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Walt Disney Customer Relationship Management (CRM) Strategies

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Executive Summary

During the contemporary period, it can be noted that losing customers is costly for the organizations; hence there is a need to put measures that are meant to retain the existing customers to the organization. This can be achieved through the implementation of a CRM strategy that is geared towards the creation of loyalty among the customers. Organizations today realize 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 organization and the customers can promote the organizations’ long-term survival since customers are often seen as valuable assets to the organization. However, a critical analysis of the given case study of Walt Disney shows that it has been witnessing a decline in sales as a result of the CRM strategy put in place, which is oriented towards the organization at the expense of the customers. Thus, efforts should be made to incorporate the customers’ values 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 customer-oriented strategy. This should consider the customers’ interests as there are likely chances that loyalty will be created among them. There is also a need to include the stakeholder interests and values in the organization’s CRM strategy. It is also recommended that the use of technology encompass the customers’ needs, not the company alone.

Table of contents

Introduction

Organizations are primarily concerned with satisfying the needs of the customers profitably. To achieve this feat, it can be noted that marketing plays a pivotal role. The marketers can apply direct and indirect consumer relationship management (CRM) to build a long-term relationship with the customers, which is essential for their long-term survival and viability. Against this backdrop, this report seeks to critically evaluate the measures that can be implemented by Walt Disney to foster the creation of CRM. This concept is seen as essential in the operations of any serious business during the contemporary period. The report starts by outlining the current processes of Walt Disney and the way it relates to its customers. This will be followed by an overview of the CRM theory and how it impacts the organization’s overall performance 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 to show a close link with the theoretical framework of the CRM model. A CRM designed will also be outlined in the report’s main body, and the last section will mainly look at various factors that can be put in place with regards to the 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 critical aspects of consumer relationship marketing discussed will be summed up in conclusion at the end of the story.

Walt Disney Customer Relationship Management (CRM) Strategies

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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’ Disney’s theme parks gained an immense reputation, given that they provided customized services to the clients. However, the company has been experiencing viability problems, which resulted in a decline in 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 2003 to $957 million from $1.2 billion in fiscal 2002. These problems can be attributed to customer relationship management; given that of late, the customers have been complaining about the low services offered by the organization. The company’s strategy to roll out its initiative to improve the customers has been a challenge due to different factors highlighted below.

Meanwhile, the analysts noted that Disney’ Disney’s costs continued to increase, and the analysts said that the parks’ parks’ capital expenditure was significantly lower in 2002. However, there have been sliding attendance rates, and this brand has been losing its lustre, especially among the children comprising the digital age. Therefore, the organization has underscored to launch an ambitious digital CRM play based on real-time interfaces with the customers and 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 regarding the measures that can be taken to turn around the company’s fortunes 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’ 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 element 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 harnessing technology features into a well-designed programme that caters to the human needs and interests to improve the CRM strategy. Walt Disney uses RFID (radio frequency identification), a new ticket system that does not allow the use of turnstiles for its Epcot theme park. While technology has a vital role in implementing the CRM strategy in the organization, 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 organization its day to day operations.

CRM Theory

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, significant customer interactions, and integration through various customer channels and back-office enterprise functions. In today’s competitive marketplace, organisations cannot ignore the customers’ needs and interests as this can prove costly in the long run. The Insider (ND) posits that while American organizations 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 organization than to retain existing ones.

Many organizations realize that customer loyalty is an essential aspect that determines the company’s success has prompted many marketers to consider long-term marketing strategies that are meant to appeal to the customers’ interest. The refinement of the marketing concept by different organizations 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 emphasizes creating long-term relationships with the customers for the sake of the business’s sustainability and viability. The success of any organization 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 organization. This strategy is vital for Disney to rejuvenate its operations that have been impacted by viability problems due to customer turnover.

During the contemporary period, it can be noted that enlightened marketers have come to realize that there is a need to establish long lasting relationships between the organization and the customers so that there is mutual understanding between the two (Kotler & Armstrong, 2004). This type of connection is often built by offering value to the customers and consistency in customer satisfaction. Failure to implement such a strategy may result in customer turnover, where they can easily switch to the other brand to obtain the desired satisfaction they may require. It can be noted that organizations during the contemporary period operate in a dynamic environment that is characterized by competition from the other rival competitors; hence customer satisfaction is a virtue to retain them to the organization. Implementation of relationship marketing is advantageous in that loyalty is created among the customers. There are high chances of repeat sales and referrals by satisfied customers to others (Gartner, 2007). Given such a situation, it can be noticed that advertising-related costs are dropping because servicing current consumers is simpler and less costly than attracting new ones. Usually, it is not an easy feat to aal to customers’ interests than to retain loyal customers already existing. The notable advantage is that these will make repeat transactions for the services and products offered in one way or the other.

This kind of relationship is also beneficial to the customer in several ways. They are better positioned to get customized 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 personalized 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 the relationship that exists between the organisation and the customers (Gartner, 2007). When such a relationship is in place, it can also be observed that a sense of belonging is likely to be developed by the customers as they can freely identify with the organization’s products without fear. Thus, Lamb (2008) posits that the social bonding between the customer and the provider of the product or service plays a pivotal role in ensuring the relationship’s customization and personalization.

To succeed in implementing an effective CRM strategy, efforts should be made to combine it with a marketing strategy to provide direction in other vital areas such as IT, HRM, and 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 enterprise’s 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. The customers are often treated as valuable assets to the organization to determine its success or failure in its operations. From this conceptual framework, it can be noted that the value of Walt Disney Disney’s strategy has not been good. The following section looks at measures that can be implemented to improve customer value through improved CRM strategy.

Customer Retention Programs

Most organizations realize that dissatisfied customers defect and do not continue to buy the services from their current service provider (Boshof & DuPlessis, 2009). Such customers are detrimental to the organization’s future profitability and survival prospects if this situation is allowed to continue unabated. Thus, there is every reason and incentive for every organization incredibly service ormainlysuch as Walt Disney to determine how to retain customers and keep them using the organization’s organization’s services. Without relationships, the benefits of retention may not be easy to obtain. Retention is often considered the starting point in creating relationships with the customers who continue to be associated with the organisation. In as far as the retention of customers by Disney is concerned, it can be noted that the organization must place more focus on its marketing related activities on its existing customers. This enables them to have a clear picture of the customer’s kind to retain and that they actively find ways to increase their retention rates. Getting new customers is also essential to the organization, but the focus should be on existing customers since they form a good foundation for the organization.

Research has shown that about 65-85 % of the customers who defect to other organizations are either satisfied or more satisfied before defecting. Hence, the need to take a holistic approach when implementing a customer retention strategy (Waxley, 2003). 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 its customers. 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

Customer Retention Strategy/Design for Walt Disney

To fully implement the retention strategy, Disney’s following tactics can be used. It has been observed that its current system is technologically centred, and it does not fully encompass the customers’ needs.

It provides excellent customer service. As a result, it impresses the customers who are not happy at the moment. This can be achieved through exceeding customer expectations, which can significantly help in reducing the defection rate.

It is knowing the defection rate and researching 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 organization and the customers to retain them in the long run. Suppose the customers’ views are considered, such as the changes that can be made to improve the theme park’s operations, for instance. In that case, the organization will know what the customer is thinking about its brands.

Customer Service

To improve customer service quality, Disney must implement strategies that are meant to enhance communication effectiveness between the customers and the organization. No organization can succeed without communication. The most effective way of improving the communication strategy of the organization 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 beneficial for business survival during the current information as the customer can get all the information required from a trained consultant working for the organization. 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 of the organization and the products offered. On top of this, call center agents must also display a positive attitude towards all customers and potential customers. If the customers are satisfied with the kind of service they get, they are likely to develop a positive attitude toward the organization and the services offered. In this particular case, Walt Disney should introduce call centers in parks, hotels, condos, and other venues frequented by the customers. Suppose the customers can readily get the desired information about particular services. In that case, they are likely to be satisfied with the services offered, contributing to the organization’s endeavours to retain the existing customers. Call centers are significant in as far as customer service is concerned. Any information can be readily accessed by the customers, which positively contributes to their satisfaction with customer service.

Sales Force

To improve the sales force of tick for Walt Disney for different events, the following strategies can be implemented;

  • Sales Force Automation

The automation of the sales force will be vital for Walt Disney, given that there have been significant improvements in information and communication technology. Sales can be conducted online and point of sale (POS), and there should be human resources to assist with the vital information required by the clients. Salesforce automation empowers the sales representatives with immediate insight into consumer buying patterns (Insidecrm, ND). This strategy also helps the managers to forecast better on future sales, and it also allows the companies to adjust production cycles based on real time sales figures.

By utilizing the sales force’s automation, an accurate assessment of the sales team performance can be obtained, which also positively contributes to the organization’s overall performance.

  • Personal Face to Face

This is another effective strategy for stimulating sales of tickets, especially in the park. The sales agents can personally interact with the customers and potential customers to directly exchange valuable information about the products and services offered by the organization. There are high chances of mutual understanding if the people involved are engaged in verbal interaction since both ends free flow of information. This strategy also minimizes 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 because it creates lasting impressions that are likely to appeal to the customers’ needs and interests.

  • Personal Telephone

The use of the telephone is another viable strategy that can be implemented to improve the sales force’s operations. The use of the phone can be nationally based, and the advantage of this strategy is that it removes physical barriers such as 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 more accessible for people to drive sales over the phone, given that it also removes barriers to communication, such as fear of intimidating. Some people can cause others to be skeptical of conducting their transactions by their physical appearance; hence, using a telephone at the national level can appeal to the interests of as many people as possible from diverse backgrounds. The other advantage of the phone is that it is as good as face to face interaction where verbal communication is utilized. Mutual understanding is promoted, and there are fewer chances of conflicts among the people involved in this particular conversation.

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 Facebook (Greenberg, 2008). The advent of the internet has revolutionized the communication landscape. It can be noted that there is a growing number of people who use social sites for their communication purposes and link with their beloved ones. The internet is a viable channel of communication, given that it can instantly reach many people at the same time. Businesses can link with customers such as B2C, and there is a 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 organization and the customers to get feedback from both ends. The internet provides a two-way communication channel whereby the marketer and the customer can engage in meaningful dialogue, improving the organization’s performance in as much as CRM is concerned.

The software applied in this application is primarily concerned with establishing a mutual relationship between the organization and the customers, which is beneficial. There will be likely chances of them returning to buy some of the products offered given that loyalty will be created. Through e-business applications, there are possible chances that the customers will be persuaded to purchase the products and services provided. Once they have been influenced, there are high chances that they will remain loyal to the organization, which is advantageous in the long run, given that it becomes relatively easy to retain such customers. As noted, customer retention is critical to the organization as it creates a solid foundation for the organization.

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 that enable the business to allocate the resources, gain strategic insights, and analyze the real performance of the organization as a whole (Insidecrm, ND. Value can be measured through observation or analysis of the sales costs in particular that are obtaining on the ground. As noted in the case study, there has been a significant decline in the number of ticket sales mainly 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 has been a significant increase in sales recorded. However, a stagnant level of 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 organization in terms of sales recorded. This analysis can be done on a short term basis by comparing the current version with the previous performance over the same period.

CRM Design

The CRM can be designed using Gartner’s Gartner’s eight building blocks. These encompass all the critical stages that can create a meaningful CRM strategy that can give positive results to the organization. Gartner (2007) posits that the components of the CRM initiative are critical as they are interrelated, and they also try to create a delicate balance between the needs of the organization and 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 organizational values and the customers’ values. This design can be illustrated diagrammatically below.

The components of the CRM design illustrated in the table below are designed so that the needs of the customers and the organization are balanced to create value for both stakeholders involved. An effective strategy considers both the customers and the organization’s needs, and these should not be compromised as they can negatively impact the system’s effectiveness.

However, in designing its CRM, Walt Disney uses radio frequency identification (RFID) due to its continued emphasis on future technology. The Epcot theme park uses the new ticket entry system, which comprises 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. The guests 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 the queue to buy the tickets. This strategy, if carefully designed considering the needs of the customers, there are likely chances that time wasted in the line will be limited given that the customers can use these chips to get into the theme parks without going through the turnstiles.

CRM design

Figure 2 CRM Design

Implementation of the CRM Strategy

In particular, the marketing manager has a responsibility to implement the new CRM strategy that is meant to create a long-lasting relationship between the customers and Walt Disney. The marketing manager identifies the roles that can be played by different members of the organization. Having allocated the parts to be performed by particular people, it becomes the leader’s duty to monitor the performance of the employees and the organization as a whole. For instance, performance can be measured through a critical analysis of the organization’s level of sales. It can be noted that the implementation of this strategy is not an end in itself but has to be continuously 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 creating relationships between the customers and the organization. Managing the process is designed to ensure that there is conformity between the organization’s expected operations versus the value created for the customers in a bid to develop a long-lasting relationship that is beneficial to the organization as a whole. Thus careful implementation of the CRM strategy can help 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.

Conclusion and Recommendation

Over and above, it can be noted that organizations during the contemporary period realize the importance of CRM regarding the creation of loyalty, which can lead to quality relationships between the organization and the customers. There is customer loyalty; it is easier to retain the customers as they identify with the organization. It is also cheaper for the organization to keep old customers than attract 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. The one in place is primarily concerned with the organization’s interest at the expense of the customers. 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 customer-oriented strategy. This should consider the customers’ interests as there are likely chances that loyalty will be created among them.
  • It is also recommended that Walt Disney include all stakeholders in the decision-making process to share the same vision of the organization. Mutual understanding, which ultimately leads to a long-lasting relationship, can be created, beneficial to both the organization and the customers.
  • It is also recommended that the use of technology encompass the needs of the customers and not be specifically focused on the needs of the organization alone. Customers from the backbone of the organization hence their needs and interests, have to be considered.

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