1) Questions 1 and 2:
Develop and Implement the Solution:
We have several steps to begin the implementation of our new solution. The first step is to generate a survey so that we can find out what is most important to our customers. The results of the survey will be used to create the new CRM data structure. This survey should take about three months to create and implement. Depending on the results of the survey we will spend the next 3-6 months updating the fields, tables and criteria in our CRM system, setting it up correctly for the first time. Following this we will allow the CRM system to gather data over a 3 month period. With the results of this data we will be able to make positive changes to the rewards program which will encourage more purchases and entice people to join. One of the roadblocks that we could run into is the hesitance of upper management to spend money on the rewards program. It is critical to convince them that this expense is a short term cost which will yield long term benefits.
Evaluate the Results:
When dealing with the concept of cash and quantities there is no better measurement than a number. This makes it much easier to measure than something such as improved customer morale or satisfaction. In our case we have a tremendous benefit because all of our goals can be measured simply. One of our goals is to increase profits by 7% over the course of the year. An easy way to measure this is to track the annual sales and see what the increase or decrease is. We can then tie into our rewards members purchasing trends in our CRM data to show a positive correlation in growth. The other two goals of increasing member sales and increasing the membership base are each easily measured through the CRM system data. Our desired increase of 10% in membership and 15% in sales will be available through standard system reporting.
2) Questions 3 and 4:
Make the Decision/Optimal Solution:
Classic Airlines can find success in increasing and retaining a loyal customer base and meeting their cost reduction goals by understanding the key drivers of, 1. Creating customer value, 2. Placing in effect strategic strategies designed to meet customer wants and needs, and 3. Performing a customer segmentation analysis while re-aligning organizational goals with the needs and expectation of key stakeholders.
To implement this solution, the management team at Classic must first identify the needs and expectations of all their stakeholders, including the board of directors, customers and employees. When these needs are identified, Classic can begin the process of segmenting their customers based on the needs identified by the organizations research. Management must at the same time identify the unique values that only they as management can provide to the customers in order to give Classic competitive advantage. Taking all these steps will enable them to identify and select the best alternative or combination of alternatives, and create a budget that will allow them to meet the cost-reduction goals set forth by the board of directors. With the ability to meet all customer needs Classic will increase sales and profits, increase share prices and increase customer base.
Develop and Implement the Solution:
In developing and implementing the solutions for Classic the first step should be the development of a specific timeline for each proposed solution. The Classic management team marketing team will first need to set up meetings to determine and assess the major goals and set short-term objectives. Organizational goals need to be first identified in order to align all other initiatives toward those goals. The CEO will be responsible for identifying all organizational goals. Marketing should then be given two weeks to determine the major marketing goals, as well customer relationship initiatives that will enable Classic to improve its business processes. This should then be presented to the CEO and CFO. One of the resources that will be needed for this step of the implementation process is some research avenues. Marketing has already conducted limited research and provided reports on customer satisfaction feedback, call monitoring, exit interviews, the competitors and the external environment. Taking these various reports into consideration, marketing should determine the major marketing goals that need to be met for presentation to the CEO.
The following two weeks should be dedicated to using the CRM system in order to identify the major problems and the areas that need to be improved. Since no IT personnel on the management team, the CEO, with the help of Kevin, should make a decision on outsourcing the upgrade of the CRM system. The implementation of the new and upgraded system should be done in eight weeks. During this period, Catherine should continue to put money toward the fuel hedging program in order to reduce fuel costs. While the CRM system is being upgraded, Kevin should also analyze the information provided for marketing alliance. He should identify the pros and cons of this decision and present it to the CEO if it seems like a worthwhile and profitable effort for Classic. Kevin should then begin to identify the company’s target market and conduct a market segmentation analysis.
One of the major resources that will be needed in order for the implementation of any of these alternatives is money. Classic needs to outline a budget that will help them identify their financial needs as it relates to the company’s current state, while still meeting their cost-reduction goals. Catherine, Chief Financial Officer, should be in charge of this process. She should identify all needs and produce a budget within the first four weeks.
3) Questions 5 and 6:
Identify the Alternatives and Benchmarking Validation:
Classic Airlines consumer relations department has a problem with gathering and organizing customer feedback. The system that is currently in place is not streamlined or interfaced with other systems the company employs. If a customer completes a web survey and then calls a customer service representative, the information that was provided in the web survey has to be repeated orally. This leaves the customer service representative in a peculiar position and customers may feel frustrated over being forced to repeat information. The relationship between the customer and the service representative potentially becomes more strained with each call. Sprint/Nextel launched a company-wide initiative in 2004 to increase stakeholder wealth through customer retention. To begin this process Sprint began to re-educate its employees regarding the customer service experience. The service representatives were given three main objectives to achieve the goal: Achieve customer turnover of 1.5 percent or lower, measured as a percentage of total subscribers; Achieve overall customer satisfaction, measured by Nextel's two main customer satisfaction survey metrics: the Customer Satisfaction Index and the Service Quality Index (both measured by the Harris Co.); Maintain the highest average revenue per unit (ARPU) in the industry, measured by revenue divided by average number of phones in use (McGough, 2006). Sprint's implementation process was to build awareness and provide information. The company began an integration process between communications groups in marketing, engineering, and corporate communication (McGough 2006). The “Service Done Right” program was implemented to recognize the promotions and recognition of employees. "By communicating clearly and reinforcing the program's driving principles, the communication realm was able to help employees make the connection between their focus on the customer and Nextel's strong bottom line" (McGough 2006).
Improving customer relations both internally and externally is a hard task. When customers do not experience a connection between themselves and the company, customer loyalty may be lost. Classic Airline's customers do not feel as if the company hears or cares about their concerns. The relationship between the two is strained; the inability to offer better travel dates and increased blackout dates caused Classic Airlines to lose customers to competitors. Increasing the profit margin of an organization has to go beyond current customers by devising methods to obtain future customers. John Deere has devised such a method. John Deere implemented a re-purchase system. John Deere will re-purchase equipment that is as old as 11 years. The strategy is used to increase repeat purchases of John Deere products. Customers are allowed to use this system to update equipment. John Deere is not just focusing on current customers; the company wants to acquire or create a generational customer base (Tully 2003). "It makes parts available for decades and sets margins for all parts at about the same level. By focusing on building and retaining customer loyalty, John Deere has been able not only to withstand the test of time but also the test of cut-throat competition. In 2002, the company saw its sales increase 10%" (Tully 2007).
Classic Airlines has experienced a problem with achieving the goal of increasing customer relations. There has been a break in communication; the various departments are not sharing information, and are not using an integrated system for customer service. The schism is causing chaos, tension, and a gap with achieving excellent customer service. The customer relations management program (CRM) is suffering because of this. The MCI Group shared a similar problem. MCI Group began expanding by acquiring companies in countries such as Madrid, Spain, and Barcelona (TechRepublic 2007). The expansion allowed the company to broaden and acquire a new customer base. The various locations were not integrated and the information needed to develop the CRM program was not being conveyed amongst the various groups. MCI addressed the integration issue by purchasing a program by Microsoft. The program, Microsoft CRM, overhauled MCI’s then current software and migrated all of the information in the company's database to the new software. MCI's marketing groups, as well as others, were able to access the same information at any given time (TechRepublic 2007). The "information pool" empowered each department, boosted sales, and improved customer relations. The goal of the company was realized and achieved.
4) Questions 7 and 8:
Optimal Solution and Implementation:
Based on the information presented above, and discussions among the managers in CA it appears the optimal solution in this scenario will actually be composed of several opportunities and will be multi-phased.
It would be fair to assess the statistical familiarity among the management as fair to poor. As a result, and in order to improve the forecasting and reliability concerns, there will be a need for a greater level of internalization of statistical analysis. While it may be beneficial to continue utilizing third-party vendors for the gathering and summarizing of survey results, either an experienced analyst needs to be added to the senior management teams in CA or the existing management will need to be trained in analysis and forecasting in addition to the principles of research design.
This will need to be completed within the next few weeks as the deadlines for this year’s new product launch is closing quickly. As a result the firm will hire an interim analyst and will proceed with training and education as time permits. It will be the role if this analyst to determine the reliability of the data gathered for these projects, and will then prepare the forecasts for the probability of success of the proposed new offerings.
This will mark the beginning of the formation of an analysis team within the firm, which has been discussed earlier. Concurrent with the formation of this team will be the formation of an Enterprise Risk Management team. This team will consider the possible ramifications of failures in the proposed projects in addition to calculation the potential for the risks coming to fruition. Analysis of these probabilities may be supported by the analysis departments/teams.
These teams will come together in order to share information which has been gathered and their impressions of their respective research. This increase in communication will result in more effective communications to the board, and an increase in the levels of confidence in the projected results.
It should be noted that the research and analysis teams will incorporate into their policies the process of communicating with other companies in similar markets, and will analyze the results of their performance. This can be summarized as secondary research, as there will be public information available on the performance of these companies following the offering of a new product.