD and VHS players just weren't going to cut it.

Having successfully upsold myself (no arm-twisting necessary from a high-pressure salesperson) to purchase a Netflix-ready Sony home theater system, a mere 24 hours later I was wirelessly streaming Netflix movies at $7.99 per month (unlimited) to the Lucy man-cave. I bring this all up because — believe it or not — I learned several lessons from this experience directly applicable to the business lives of electrical distributors, independent manufacturers' reps and electrical manufacturers.

Lesson #1. Never underestimate the potential of Americans to go couch-potato and waste a perfectly good sunny day watching television. I plan to market this concept as “Lucy's Law of Convenience.” It relates to electrical marketers because they should be thinking of how to produce company promotions and other marketing materials in a video format that can be displayed in all their beauty on a flat-screen television, iPad or other tablet, cell phone or “old-fashioned” laptop or desktop computer. You don't necessarily need a big-time production company to produce a company video. With one of today's high-definition video cameras available for less than $300, you could be posting content to your company's website or its own YouTube channel.

The home theater system I purchased interfaces very easily with YouTube, should I ever want to check out some wacky video snippets. But it would be quite easy for your company to post training material on a YouTube channel for customers so they can watch it after-hours at home. We can all poke fun at all the dopey, time-wasting videos on YouTube, but it's far more constructive to harness video technology and market our companies right to the customer on his or her couch.

Lesson #2. If there's an easier way to buy something they want, U.S consumers will find it. Everyone loved Blockbuster when it first came to town because of the convenience of driving to one of their stores to rent a video. But Netflix CEO Reed Hastings sensed that wouldn't be convenient enough for American consumers, and he started offering DVDs by mail. When he figured out Netflix could save customers the walk to their mailboxes and dramatically slash his company's distribution costs by streaming video content directly over the Internet, he essentially blew up this company's way of doing business, all based on Lucy's Law of Convenience. Not bad for a company that one stock analyst said was a “worthless piece or crap” back in 2005, when the stock was trading for $11 per share. Netflix now has 16 million customers and a stock price nearing $200 per share.

Lesson #3. Never underestimate the power of an idea whose time has come. On the surface, it may not seem like electrical distributors, reps and manufacturers can learn much from a company that got its start mailing DVDs through the mail to customers, and within a few years cannibalized its own business by phasing out DVD rentals and enticing customers to instead stream content to their homes.

I am not saying you need to reinvent how you sell electrical products in your market area or product niche. But you can learn from Netflix by identifying core customer desires and then working backwards to develop strategies to satisfy those desires. You may come up with something really radical that helps you become Fortune magazine's “Businessperson of the Year,” like Netflix's CEO. More likely, you will just figure out a much easier way to service a busy customer.

One more note on the Lucy man-cave: As part of my quest to support the U.S. economy on Thanksgiving weekend, I flew solo to Warren Buffett's Nebraska Furniture Mart (with a permission slip from my wife) to purchase a love-seat, comfy chair and ottoman. I'm loving my new man-cave and promise I won't waste too many sunny days down there.

About the Author

Jim Lucy | Editor-in-Chief of Electrical Wholesaling and Electrical Marketing

Jim Lucy has been wandering through the electrical market for more than 40 years, most of the time as an editor for Electrical Wholesaling and Electrical Marketing newsletter, and as a contributing writer for EC&M magazine During that time he and the editorial team for the publications have won numerous national awards for their coverage of the electrical business. He showed an early interest in electricity, when as a youth he had an idea for a hot dog cooker. Unfortunately, the first crude prototype malfunctioned and the arc nearly blew him out of his parents' basement.

Before becoming an editor for Electrical Wholesaling  and Electrical Marketing, he earned a BA degree in journalism and a MA in communications from Glassboro State College, Glassboro, NJ., which is formerly best known as the site of the 1967 summit meeting between President Lyndon Johnson and Russian Premier Aleksei Nikolayevich Kosygin, and now best known as the New Jersey state college that changed its name in 1992 to Rowan University because of a generous $100 million donation by N.J. zillionaire industrialist Henry Rowan. Jim is a Brooklyn-born Jersey Guy happily transplanted with his wife and three sons in the fertile plains of Kansas for the past 30 years. 

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