Canyon Ranch free essay sample

Health Resorts (or â€Å"The Company†) was created in 1979 to be an inspirational and motivational place where clients could relax, get away, and take control of their own healthier lifestyles. As of 2004, Canyon Ranch was unquestionably the industry leader when it came to the luxury portion of the spa industry. Lack of potential entrants in a niche market, scale economic practices (development of cosmetic line), and a strong US economy are just a few of the reasons why The Company has continued to thrive despite engaging in archaic, inefficient IS strategy. New competitors, economic downturns, and the emergence of substitutes are now a very real threat to The Company’s current position. Should The Company wish to remain the industry leader in their respective market, they must begin to utilize IT as a competitive force. In order to do this, The Company must undertake the following initiatives: 1. Upgrade existing IT architecture and infrastructure to a company-wide modular system. 2. Adopt and interface a hospitality oriented CRM system. 3. Use the information gathered from the CRM to initiate a targeted marketing campaign. The existing IT architecture and infrastructure is decentralized and inefficient. In fact, The Company is still using paper as means of transporting data from department to department. In addition to centralizing IT systems, The Company should add new modules to their existing system (POS, MIS, DDS, Reservation Interface, etc. ) and upgrade their existing CLS system in order to promote two-way communication, and free flow of data. In doing this, The Company will move the IT strategy from that of a support function to a more aggressive, competitive function. The Company is not doing all it can to collect important customer information. Given their respective services (Spa, Medical/Nutritional, Cosmetics, etc. ), The Company has access to very personal information about their customers. Many industries do not have access to such information or they must pay a lot for it. For Canyon Ranch, however, this information is part of their business. As such, they should be utilizing the best possible CRM solutions to gather and retain this data. In an attempt to thwart emerging competitors and cope with a down economy and substitutes, The Company must do whatever it can to maintain customer loyalty as well as appeal to a new demographic of potential clients. Armed with the sensitive information gathered from a new CRM system, The Company could launch a comprehensive marketing campaign aimed at increasing profits and maintaining their current market share. With the alternatives we set forth in the coming report, Canyon Ranch stands to provide a better customer experience, create new market opportunities, and be more efficient and profitable overall. Synopsis Canyon Ranch (or â€Å"The Company†) has long been at the top of the luxury spa marketplace. Their emphasis on quality and unique array of guest services has put them far ahead of competitors and helped them forge a solid block of repeat clientele. In the 21st century, however, Canyon Ranch is facing two big challenges: a down economy and an onslaught of competitive forces in the luxury spa marketplace. The Company offers an array of services and luxuries that, at current, no other competitor can afford to offer. This will continue to be a competitive advantage for Canyon Ranch in the near term. In time, however, t competitors will equalize the playing field in regards to service amenities and, unless action is taken, The Company will begin to experience diminished returns as they hit the plateau of the â€Å"technological-S-curve.   In order to maintain their position as an industry leader, Canyon Ranch must take on new initiatives aimed at creating value to their existing and potential customer base. SWOT Analysis Upgrade Existing IT Analysis of current IT As a result of the old IT strategy (support of the operational systems) there was no IT director until 1996. Even after the position was created and â€Å"IT was viewed as increasingly strategic† there have not been major changes made. The IT is decentralized and the resorts and spas are working independently. Only the Computerized Lodging Systems (CLS) and some basic Decision Support Functionality in form of reports are shared. In 1999 some functionality to store Customer Data was implemented at the Berkshires location via a system that tracks customer preferences (Guestware). Although this system is in place, the Program Coordinators and key employee positions that service the customer do not have any IT support. They are, in fact, still working on paper basis. Figure 1: Old IT System The IT of the Company is neither effective nor efficient. It does not support and cannot support the operational processes and can only be used for basic tactical or strategic support. Furthermore, the current IT achievement potential is not very high, since the system cannot be upgraded easily. The current systems, even if used with adjusted business processes, cannot help achieve future success. Therefore we rate the IT infrastructure only supportive and in means of efficiency and effectively it is strategic wastage, respectively strategic overexpansion. Figure 2: Situation Analysis of IT Infrastructure The general vision should be to upgrade the system to maximize efficiency and customer support. The Company should not implement an aggressive IT strategy nor a momentum strategy (do nothing). Therefore a moderate IT strategy is suggested. Because IT is not THE competitive advantage for The Company, there is no need to build a brand new system but instead buy modules and interface them with the CLS. This is advantageous as The Company owns the source code. Suggested new System To address the problems The Company is facing the IT strategy has to be aligned with the business strategy and some improvements must be made to The Company’s IT system. First, The CLS system has to be upgraded to a new version. This version needs to support modern interface and network technology. A modular system would provide these necessary functionalities. If a new systems needs to be implemented in the future (e. g. medical information systems) this modular architecture would allow an easy implementation. On this basis seven different systems are suggested to be implemented and connected to the central CLS mainframe. All systems have to support a modular architecture and modern interface and network technology. All suggestions are already in order of positive evaluation (see below). 1. Customer Relationship Management System * A Customer Relationship Management System needs to be implemented. Such a system can be bought easily. But The Company should not buy any system just to have it. The decision has to be considered carefully from the aspects of both technical support and management. Management aspects will be addressed at a later point. Technical aspects are that the CRM System must support modern interface and network structures; this so two-way communication with the CLS System will be guaranteed. Furthermore it should be easily integrated with other modular systems The Company might implement either now or in the future. 2. Point of Sales System * Point of Sales (POS) Systems are a must for modern companies. A modular system should be acquired by The Company. Interfaced especially with a Data Warehouse and MIS/DSS Systems it would support both operational and strategic matters. 3. The integrated Guestware System * Since this system is already implemented in one location it can be used as a prototype for the company wide implementation of this system. If there is the possibility to obtain information about possible interfaces or API’s from the programming company, this system would provide synergies with the CRM. 4. Program Coordinator System * To support the key position between company and customer, all of the spa program coordinators should be able to put important customer information into the system while communicating directly with the customer. Wireless technology and an interface to the central CLS system and therefore especially to the CRM System would support this key position significantly. 5. Management Information Systems (MIS) and Decision Support Systems (DSS) * These systems can significantly support The Company. Decision Support Systems help decision makers to solve unstructured or semi structured problems. They can be used to support tactical and operational management. The MIS can support the management through intelligent reporting. Because some functionalities in this field are already implemented, this system should be similar to existing systems to reduce the cost of training of personnel. 6. Reservation Interface for Customers It should be convenient for all customers to make a reservation. For that matter, a special Reservation Interface for mobile devices and the website should be accessible. This system needs to have access to the CLS or should be part of it. 7. Data Warehouse with connected intelligent systems (e. g. Business Intelligence Systems) * Data Warehouse Techniques have advanced significantly over the last decade. To use and benefit from this tec hnology, a Data Warehouse should be implemented in addition to the CLS. The aggregated data can be used to support the management in many kinds. This will create big synergies with the MIS and DSS systems because these systems can be fed by intelligent techniques. The following image shows the possible modular system architecture for The Company’s infrastructure: Figure 3: Proposed IT Architecture Evaluation of Suggested System This IT architecture would support the whole company from its operational needs to its strategic needs. The modular architecture would allow The Company to make easy changes in future if there are changes in the business or if the business is expanded. This would provide the Company with an IT Infrastructure of the type weapon to face future threats. With the suggested System, The Company’s processes can be optimized and paper will not interrupt any more the digital business procedures. The Companies IT would be in a Balance: Figure 4: Projected Analysis of IT Infrastructure Enhancing the CLS is a must for the Company to stay in business with the threats of substitutes and new entrants to the market. The different modules attached to the main system will be evaluated in two manners. On the one hand they will be rated in Benefits vs. Risks, on the other hand the fit of the systems into the business strategy and the IT architecture is rated. The third dimension (the size of the bubbles) shows the estimated amount of capital for the realization of the projects in comparison to the other projects. Please see the diagrams on the following page: Figure 5: Benefit vs. Risk Analysis Figure 6: Strategy Fit vs. Architecture Fit Analysis For explanation of the factors evaluated in both figure 5 and 6, please refer to Appendix A. Customer Relationship Management At current, The Company is collecting data about guest stays and guest preferences in order to enhance the customer experience during a stay. To do this, The Company is using a standalone application called Guestware. Guestware does not integrate well with The Company’s current CLS system and cannot be accessed on a company-wide basis. In addition to this, the Guestware system does not aide in transmitting the information it gathers to the various levels of management throughout The Company. In conjunction with upgrading the current CLS system, The Company should invest in a high-quality, hospitality oriented CRM system. This system would be one of the new modules added to the proposed IT structure as discussed in the previous section and would be fully integrated in the modular design. Here are some basic functions of the proposed CRM: * Automate and capture reservation information across multichannel contact points for services * Generate and recognize pricing and service information * Enhance customer recognition and loyalty programs * Acquire and maintain data capture for analysis and decision making * Integration and consistency in aid of superior customer service * Support management and enhance quality Automate personalized thank-you, confirmation and cancellation messages * Strengthen customer service * Track and manage inventory Given these proposed functions, it is imperative that the CRM system interface directly with the PMS system so that data stored in the CRM can move out and data collected from other modules (POS, MIS, Reservation System, etc. ) can move in and be stored without probl ems. The CRM system should also work hand-in-hand with The Company’s existing Centennial Membership program. In doing so, the discounts and perks that are offered can be custom tailored to each individual customer and their respective tastes. In addition, the information gathered from the CRM will allow the company to come up with a formal recognition and reward program aimed at further gratifying their very best customers. Forging this sort of â€Å"personal† relationship with customers is a significant way to add value to their experience and encourages them to not only return to Canyon Ranch, but to also explore other services offered by The Company. Here is a rundown of how CRM will increase the company to client relationship: * Automate basic business processes (marketing, sales, service) * Analyze client behavior and influence business and operational strategies * Allow for communications with clients on multiple communications channels * Streamline communication between organizational team and management to ensure a quality client service experience and follow up Value is created for both the customer and company by implementing a CRM system. By increasing the overall experience for the customer, value is created for the customer. When customers spend more money, value is created for the customer. It is important to note, however, that this value is created only if the CRM is part of a cohesive IS design overhaul. The CRM, partnered with updated CLS code and IT modules will create a positive synergistic effect for Canyon Ranch and allow them to take on goals aimed at retaining their position as a market leader and expanding their customer base. Marketing and Advertising Implementing the proposed IS strategy and adopting a comprehensive CRM system will allow The Company to collect and organize a large amount of data. As such, this data should be used to initiate a targeted marketing effort. This is imperative to The Company’s continued success as it will allow them to expand their customer demographic as well as retain their existing customer base. Marketing to Men Initial marketing efforts should be geared towards men, who appear to be a rapidly growing segment of The Company’s existing customer base. The detailed information collected by the CRM system would allow The Company to market to men based on their interests, needs, and preferences in an appropriately masculine manner. The male spa customer has different needs and also has a different image to maintain. Information collected from feedback and preference surveys used in conjunction with basic stay information will let The Company create a sort of niche experience for male clientele. Men are rapidly becoming more health and beauty conscious. A recent report by Global Industry Analysts projects that the male grooming product industry will exceed $33. 2 billion by the year 2015. [1]   It is imperative that Canyon Ranch is at the forefront of this new opportunity given the amount of data they have regarding this particular market sector. While male grooming products are gaining in popularity, â€Å"spa vacations† can still be considered a taboo amongst men. The goal of the market effort is to make the Canyon Ranch experience less taboo amongst prospective male clients. Currently, the Canyon Ranch website is dominated by pictures of women enjoying relaxing and sensual spa services. The Company should include more pictures of men enjoying the services as well. It is also important for the Company to make the golf and sports training package a more prominent presence on the website. Additionally, discount golf and sports training packages should be offered to loyal clientele. Email Canyon Ranch is not a company that advertises on television or by way of print media. In fact, Harley Mayersohn (VP of Marketing) has indicated that Canyon Ranch is a word-of-mouth referral business. That said, The Company must increase the marketing for repeat customers. A strong e-mail marketing campaign to existing clients is an excellent way to do this. With the vastly updated CRM system, The Company will be able to send out customized e-mails to each client throughout the year to keep in touch, offer new services, help them book their next trip, etc. According to a study by Get Response, an email marketing company, the travel and spa industries had the 2nd and 3rd highest â€Å"open rates† of all major industries from the period of July 2009 to December 2009. [2] â€Å"Open rate† simply means someone opening an email rather than deleting it outright. This bodes well for Canyon Ranch as their â€Å"open rate† should be even higher when marketing to existing clients. New Geographic Markets Targeted marketing will also give The Company an opportunity to draw new customers from different geographical areas as well. At current, The Company draws a majority of its clientele from the eastern United States. As competitors emerge, it is fair to say that some of these eastern based clients may go to different brands. As such, The Company must recognize the fact that there are many members of their key demographic located throughout the US. Demographic analysis of data capture from the CRM system will allow The Company to expand their draw from growing markets like the Southwest and existing high net-worth markets like central California. Loyalty and Rewards Program At current, The Company only offers a Centennial Membership program to their very best customers. While this is indeed a great means of customer retention, it is short sighted in that it excludes a larger portion of their customer base. Working in conjunction with the existing email marketing efforts, the loyalty program would offer incentives to repeat customers as well as rewards for customer who, by word of mouth, encourage their friends or relatives to come to Canyon Ranch. Conclusion Canyon Ranch has been the industry leader in the destination spa market. As the first major player on the scene, The Company was able to firmly establish their business and, for decades, enjoyed a market place virtually free of direct competition. Times, however, have changed and The Company faces new challenges from competitors, and market forces that are beyond their immediate control. Their dated IT strategy will continue to hold them back unless they make changes to their IT architecture/infrastructure, embrace a comprehensive CRM system, and undertake new.