Case Study: CRM

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Canyon Ranch CRM additional two pages included

Should Canyon Ranch implement a CRM strategy?

It has to in order to stay competitive with other high-end spas that sell to rich Baby Boomers. The fact that people are spending $2,000 or more for a stay there says how important these relationships are. The case study shows how lucky Canyon Ranch has been to stay in business when they don't have this insight into how best serve their customers. Like any business, the customer and their trust is the lifeblood of this one too. The case shows how difficult it is for the Canyon Ranch managers and employees to deliver a really good experience for their customers because their IT systems aren't talking to each other. If they had a CRM system in place they would be able to better serve their existing customers, getting them to spend more while visiting. And the best part of having a CRM system is staying in touch with them after they have left. The marketing teams at Canyon Ranch would be able to do follow-up mailings, e-mails, special programs just for returning customers, even referral programs. There are many, many opportunities to attract new customers too. All of these benefits are important for Canyon Ranch to stay competitive in relatively exclusive business. The customer wants to know they are special, and a CRM system can help Canyon Ranch accomplish that.

2. Does a CRM Strategy fit with overall Canyon Ranch positioning?

Yes, it does because Canyon Ranch isn't selling just a product or a series of treatments. They are selling the promise that when the Baby Boomer customers leave they will feel much better, refreshed and as their brochures and website say, rejuvenated. Canyon Ranch is really in the relationship business, whether they ever realize that or not. It is relationships that keep the customers coming back, and trust that gets them to tell their other rich friends about how great Canyon Ranch is. A CRM system fits perfectly with Canyon Ranch because they must also understand how their customers see them if they are going to grow too. A CRM system will give them the ability to better track how satisfied the rich Baby Boomers are after the leave after their treatments.

3. How do you judge their current use of CRM concepts?

They are not really using any CRM system right now. They don't even have IT systems that are connected with each other, which causes chaos when trying to even run the ranch. No wonder they are turnover over program coordinators at the rate of 50% a year; that has to be one frustrating job with the lack of IT support and systems that don't work like they are supposed to. They have spent too much time thinking about IT as a way to track how they are doing inside. They need to use CRM to consider how they are impacting people, most importantly customers, outside.

4. What should Canyon Ranch Destination Resorts CRM initiative look like

It should be very people-driven and focus on each kind of customer they have, so they can quickly roll out new programs and promotions to get them to come back and spend more. These customers are spending well over $2,000 a visit which is exceptional for even a high-end hotel chain as the case study shows. A CRM system for the entire Destination Resorts initiative needs to think more about how they are selling the experience of being at their resorts, less on price or even the packages offered. They need to get their rich customers to talk about how great they felt when they left, because this is what the Baby Boomers love about spas. They love to go there, come back feeling refreshed and even have a chance to brag about it too. A CRM system can capitalize on this and capture their experiences and endorsements as a means to attract new customers too. In fact they could even give their best customers 30% their next visit if they tell five friends and a few also show up. These people visiting the spa have the money to go and do many different experiences that they chose to come to Canyon Ranch speak volumes of the value they see there. A CRM system needs to capture all this information and use it to hold onto them as customers and get new ones as well.

How should canyon ranch leverage its uniqueness in the face of increasing competition and against entrenched customers' beliefs about the firm as a world class spa?

They have to give themselves an extreme CRM makeover. It is ironic that a business so well designed to make over their rich customers is challenged to make over themselves. But they have to figuratively look at themselves in the mirror and decide to change and stay real for their customers. Today their IT systems show they value the internal measures of performance and how they are doing at a very fundamental level without regard to customers.

To leverage their uniqueness in the face of increasing competition, the Ranch has to decide what is more important, their internal view of themselves or their customers'. With a CRM system they could connect with all customers and make the most important of them realize how critical they are to the ranch's future. This includes creating programs that are just for the top tier of customers, for example having training programs with world-known trainers and celebrities. Having a "Jet-In Weekend" for the really rich who have private jets (and at $2K a visit there are some customers who must have their own planes) will add even more exclusive nature ot the ranch. This will not only reward the best customers, it will give these rich Baby Boomers something to brag about. And every customer wants not just a good treatment at the spa to make them younger, they want to feel younger and important too. That's where expanded programs like this will pay off, it will give customers what they are looking for over and above just the spa experience alone.

Additional Two Pages of Questions and Answers

What is the value of customer information to Canyon Ranch?

Customer information to Canyon Ranch is like electricity to a city, without it the doors stay closed yet with it, a business and economy flourishes. It's the same for Canyon Ranch and their use of customer information. They need to understand how their customers see them, not just today but over time and they also need to understand which services and the most and least profitable too. Today they run their business like it's a nonprofit, basically not tracking profits by service area all that well. Worse, they have no idea why and who is buying which services and if there are any patterns. Customer information would shine a very bright light on these areas and give the Ranch a better understanding of how and why they need to change. This is the biggest argument of all for including customer information into their overall IT plan. They clearly need to stay up to speed with customers but given their lack of CRM systems, have no idea how. It's time to buy some electricity (a good CRM system) and get customer information flowing through the company so they can get out of the dark ages of customer relationships and see how they need to change.

As CIO (Chief Information Officer), How would you make the case for customer relationship managements (CRM) and business systems at Canyon Ranch?

My first point in making a case for CRM and business systems is that if we don't take care of our customers, our competitors gladly will. I'd also make the point that our customers are accustomed to a level of service that is beyond our competitors, and we have to keep that quality level up if we want to stay in business. The best way to keep that level of performance up is to track which customers are purchasing which services or spa treatments, when and if there are any patterns in their purchases. Taking this customer sales data and including it into the financial systems of the company would give senior management a very good idea of which spa treatments are generating profits or not. The spa treatments that are losing money could be discontinued. What all of these factors can lead to is a much clearer understanding of just which customers are the most valuable and why. With that information Canyon Ranch can run a much more profitable business.

What impact would you anticipate these systems to have on the Canyon Ranch strategy and capabilities?

First, it's going to force the company to quit focusing only on internal operations as a means to track their performance. This is going to be hard to take for many of the senior managers and executives, who have a lot of political power because they… [END OF PREVIEW]

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