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redbox Adapts to Social Media, Makes Changes to Free Rentals

Find a redbox This automated DVD rental retailer has made great strides in recent years, practically turning the video rental (and post-theater) industry on its head. In fact, redbox is so popular and growing so quickly that even some of the largest Hollywood studios are feeling threatened by its value proposition in the space.

Though the success of the service itself is reason enough for little red machines to keep popping up on every corner, social media also seems to be playing into the strengths of the DVD rental company.

Getting started in social media

Last summer redbox started its “Free Movie Mondays,” a promotion where an alphanumeric code was distributed on Monday afternoons that could be used to redeem a free rental. Because the same code was used for everyone, fans of the service did whatever they could to spread the word about redbox’s great deal—posting codes on Facebook, tweeting them to friends, and even putting sticky notes on the rental machines themselves. One technologist in Kansas City even went so far as to set up a Twitter account for redbox that would automatically tweet the new code on Mondays.

As the promotion succeeded and more people learned about redbox, it didn’t take long for the company to rethink its strategy. redbox eventually went on to take over the redbox Twitter account (discontinuing the practice of tweeting codes), plus they started a blog where they could directly engage with fans: the redblog. This is the stage that many companies are in today; they are just beginning to test the waters of social media and are doing lots of experimentation. redbox posts regular reviews of upcoming and released titles, but also uses it as a platform to highlight and promote its fans.

redbox-redblog

Adapting to the real-time world

While redbox is doing a great job with supporting its community through social media, it seems as though redbox underestimated how much fans really loved their service. While the “Free Movie Mondays” used to occur on every Monday, redbox recently scaled the promo back to the first Monday of the month only—likely a business decision more than anything (can you imagine how much they lose in rental fees by offering a free night?).¬†And even more recently, redbox made another update to its free rental SMS campaign, stating that all SMS users would now be receiving their own unique codes. The move to less frequent and unique codes says to me that social media did its job too well: allowing friends to share information (including rental codes) with one another in real-time.

While social media has allowed their business to grow and to provide an effective means for friends to share their love of the service, it also served as a tool that would undermine its core business model: getting people to pay for DVD rentals.

With the recent changes to the free rental promotion and redbox’s continued community efforts in social media, this company is likely to continue growing for a long time.

Have you seen situations where social media worked so harmoniously that it was viewed as working too well? How would you advise redbox to leverage social media to the benefit of their business?

10 Responses to “redbox Adapts to Social Media, Makes Changes to Free Rentals”

  1. Pete Jones says:

    I wonder if they listened to their customers via the social media platforms before they made the business decision to scale back the free Monday rentals? I am sure they could have come to a good medium had they listened to what their customers were asking for rather than just chopping the promotion off at the root. I understand why they made the decision, and to your point I am sure it was costly. But, it seems they may have had an opportunity to truly chat with their customers and conceive an organic plan via suggestions on FB and Twitter that would have worked better with their customers and not potentially upset those who expected the Monday discounts. Not sure, I was unaware of their SM efforts until your post. Nice work.

    • From what I’ve seen, redbox is doing a good job of communicating with customers. From their tweets, to their blog, to their emails, I continue to see great stuff coming from them. Case in point was the change to the unique SMS codes: I received an email from redbox explaining everything succinctly and completely.

      Also, I think the way that redbox has been communicating with customers is probably a big part of their success, just as I mention in the post.

  2. Jon Thompson says:

    Pete,

    The problem was much more severe than what you think. When redbox opened up, we were _never_ paying for a rental, and we were using them daily. Now, we would pay occasionally for an extra day or two. But the first day was always free. Furthermore, we were always sharing the codes with the random stranger in line after us, which always gave them a smile, but removed a dollar from RedBox’s revenue.

    I’m certain that I wasn’t the only one doing this, as it was extremely easy to look up codes. In fact, Mike’s article mentioned that people would put post-it notes on the machines themselves, eliminating the need to tell someone by word of mouth, and making that night’s “sales” a complete loss. RedBox needed to shore that up, as I’m sure it had a very negative effect on their cashflow. Once they did, they then could go back and re-evaluate and communicate with their customers. I don’t think they had the convenience of time to do it any other way.

    • We were in a very similar situation last summer. My wife and I would hardly ever pay for the initial rental fee. Between “Free Movie Mondays” and the March Madness promo we were getting a couple of DVDs per week, all without paying.

      I think this was a great strategy (free rentals) to encourage early adoption of the system, but I also respect and approve of the way redbox has been cutting the promotion back. Along each step of the way they’ve been actively communicating with customers and explaining the changes, which makes me as a consumer feel ok about the changes.

      The other thing I appreciate about redbox cutting back these free rentals is that it is a smart business decision. They can’t go on giving away free rentals forever if that is their core business. redbox went about this right way and they communicated every change. I really appreciate that.

  3. Justin Brady says:

    Hey Mike. RedBox is owned and was started by McDonalds corporation. One of the more brilliantly marketed companies out there.

    I believe the original point to RedBox was simply to get people into McDonalds to rent a DVD and hopefully walk out with food. I don’t think their original goal was to make a lot of revenue off of DVD sales. However, like you mentioned, they may have underestimated just how popular this service would become, as now they are placing them in locations that are not McDonalds.

  4. Justin Brady says:

    There used to be websites devoted to free RedBox codes. When I lived in Minneapolis, I went a whole year without paying for a single rental…

  5. Pete Jones says:

    It just seemed like an abrupt decision that may have alienated their customers, which was my point above. I understand why the decision needed to be made, but it seemed like it was very abrupt and may not have been with much communication. I state that I was previously unaware of their strategy with social media, so I was most likely way off base, per Mike’s comment.

    • You are right about the fact that this is the type of situation that COULD alienate a customer base if not handled correctly. Fortunately, redbox seems to have done a good job with this (at least in my opinion).

      I think this is an example that a lot of other companies could learn from, rather than just storming in and making sweeping changes that end up affecting their customers.

  6. Harris says:

    Yes I know couple f social bookmarking sites which help users to generate revenue from sharing their bookmarks. Particularly xomba.com. Its really good in getting traffic to your content which you want to share with people.
    I would like to advise redbox to provide coupon codes for all week days rather than on mondays only. I think that would be great in growing their business.
    For more updates on redbox check out my site here Redbox codes

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