Analysis of Walt Disney CRM Strategy - Research Paper Example

Executive summary During the contemporary period, it can be noted that losing customers is costly for the organisations hence there is need to put measures that are meant to retain the existing customers to the organisation. This can be achieved through the implementation of a CRM strategy that is geared towards the creation of loyalty among the customers. Organisations today are realising that it is easier to retain the customers if there is a mutual relationship existing between them and their customers. A balance in the relationship between the organisation and the customers can promote long term survival of the organisations since customers are often seen as valuable assets to the organisation. However, a critical analysis of the given case study of Walt Disney shows that it has been witnessing a decline in the sales as a result of the CRM strategy put in place which is oriented towards the organisation at the expense of the customers. Thus efforts should be made to incorporate the values of the customers in a bid to create a long lasting relationship which can also make it possible to retain the customers. It has been recommended that Walt Disney should formulate a strategy that is customer oriented. This should take the interests of the customers into consideration as there are likely chances that loyalty will be create among them. There is also need to include the stakeholder interests as well as values in the CRM strategy of the organisation. It is also recommended that the use of technology should encompass the needs of the customers not the company alone. Table of contents 1.0 Introduction 3 2.0 Description of Walt Disney 4 3.0 CRM Theory 5 4.0 Customer retention programs 10 5.0 Customer retention strategy 10 5.1 Customer service 11 6.0 Sales force 12 6.1 Sales force automation 13 6.2 Personal face to face 13 6.3 Personal telephone 14 7.0 E-business application 14 8.0 Analytics data value 15 9.0 CRM design 16 10.0 Implementation of CRM Strategy 19 11.0 Conclusion and recommendations 20 References 22 Fig 1 Components of customer retention 10 Fig 2 CRM design 18 1.0 Introduction Organisations are primarily concerned with satisfying the needs of the customers in a profitable manner. In order to achieve this feat, it can be noted that marketing plays a pivotal role. The marketers can apply both direct and indirect consumer relationship management (CRM) in a bid to build a long term relationship with the customers which is essential for the long term survival and viability of the organisation. Against this backdrop, this report seeks to critically evaluate the measures that can be implemented by Walt Disney in order to foster the creation of CRM, a concept which is seen as essential in the operations of any serious business during the contemporary period. The report starts by outlining the current operations of Walt Disney and the way it relates with its customers. This will be followed by an overview of the CRM theory and how it impacts on the overall performance of the organisation in the long run. A discussion of various techniques that can be implemented will also be undertaken in this report. Practical examples will be drawn in order to show a close link with the theoretical framework of the CRM model. A CRM designed will also be outlined in the main body of the report and the last section will particularly look at various factors that can be put in place with regards to implementation of the strategy. Recommendations about measures that can be put in place by Walt Disney will be drawn from the main points highlighted in the report. The key aspects of consumer relationship marketing discussed will be summed up in the conclusion at the end of the report. 2.0 Description of Walt Disney Walt Disney is a renowned international giant in offering entertainment services to different people regardless of their age. For instance, services such as Disney’s theme parks gained immense reputation given that they offered customised services to the clients. However, the company has been experiencing viability problems which resulted in a decline of total revenue generated compared to previous years. For instance, the company has not done much to the division’s operating income which fell by 18 % in the fiscal year of 2003 to $957 million from $1.2 billion in fiscal 2002. These problems can be attributed to issues related to customer relationship management given that of late the customers have been complaining about the poor services offered by the organisation. The company’s strategy to roll out its initiative to improve the customers has been a challenge as a result of different factors highlighted below. Meanwhile, Disney’s costs continued to increase and it was noted by the analysts that the capital expenditure for the parks were significantly lower in 2002. However, there have been sliding attendance rates and this brand has been losing its lustre especially among the children comprising of the digital age. Therefore, the organization has underscored to launch an ambitious digital CRM play that is based on real time interfaces with the customers as well as on mobile. The goal is to redefine its orientation towards customer focus in a bid to revive its lost lustre. The initiative by Disney to use technology such as Pal Mickey which is programmed to communicate with the customers so that they save their valuable time is designed to improve customer service while at the same time attempting to deliver value. However, the biggest challenge facing Disney with regards to this initiative is that its CRM strategy is technologically centred while at the same time failing to take into account the involvement of the customers as part of problem solvers. This initiative does not engage the customers to give their views and opinions with regards to the measures that can be taken in order to turn around the fortunes of the company while adding value to the products and services offered. The company’s approach is centred on its needs and interests while at the same time conveniently forgetting to take into account the needs of the customers. Disney’s attempt to redefine its CRM in a bid to deliver value is affected by factors such as determining the appropriate time to be digital while at the same time taking into consideration the human factor such as customer care and service. The dilemma is that the company is not yet fully aware of what to control while at the same time leaving other elements to chance. In the face of improved information and communication technology during the 201st Century, the main problem facing companies is related to harnessing the features of technology into a well designed programme that caters for the human needs and interests in order to improve the CRM strategy. Walt Disney uses RFID (radio frequency identification) which is a new ticket system which does not allow the use of turnstiles for its Epcot theme park. Whilst technology has a vital role to play in implementing the CRM strategy in the organisation, Goldenberg (2008) argues that about 50 % of the effort must be channelled towards the needs and interests of the customers who form the foundation of the organisation in its day to day operations. 3.0 CRM theory Basically, CRM is defined as a “business strategy with outcomes that optimize profitability, revenue and customer satisfaction by organizing around customer segments, fostering customer-satisfying behaviours and implementing customer-centric processes,” (Gartner, 2007, p.4). Thus, CRM technologies are supposed to create greater customer insight, effective customer interactions as well integration through various customer channels as well as back office enterprise functions. In today’s competitive market place, organisations cannot ignore the customers’ needs and interests as this can prove to be costly in the long run. The Insidecrm (ND) posits to the effect that while American businesses experience between 20 and 50 percent customer turnover annually, it costs about five times as much to attract a new customer as it costs to keep an old one. Against this background, it can be noted that it is difficult to attract new customers to the organisation than to retain the already existing ones. The realisation by many organisations that customer loyalty is a very important aspect that determines the success of the company has prompted many marketers to consider long term marketing strategies that are meant to appeal to the interest of the customers. The refinement of the marketing concept by different organisations has been the most recent initiative meant to forge long lasting relationships with the customers. According to Lamb et al (2008), relationship marketing is a philosophy that emphasises on creating long term relationships with the customers for the sake of sustainability and viability of the business. The success of any organisation that is engaged in profit making business hinges on the strategies put in place that are meant to appeal to the interests of the customers while at the same time making efforts to retain the existing customers to the organisation. This strategy is vital for Disney in its bid to rejuvenate its operations that have been impacted viability problems as a result of customer turnover. During the contemporary period, it can be noted that enlightened marketers have come to realise that there is need to establish long lasting relationships between the organisation and the customers so that there is mutual understanding between the two (Kotler & Armstrong, 2004). This particular type of relationship is often built through offering value to the customers as well as consistency in satisfaction of the customers. Failure to implement such strategy may result in customer turnover where they can easily switch to the other brand in a bid to obtain the desired satisfaction they may require. It can be noted that organisations during the contemporary period operate in a dynamic environment that is characterised by competition from the other rival competitors hence customer satisfaction is a virtue in order to retain them to the organisation. Implementation of relationship marketing is advantageous in that loyalty is created among the customers and there are high chances of repeat sales as well as referrals by the satisfied customers to others (Gartner, 2007). Given such a scenario, it can be noted that costs related to marketing fall as a result of the fact that it is easier to and less expensive to serve the existing customers than attempting to attract new ones. Normally, it is not an easy feat to appeal to the interests of new customers than to retain the loyal customers already existing. The notable advantage is that these will in one way or the other make repeat transactions for the services and products offered. This kind of relationship is also beneficial to the customer in several ways. They are better positioned to get customised services and products that are designed to fulfil their interests and it is also easier for a seller of a particular product to quickly identify the needs of the customers and design more personalised ways of satisfying the needs of the customers (Kotler & Armstrong, 2004). As a result of the existence of stiff competition in the market, many firms acknowledge the significance of forging long term relations with their customers as it has been observed that the future growth and development of any organisation hinges on the quality of relationship that exists between the organisation and the customers (Gartner, 2007). When such a relationship is in place, it can also be observed that there is a sense of belonging likely to be developed by the customers as they can freely identify with the products offered by the organisation without fear. Thus, Lamb (2008) posits to the effect that the social bonding that takes place between the customer and the provider of the product or service plays a pivotal role in ensuring the customisation and personalisation of the relationship. In order to succeed in implementing an effective CRM strategy, efforts should be made to combine it with a marketing strategy in order to provide direction in other important areas such as IT, HRM, as well as production strategies. The corporate business strategy is the ultimate of these strategies which clearly outlines how the stakeholder value can be delivered to the customers (Gartner, 2007). It can be noted that the marketing strategy is meant to build the enterprises position in the market it will be operating in. Thus, if the enterprise wants to increase profitability through customer loyalty, it has to weave the CRM strategy into the marketing strategy (Gartner, 2007). The essence of the CRM strategy is to create and maintain a customer base given that the customers are often treated as valuable assets to the organisation as they can determine its success or failure in its operations. From this conceptual framework, it can be noted that the value of Walt Disney’s strategy so far has not been good and the following section looks at measures that can be implemented in order to improve customer value through improved CRM strategy. 4.0 Customer retention programs Most organisations realise that dissatisfied customers defect, that they do not continue to buy the services from their current service provider (Boshof & DuPlessis, 2009). Such customers are of cause detrimental to the organisation’s future profitability and survival prospects if this situation is allowed to continue unabated. Thus, there is every reason and incentive for every organisation particularly service organisations such as Walt Disney to determine how to retain customers and keep them using the organisation’s services. Without relationships, the benefits of retention may not be easy to obtain. Retention is often considered as the starting point in creating relationships with the customers who continue to be associated with the organisation. In as far as retention of customers by Disney is concerned, it can be noted that the organisation must place more focus of its marketing related activities on its existing customers. This enables them to have a clear picture of the kind of the customer to retain and that they actively find ways to increase their retention rates. Indeed, getting new customers is also important to the organisation but focus should be put on existing customers since these form a valid foundation for the organisation. Research has shown that about 65-85 % of the customers who defect to other organisations are either satisfied or more satisfied before defecting hence the need to take a holistic approach when implementing a customer retention strategy (Waxley, 2003). In order to implement a retention program at Disney, the following components of customer retention must be taken into consideration. Customer satisfaction and customer relationship management (CRM) are vital elements that can determine the success or failure of the endeavour to retain the customers by the organisation. These components suggest that customer satisfaction is a prerequisite for retention and successful implementation of relationship building activities (Boshof & DuPlessis, 2009). Figure 1 Components of customer retention strategy 5.0 Customer retention strategy/design for Walt Disney In order to fully implement the retention strategy, the following tactics can be used by Disney as it has been observed that its current strategy technologically centred and it does not fully encompass the needs of the customers. Providing excellent customer service as a result impressing the customers who are not happy at the moment. This can be achieved through exceeding customer expectations which can greatly help in reducing defection rate. Knowing the defection rate as well as conducting research so as to be better positioned to establish the reasons why there are customer defections. Listening to customers is regarded as the best way to deal with issues related to defections. Walt Disney has to strive to implement measures that are meant to create a rapport between the organisation and the customers in a bid to retain them in the long run. If the views of the customers are taken into consideration such as the changes that can be made to improve the operations of theme park for instance, the organisation will know what the customer is thinking about the organisation and its brands. 5.1 Customer service In order to improve the quality of customer service, it is imperative for Disney to implement strategies that are meant to improve the effectiveness of communication between the customers and the organisation. There is no organisation that can succeed without communication. The most effective way of improving the communication strategy of the organisation is to establish call centers. According to Evenson (2005), first impressions which often lead to lasting impressions are also formed over the phone. Therefore, call centres are very effective for the survival of business during the contemporary information as the customer can get all the information required from a trained consultant working for the organisation. If the impression is favourable, then the foundation for customer service has been laid. It also has to be noted that the customers appreciate courteous treatment as they will develop a positive sense towards the organisation as well as the products offered. On top of this call center agents must also display positive attitude towards all customers as well as potential customers. If the customers are satisfied with the kind of service they get, they are likely to develop a positive attitude to then organisation as a whole as well as the services offered. In this particular case, Walt Disney should introduce call centers in parks, hotels, condos as well as other venues that are often frequented by the customers. If the customers can readily get the desired information about particular services, then they are likely to be satisfied with the services offered which can contribute towards the organisations endeavours to retain the existing customers to the organisation. Call centers are very important in as far as customer service is concerned given that any information can be readily accessed by the customers which positively contributes to their satisfaction with regards to customer service. 6.0 Sales force In order to improve the sales force of tick for Walt Disney for different events, the following strategies can be implemented 6.1 Sales force automation The automation of the sales force will be vital for Walt Disney given that there have been major improvements in the information and communication technology. Sales can be conducted online as well as point of sale (POS) and there should be human resources to assist with the vital information that can be required by the clients. Basically, sales force automation empowers the sales representatives with immediate insight into consumer buying patterns (Insidecrm, ND). This strategy also helps the managers to forecast better on the future sales and it also allows the companies to adjust production cycles on the basis of real time sales figures. Through the utilization of the automation of the sales force, accurate assessment of the sales team performance can be obtained which also positively contribute to the overall performance of the organisation. 6.2 Personal face to face This is another effective strategy of stimulating sales of tickets especially in the park. The sales agents can personally interact with the customers as well as potential customers in such a way that they can directly exchange valuable information about the products and services offered by the organisation. There are high chances of mutual understanding if the people involved are engaged in verbal interaction since there will be free flow of information from both ends. This strategy also minimises the hassles for the customers as they may not struggle to obtain the tickets they may need while in the parks. Personal interaction is also vital in that it creates lasting impressions that are likely to appeal to the needs and interests of the customers. 6.3 Personal telephone The use of telephone is also another viable strategy that can be implemented in order to improve the operations of the sales force. The use of the telephone can be nationally based and the advantage of this strategy is that it removes physical barriers such a geographical location. Sales can be conducted from any part of the world as long as there is access to a telephone. It is also easier for people to conduct sales over the phone given that it also removes barriers to communication such as fear of intimidating. Some people can cause others to be sceptical of conducting their transactions by virtue of their physical appearance hence the use of a telephone at national level can appeal to the interests of as many people as possible from diverse backgrounds. The other advantage of telephone is that it is as good as face to face interaction where verbal communication is utilized. Mutual understanding is promoted and there are less chances of conflicts among the people involved in this particular conversation. 7.0 E-business application The social tools which are most important for CRM in this case involve the use of blogs, wikis, and social networks such as face book (Greenberg, 2008). The advent of the internet has revolutionised the communication landscape and it can be noted that there is a growing number of people who use social sites for their communication purposes as well as to link with their beloved ones. The internet is a viable channel of communication given that it can instantly reach a lot of people at the same time. Businesses can link with customers such as B2C and there is direct link between the parties involved (Kotler & Armstrong, 2004). The other advantage of using e-business applications is that there is a provision for both the organisation as well as the customers to get feedback from both ends. The internet provides a two way communication channel whereby the marketer and the customer can actually engage in meaningful dialogue which can improve the performance of the organisation in as much as CRM is concerned. The software applied in this application is primarily concerned with establishing a mutual relationship between the organisation and the customers which is beneficial in that there will be likely chances of them returning to buy some of the products offered given that loyalty will be created among them. Through the use of e-business applications, there are likely chances that the customers will be persuaded into buying the products and services offered. Once they have been persuaded, there are high chances that they will remain loyal to the organisation which is advantageous in the long run given that it becomes relatively easy to retain such customers. Customer retention as noted is very important to the organisation as it creates a solid foundation for the organisation. 8.0 Analytics-data value Measurement of value in the short term can be done through the use of analytics. This helps to generate real time, customized and graphical reports which enable the business to allocate the resources, gain strategic insights as well as to analyse the real performance of the organisation as a whole (Insidecrm, ND. Value can be measured through observation or analysis of the values of sales in particular that are obtaining on the ground. As noted in the case study, there has been a significant decline in the in the number of the sales of tickets particularly for the theme parks given that the customers were complaining about the long periods they would take queuing for the services. However, after implementing a CRM strategy, it becomes easier for the responsible authorities to monitor if there have been a significant increase in the number of sales recorded. However, a stagnant level of the sales or a decline in the number of sales can in turn mean to say that there would be no change in the performance of the organisation in terms of sales recorded. This analysis can be done on a short term basis by comparing the current performance with the previous performance over the same period. 9.0 CRM design The CRM can be designed using Gartner’s eight building blocks given that these encompass all the important stages that can lead to the creation of a meaningful CRM strategy that can give positive results to the organisation. Gartner (2007) posits to the effect that the components of the CRM initiative are very important as they are interrelated and they also try to create a fine balance between the needs of the organisation as well as the customers. The values must be communicated to the customers and their interests have to be taken into consideration. The design of the CRM must clearly show a balance between organisational values as well as the values of the customers. This design can be illustrated diagrammatically below. The components of the CRM design illustrated in the table below are designed in such a way that the needs of the customers as well as the organisation are balanced so as to create value for both stakeholders involved. An effective strategy takes into consideration the needs of both the customers as well as the organisation and these should not be compromised as they can negatively impact on the effectiveness of the strategy. However, in designing its CRM, Walt Disney uses the radio frequency identification (RFID) as a result of its continued emphasis on future technology. The Epcot theme park uses the new ticket entry system which is comprised of chip tickets which can be inserted in the Mickey Mouse head shape and these allow the customers to gain entrance into the theme parks with no turnstiles. Basically, the guests simply have to place a chip-equipped ticket up to a Mickey Mouse-themed device whereby they wait for a response which takes place after a finger scan and a signal can be given if they are to proceed. This is designed to limit the waiting time in queue to buy the tickets. This strategy if carefully designed taking into consideration the needs of the customers into consideration, there are likely chances that time wasted in the queue will be limited given that the customers can simply use these chips to get into the theme parks without going through the turnstiles. Figure 2 CRM design 10.0 Implementation of the CRM strategy The marketing manager in particular has a responsibility to implement the new CRM strategy that is meant to create a long lasting relationship between the customers and Walt Desney. The marketing manager identifies the roles that can be played by different members of the organisation. Having allocated the roles to be performed by particular people, it becomes the duty of the leader to monitor the performance of the employees as well as the organisation as a whole. For instance, performance can be measured through a critical analysis of the level of sales in the organisation. It can be noted that implementation of this strategy is not an end in itself but has to be constantly monitored since it is a continuous process. In the implementation process, it can be noted that controlling is the last process which is very important in the creation of relationships between the customers and the organisation. Controlling the process is designed to ensure that there is conformity between the expected operations of the organisation versus the value created for the customers in a bid to create long lasting relationship which is beneficial to the organisation as a whole. Thus careful implementation of the CRM strategy can prove to be beneficial to Walt Disney as there are likely chances that loyalty among the customers is created. This is very important in as much as loyalty among the customers is concerned. 11.0 Conclusion and recommendation Over and above, it can be noted that organisations during the contemporary period are realising the importance of CRM with regards to the creation of loyalty which can lead to quality relationships between the organisation and the customers. Where there is customer loyalty, it is easier to retain the customers as they would identify with the organisation and it is also cheaper for the organisation to retain old customers that attracting new customers. As such, it has been noted that the performance of Walt Disney has been impacted by the absence of a sound CRM strategy which is customer centred given that the one in place is primarily concerned with the interest of the organisation at the expense of the customers. As such, its operations have been negatively impacted during the current period as there have been defections by the customers to other players in the same industry. Against this background, the following recommendations have been suggested for Walt Disney: It should formulate a strategy that is customer oriented. This should take the interests of the customers into consideration as there are likely chances that loyalty will be create among them. It is also recommended that Walt Disney must include all stakeholders in the decision making process so that they can share the same vision of the organisation. Mutual understanding which ultimately leads to long lasting relationship can be created which is beneficial to both the organisation as well as the customers. It is also recommended that the use of technology should encompass the needs of the customers as well not to be specifically focused on the needs of the organisation alone. Customers form the back bone of the organisation hence their needs and interests have to be taken into consideration. References Boshoff, C. & Du Plessis, F. (2009). Services marketing- A contemporary approach. CT. JUTA. Brigante, R. (13 November, 2011), Disney World begins testing RFID theme park entry at Epcot without turnstiles. Retrieved from: http://www.insidethemagic.net/2011/11/disney-world-begins-testing-rfid-theme-park-entry-at-epcot-without-turnstiles/ . Gartner, (2007). CRM success hand book. Thomson. Goldenberg, B. (2008). Technology and the Digital Client: A new reality emerges for the people-process-technology mix. Greenberg, P (2008). 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