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I remember when it was “Be Kind, Rewind”

Now, at Blockbuster, there’s a sticker that says “Be Kind, Return on Time”

Let me tell you about the pitfalls of grace periods.

I used to work for a non-profit professional association in the membership department. Our associations methods were all holdovers from the days when memberships were all processed by postal mail, and stored either in flat files (early years) or Filemaker Databases (later years). New memberships were automatically given a two-week extension from the processing date to “compensate” for the time lag in getting new member materials prepared and mailed back out. Likewise, all renewals were given a handful of ‘extra’ days based on how long it was taking the staff to plow through the piles of paperwork.

In addition, all memberships received a two week grace period post-expiration, during which they could receive full access to the association website. Needless to say, even someone who wasn’t actively gaming the system was getting somewhere from 2 to 6 extra weeks added to the cost of their membership.

Meanwhile, accounting practices monitored all incoming renewals and registrations, but those numbers weren’t meshing with the monthly snapshots of the membership database. Every year, it looked like memberships were falling off, to the tune of 500 people (or 50,000 dollars). Because of the time extensions, at any point the database was showing the active members, plus an extra 10% or so of grace-period members.

Ultimately, we made a command decision and stated that, since all membership services were now managed through the web site, and because web culture is immediate, the practice of membership front-end extensions was terminated, and the grace period was calculated outside the membership expiration date. Last I heard, that had solved the issue, and the office no longer provides membership “snapshots” to the Board of Directors, just monthly reports of the number of new and renewal memberships.

Blockbuster used to say “no more late fees.” But after you had the movie for a week, they’d assume you were keeping it, and charge your credit card the full price of the DVD . If you returned it after this charge, you’d be refunded, but there would be a “restocking fee” of $2 or something. People noticed that this seemed an awful lot like a late fee.

So now it’s “bring it back in a week… or whatever.”

Sounds like the result of a compromise.

Stakeholder A wants 2 day rentals to maximize revenues; the faster turnover you can get, the more times a title can be rented out, and hence more revenue. Stakeholder B doesn’t want to be a dickhead to customers, not because he’s a nice guy but because he has an idea that being a jerk may sooner or later hurt sales. And out comes a compromise: something that doesn’t really make anyone happy, but you can’t really expect anything better to come along.

I think the “Be kind, return on time” sticket is a giveaway as to why Blockbuster don’t just call it a week-long rental; if they really were all week long rentals then they would very likely need a lot more stock of certain titles to cope with people not bringing the movie back in the normal timeframe. By using two distinct timeframes, they are encouraging peopel to return within the first, but not punishing them if they don’t.

Amazon’s reasons for doing this are clearly business-driven, though; much like (auto-expiring) credit vouchers being given instead of refunds, the intention is to lock-in custom, and encourage it to be used quickly.

So 2 days is actually 9 days. 7 days is 14 days. And 18 months is actually 24 months. The extra time is nice, but it’s too bad people don’t just say what they mean anymore.

I’m just guessing here, but it’s probably because if they said you could keep it for 9 days, most people would keep it for 9 days. If they say 2+grace, there will be a bunch of people who return after 2 days.

If the studios would pull their heads out of their butts and we had a real broadband network in this country, we could have on-demand movies in our homes.

Unfortunately, the buggy whip and horseshoe industries are lobbying hard to kill off the noisy, polluting automobile.

Its a typical case of a company not assuming the best from their customer.

Perhaps web companies may benefit from assuming the most of their clients, they actually do have a savvy and sophisticated demographic of users.

The ‘users’ of blockbuster brick and mortar stores may not benefit so much from being given the benefit of the doubt.

I agree with Siddharta. And I don’t think the grace period is really even advertised is it? Its more like if you ask about it they’ll tell you but for people who don’t ask it’s due in two days. Its just a built in padding for customers.

I’ve become a fan of Blockbuster again. It’s a great deal. You have all the qualities of Netflix with a store down the street. My online account applies offline too, I don’t have to wait for a movie in the mail. Seems to me they’ve handled the competition of Netflix quite well.

You forget about the Take Away.

You’re renting the movie for two days. That’s what you’re paying for, a 2-day movie rental. Except now, they’ve decided to give you a 7-day grace period. You’re not paying, technically, for the grace period – you’re paying for the 2-day rental period.

Now, if they change the grace period (say, make it smaller or remove it entirely), they’re changing the grace period. The 2-day rental stays the same – they haven’t taken away from the rental period.

But if they simply said “Hey, these are now 9-day rentals,” then later had to revert back to some smaller period, they’ve just taken away from the rental period.

Let me be clear – I agree with your point. Just call a spade a spade and be done with it. But this move on BB’s part optimizes their ability to change the agreement without appearing to reduce their core offering (the 2-day rental).

I believe that both Jim and Siddharta are right. Blockbuster doesn’t want people to really use those nine days and it also wants the option to shorten/revoke the grace period completely.

Jim’s point sounds very similar to how some companies will give a salary of x with a bonus of y rather than a combined value of z. It would be hard to justify lowering a person’s salary unless they screwed up (or work for the airlines) but they can adjust the bonus from year to year as company profits permit. While z might be lower either way, a bonus is still a “gift”.

Reminds me of that scene with Steve Martin in The Jerk…

“I know we’ve only known each other four weeks and three days, but to me it seems like nine weeks and five days. The first day seemed like a week and the second day seemed like five days. And the third day seemed like a week again and the fourth day seemed like eight days. And the fifth day you went to see your mother and that seemed just like a day, and then you came back and later on the sixth day, in the evening, when we saw each other, that started seeming like two days, so in the evening it seemed like two days spilling over into the next day and that started seeming like four days, so at the end of the sixth day on into the seventh day, it seemed like a total of five days. And the sixth day seemed like a week and a half. I have it written down, but I can show it to you tomorrow if you want to see it.”

This sort of “let’s WOW the customer” is not going to work.

Let’s say that it’s commonly known by Blockbuster’s users that there is this “extra 7-day grace period” for a 2-day rental. As a consumer, my perception is now that my $3 is buying me up to 9 days to watch the rental.

If Blockbuster ever decided to shorten their grace period due to inventory or sales problems, I would feel slighted by the company. Like they were trying to MAXIMIZE their inventory and shortchange me. It’s not the truth, mind you, but in the consumer’s mind – perception is truth.

Another problem with the “extra 7-day grace period” relates to the customer experience. The corporate suits at Blockbuster probably think this is a REVOLUTIONARY idea; that they’re doing their customers a great service by providing a week-long grace period.

They view it as their “WOW…Blockbuster rocks” project. In reality, it’s not. By giving a blanket grace period to everyone, they aren’t treating ME special. When I walk into the store, I don’t get the positive experience of receiving their mercy on a late movie.

You know those times when you want to return a product to any store but can’t find the receipt? You debate about even trying to return it, worried that the customer service rep will be a jerk and slap you silly for even THINKING of something so crazy.

The same is true for Blockbuster. They want to provide service to their customers so word will spread and their market share will grow. But the return policy integration for their online and brick stores doesn’t mesh.

IMHO : I’m surprised it’s taking them so long to get this figured out. Boys, give me a ring and we’ll come up with a solution.

Oh, one thing Blockbuster could do:

Every time a customer rents a movie or game, their receipt could highlight how much money they’ve saved from having no late fees over the past year.

Amazon should also find a way to implement this for those to take advantage of their “free shipping” option.

The company is just providing concrete facts for the customer to feel special and privileged. Shoot, I could see an ad campaign (a la Progressive) having Blockbuster customers showing their “late fee savings” receipts and asking others to join the company in “no more late fees”.

The no more late fees campaign was nothing more than a lie. The 2 days plus 7 days plus forgiveness if you give it back a year from now charades seen to be designed to hide the fact that there are, in fact, pretty significant late fees if you’re particularly slow or forgetful.

As I told a Blockbuster employee – You have “no more late fees”, but you do have fees due to lateness.

I know we’ve only known each other four weeks and three days, but to me it seems like nine weeks and five days. The first day seemed like a week and the second day seemed like five days. And the third day seemed like a week again and the fourth day seemed like eight days. And the fifth day you went to see your mother and that seemed just like a day, and then you came back and later on the sixth day, in the evening, when we saw each other, that started seeming like two days, so in the evening it seemed like two days spilling over into the next day and that started seeming like four days, so at the end of the sixth day on into the seventh day, it seemed like a total of five days. And the sixth day seemed like a week and a half. I have it written down, but I can show it to you tomorrow if you want to see it.

“pretty significant late fees”

Like what, paying for the movie?

They let you rent the movie for 2 days, just like ANY OTHER rental place. However, now you actually have a fudge factor of an ENTIRE WEEK if you’re “slow or forgetful”. If you keep it past that, you pay a buck fifty. That’s less than half a latte because you’ve delayed them from being able to make money on that movie for more than a week.

If you keep the movie past 30 days, you pay for the movie at market value, which for them is $14.99 (often as cheap or cheaper than you’d pick it up for at Target).

Sounds like a pretty good deal to me, even of some people can’t seem to wrap their heads around it. I have to say – I’m sick of this whole “I’m the customer, I should get whatever I want!” attitude that we see these days. Business and commerce is about trading value equally. It’s not about one guy getting more than the other guy. Blockbuster charges you a fee to rent their movie for two days. Anything they give you past that is gravy for you. Anything you take past that, you’re taking out of their pocket (because they can’t make money with that movie while you have it).

Get over the self-entitlement, people.

It seems to me that it is an ass-covering, cost-lowering, customer-service-issue-preventing thing. And it is our fault (consumers). If they say 9 days, you bring it back on the tenth day and then plead with the teenager to not charge you a late fee. The teen gets his/her manager (also a teen), who has to review the situation and decide whether to make an exception . . . this all takes time, which we know is money. Besides, now you have teenagers with the authority to waive late fees – that might be a problem.

This way, you advertise 2-day rentals and when the customer invariably brings it back “late” and starts pleading with the teen, he/she says “ok.” Money saved, customer service issues averted, the customer loves blockbuster, the teen doesn’t hate his job as much (lowering turnover), etc.

Yeah, gee whiz, whatever happened to those halcyon days when companies said exactly what they meant and were totally straightforward about their products and policies?

http://www.siliconvalleysleuth.com/images/765_1.jpg

Ironically, we found the opposite of what you’re describing to be true of 37signals’ products.

http://needmoredesigns.com/notes/465/online-memberships-givers-and-takers

Not all Blockbusters continued the “no late fees” promotion. http://www.usatoday.com/money/media/2005-12-15-blockbuster-latefees_x.htm

Rogers Video in Vancouver, BC. doesn’t charge penalty fees anymore, but users who return the movie earlier get 1 dollar off of their next movie rental. I think this type of positive reinforcement works a lot better than penalty fees, or silly confusing grace periods.

I too wonder why people sometimes make things more complicated than what they should be!