Classic Airlines Problem Solution “Every company knows that it costs far less to hold on to a customer than to acquire a new one” (Gooey, 2002). As the commercial airline industry is changing at a rapid pace, Classic Airlines (CA) is faced with the challenge of delivering increased value within leaner consumer budgets. According to Plunked Research Online, travel industry expenditures are decreasing and e-commerce is gradually replacing many jobs.With this report in mind, CA is set to use this pivot point as an opportunity to leverage proven techniques while improving the existing CRM system, and introducing a transparent planning process to increase customer loyalty. Issues and Opportunities Overextension and rising costs have been challenging CA.
With approximately 32,000 employees, 19% decrease in Rewards members and 20% decrease in flights, the firm is due for a significant change (I-COP Portal, Classic Airlines). Added pressure has been experienced following the Board of Directors 18 months/15% cost reduction mandate.These issues have developed into a crisis that resulted in a 10% decrease in stock price. Amanda Miller (current CEO) was hired in 2000 to prepare for her urination in 2002, following the retirement of Jack Broadway (former CEO). This transition happened at a critical time, and has unfortunately set back the company. Mrs..
Miller believes in operational excellence as a number one priority, which has left the firm vulnerable in a time when consumers need to be valued and competitors are learning more of continuous improvement.Stakeholder Groups Stakeholder alignment is an important part of marketing planning and implementation. Trade-offs exist at every level and should be balanced according to consumer needs/wants. Organizations must connect not Just with their consumers but with all the stakeholders, for the people affected by what the company does and how well it performs” (Kerri et al. , 2006). The focus of this paper will be to discuss how CA can create sustainable value for stakeholders. Relationships contain conflicting interests that need to be mediated and eventually optimized according to new improvement philosophies.
Management has been careful to maintain a high Employees need to be encouraged to know the consumer, which will help shape a clear picture of how the target market will be met. Developing a cross functional communication framework will become an important part of the improved CRM system, and should assist in closing the stakeholder communication gap. Problem Solution “Ultimately, it simplifies life by helping us see the deeper patterns lying behind the events and the details” (Sense, pig 73). Classic Airlines (CA) earned $8. 7 billion in sales, however, has battled within an ineffective CRM system and reduced yields from consumers.The firm suffers from a lack of CRM integration, a rudderless data mining focus, unclear customer relationships and minimal enterprise wide thinking. New priorities need to be developed such as highlighting important consumer needs, establishing realistic criteria for finding market segments, unearthing value drivers, focusing on proven customer retention approaches and leveraging stakeholder feedback. Though CA has been able to increase efficiency by hedging fuel costs, and restructuring, the firm is struggling from a lack of consumer value focus.
A CRM program was implemented in 1989 with the hope of identifying the voice of the customer, however, rewards membership continues to decline. Identifying market segments requires knowledge of the most important groups demanding the product ND should be accompanied by specific strategies to satisfy this consumer. According to Plunked research, next year’s airline industry revenues are decreasing.
With that said, commercial airlines need to prepare by offering accommodating products/services which address budget restrictions, and e-commerce capabilities.Due to the success of online registration systems, all airlines are planning for a potential transition into mostly e-ticketing services. These pressures are causing conflict within firms, which can are best remedied with refreshed cross functional applications. This kind of solution is the only way to combat employee turnover and morale fluctuations.
Discovery of primary consumer needs/wants should be an ongoing effort. Industry climates change fast in the present global economy, and can be best prepared for by establishing links to provide immediate data. The best way to understand the customer is by asking them.This is far more effective than wasteful Research and Development spending. “Firms spend billions of dollars annually on marketing and technical research that significantly reduces, but doesn’t eliminate, new product failure” (Kerri et al. , 2006).
Certain factors shape the demand for any commercial airline product/service, and the firm is planning to update the CRM system to keep pace with industry changes. “It is marketing Job to make these departments understand that without happy, satisfied customers who buy the organization’s product, there is no company and there are no Jobs” (Kerri et al. 2006). Similar statements about consumer happiness should be considered the new mantra for organizational decisions.
Though the previous CRM system focused on greater efficiency, stock prices decreased by 10% and rewards members are down by 19%. Regardless of the company’s ability to save 12% on fuel costs, CA is having trouble increasing value in other areas. The target consumer must become the leveraging area, and efficiency should increase yet not at the expense of stakeholder satisfaction. Overarching theme to CA employees.
Tremendous opportunity exists within the industry if management can take control of leadership roles while introducing transparent governing techniques. When employees feel more included, the transformation will take place easier. Value is ultimately built on the improved relational variables cultivated between business units. CA is experiencing difficulty in understanding how the enterprise can function as an entity as opposed to a collection of divided groups.
An enterprise wide continuous improvement plan will hopefully, invigorate all stakeholders from consumers all the way up to the Board of Directors. As power shifts with suppliers and consumers, innovative companies are altering the competitive balance in their respective industries to revolutionary business models built on relationships and innovative uses of technology’ (Delilah, pig 2). Although new risks are involved within the transitioning airline industry, CA must evolve proactive models to address the challenges/trends that consumer inquiries reveal. Catherine Simpson, SCOFF, will have to update her thinking that has been primarily focused on increased efficiency. Strategy and efficiency should always exist alongside each other.
Just as sophisticated Internet technologies are impacting the airline industry and replacing traditional platforms, internal processes are changing as well. CA will have to restructure an internal CRM system that introduces cross functionality and aligns with the consumer. Success for CA will depend on how well the organization can average the right areas consistently. End State Vision CA must create a sustainable strategists marketing model that evolves through time, and provides communication links to inform internal decision-makers of necessary adjustments.A firm must have a vision in order to establish an underlying construct to function from. As mentioned in the problem statement section, management should focus on customer needs, identify market segment criteria, understand value drivers, build retention, and leverage important customer feedback. These goals will be possible when CA proactively structures an ERM approach (enterprise wide risk management).
The ERM philosophy is meant to suggest the presence of a continuous assessment platform, which should ideally function with relationship marketing wiring.Balancing risk with customer focus will help the firm develop into a growing entity. The primary reason that CA has experienced difficulty is that efficiency emphasis overshadowed the strategic thinking. “Services need to ensure that employees have the attitude, skills, and commitment needed to meet customer expectations and sustain customer loyalty’ (Kerri et al. , 2006). Employees must be charged with the accessibility of maintaining a vision that lives through a combination of strategy and efficiency.In addition, realistic marketing strategy should delight stakeholders, and Benchmarking is a part of any successful company transition. In this case our discussion will include points derived from Southwest Airlines, United Airlines and GE.
Southwest has been able to deliver consistently high regard for consumers and employees, which as of February 2009 reported a record-breaking 36th consecutive year of profitability. Research attributes this success to realistic revenue growth initiatives, strong liquidity, fuel hedging, , and the relationship of consumers.From actual flights to consumer experiences with the website, the firm values relationship marketing concepts. This approach has set a high standard within the airline industry. CA can learn from the Southwest consumer focused philosophy, which should be perfected in the new CRM system. United Airlines has carved a niche for itself through an emphasis of onboard sophisticated technology. Some of the services offered are in-flight Wi-If, DC power outlet ports, a liberal cell phone policy (on ground), in-flight satellite phones, and updated entertainment options.
The services are supported by a website to communicate the importance of consumer loyalty, and reflect firm efforts of providing convenience and affordability. GE is a famous story of how cross functionality revolutionized a firm, thus increasing consumer value and profitability. The fact is that through customer focus, the company grew from a market value of $12 billion in 1981 to $280 billion in 1998. This achievement was attributed to an overarching philosophy that traditional emphasis on efficiency must be married to continuous strategy supported by target arrest value assessments.
CA needs to be adaptable enough to evolve along with the industry. Analysis of Alternatives In order to optimize the CRM system, management must prioritize the alternatives using appropriate weights. The most important element of the marketing plan is a cross functional/consumer focus emphasis that combines concepts. For the sake of procrastination, consumer focus will receive the highest weight, and cross functionality receives the second most important. Even without cross functionality, consumer focus should remain a priority throughout the life of the company.This paper attempts to expand on the alternatives mentioned by presenting an enlightened perspective on how to implement a sustainable marketing philosophy. The ERM approach is an important concept that should be communicated in a friendly/accessible way, along with pertinent customer relationship strategic points, retention elements, and the importance of transparency.
A marketing plan should also be balanced with performance measures that consider the shift occurring within the industry, while setting guidelines to ensure that management is showing the best effort possible.CA employees should be reminded that learning tends to fade; wherefore, updated requirements must be mandatory. Risk Assessment and Mitigation As the industry changes, the company will be challenged by trade off choices that do not add value. Implementing risk mitigation techniques will help prepare the firm for contingencies, and build a stronger structure.
Introducing ERM is a wise choice. Inform organization needs an enterprise wide process to bring risk into balance as a strategic imperative in a complex and changing world” (Delilah, pig 1). The firm will unified environment.Finding true sources of value is one of the first phases of ERM, and management would approach this part with an open mind. Changes often produce new drivers, and surprise decision makers. Therefore, the CA analysis team should recognize potential power shifts, assess risk, and categorize elements as tangible or intangible. Often a source of value has gone unnoticed, which could upset the balance. Companies must take risks; however, a proactive/inquisitive mindset can help avoid risks beyond traditional risk models.
Risk can be best repaired for by embracing it.The previously excessively efficient CRM system has proven to cause more harm than help. As mentioned, consumer loyalty has declined as well as the stock price. Along with these facts, the firm can usually expect other areas to suffer as well.
An issue such as employee morale is a concern (with the pressure to lower costs) and the Board of Directors should know this. By developing efficiency guidelines, senior leaders will mitigate risk by communicating the need to control costs without sacrificing stakeholder value. Every airline company is hedging fuel costs, yet a company such as Southwest is well balanced by maintaining customer focus.This model should become the new approach for CA. The ability to define a company’s future in terms of its opportunities-not to mention its ability to manage its destiny in an uncertain environment-is a powerful driver of share price” (Delilah, pig 1). Risk management should be structured in a way that addresses the organization through realism and optimism.
By implementing ERM processes, functional barriers will be minimized thus clearing paths for risk management communication. Objectives should be aligned with consumer value and relevant to the evolving industry.Succeeding with this integrated system requires ongoing assessments done by employees who value the entire firm, not Just segments. Optimal Solution A new organization must balance value building elements, integrate optimal cycles of consumer feedback; include target market segment identification, relative evaluative criteria, relationship marketing practices and retention techniques. These points should be continuously addressed within the CRM system, while management consistently emphasizes how the previously unsuccessful system will improve according to specific guidelines.Designing the new CRM is a complex process that involves customer focused assessments of core material, and it should be supported y the entire organization.
“CRM strategies are only effective if they deliver positive outcomes. It is no longer good enough Just to say that you are customer focused, but it matters what you do” (Bull, pig 8). Creating a new CA will entail a shift of perspective in order to leverage marketing planning, prioritize product/services to satisfy the consumer, assess customer behavior consistently, which should ultimately increase market share and sustainability.Traditional fragmented approaches created a CA that was eventually top-heavy with efficiency, and lost contact with the customer voice. The new strategic marketing plan will use the improved CRM as a focal point to align functionalities through integration and communication. In addition, management will have to rise above the familiar solutions by acknowledging current industry risks as critical senior leaders will be allowed to invite multilevel input. This kind of accountability has been missing from the firm, and should reorient the thinking processes of all departments.Communication within the CRM will receive new carefully targeted attention.
“During the transformation the primary task of the leadership team is a clear, insistent, and unambiguous transmission of their vision to others in the organization” (Peeked, pig 100). When the enterprise has made every attempt to link the CRM to activity maintenance, transition should be felt within departments. Customer response/behavior should help shape changes, as management continues to emphasize the importance of internalizing critical success indicators within the market.The process can be perceived as a translation of consumer value that involves a metamorphosis into employee proactively.
This is a complex challenge that management should meet with open minds, while remembering that the decision ill require optimal trade-off decisions. Implementation The strategic CRM implementation for CA will succeed according to how well senior leaders can restructure the holistic consumer voice into the existing system. Expert IT personnel will have too help guide employees on how to reengineering the platform according to industry success models.
The greatest challenge of implementation will be in dealing with change resistance, which will be addressed at information sessions geared to communicate the relationship marketing emphasis. Increased consumer use of the Internet is signaling the company to accelerate the CRM transition. “Another implementation issue is that of sourcing.
Many organizations have few alternatives but to outsource a significant portion of their CRM solution as they lack the resources to develop CRM software” (Bull, pig 2).According to industry experts, the majority of CRM systems fail due to process conflicts and loss of consumer focus. Maintaining an awareness of these facts will help CA maintain growth and strengthen relationships. The implementation timeline can be found in table 6 of this document.
Evaluation of Results CA is planning on a new balanced approach to help company plant long term deeds that will reap sustainable rewards. In order to achieve exceptional quality levels, management will have to put metrics in place to ensure that the CRM system is performing according to specifications.One of the ways to communicate the status of a project is to display dashboards that report scorecards on each element. This is a way that all employees will have access to updated information to base adjustments on.
The scorecard should commit to transparency regarding performance, consumer response, internal insight, and overall stakeholder information. Senior leaders should refer to this function of the CRM, and develop an obligation to perform according to organizational goals. Scorecards are to continuously improve and show that the staff is accessing and processing information.
Causation is an important concept for management to share. Root causes create results, which will be displayed on the scorecards. Within the CRM, employees should be encouraged to offer input on how to identify root causes of lost rewards CA will begin to take more control of processes.
Scorecards are placed to help define components of the organization, and to provide a comprehensive view on the structure of events. These metrics should be visible at every level, and no employee is exempt from performance measurement. These goals must be personalized by designing metrics to act as surrogates for the goals. Think of the goals themselves as latent or hidden constructs. The objective is to identify observable things directly related to the goals that can be measured” (Peeked, pig 66).
Retention will become an emphasis, which will balance the over efficiency focus. A good way to assess this measurement is to calculate the financial value of each consumer. After the CRM system is in place to track behavior/ espouse, the finance department should display time periods, segments, and customer net present value.In this way, the target customer will be viewed qualitatively and quantitatively. Consumers are the pulse of the company, and the organization should be reminded of this on a consistent basis. Retaining employees and customers requires an enlightened perspective focused on sustainability and high value.
Management will have to make mental shifts to realize the importance of an integrated CRM to align the company. The future of CA relies upon a concerted effort infused with productivity. Table 1Issues and Opportunities Identification Concept Application of Concept in Scenario or Simulation Reference to Specific Course Concept (Include citation) Personal Experience at your Organization Discovering Customer Needs Due to the rising cost of fuel, and declining classic rewards membership, the CRM system will need to be restructured to better to listen for the voice of the customer. The firm will be able to increase consumer satisfaction by understanding indicators of consumer benefit by inquiring on past experiences. “Robert M.McGrath, who has studied more than 70,000 of these new product munches, offers two key suggestions: (1) focus on what the customer benefit is, and center, employees are told to act with haste yet effectively.
This recommendation often disconnects the consumer from the experience, and the firm can often lose sight of how to better help the experience. Establishing criteria for identifying market segments Classic airlines had a much stronger loyalty program. By integrating the new CRM system functionalities, market segments will become clearer. The firm must take care to choose its target market segments carefully. If it takes too narrow a set of segments, it may fail to reach the volume of sales and profits it needs” (Kerri et al.
, 2006). As the newspapers tried to help consumers transition to the Internet, our customer service pitch was ordered to change drastically. Senior readers are upset by the emphasis, and many have canceled subscriptions. Understand key drivers of customer value John Hartmann, Senior Vice President, believes that front line customers will reveal valuable information.Employees have a responsibility to engage consumers and organize data to establish value drivers.
“Never lose a guest. Instant guest gasification is the responsibility of each employee. Whoever receives a complaint will own it, resolve it to the guests satisfaction and record it” (Kerri et al. , 2006). When a testing candidate complains about a procedure, we are honored to help make their experience more comfortable.
These are the moments where we learn most. Leveraging customer feedback Previous efficiency focus of the CRM cost the company more than it did in savings.Oftentimes the most important leveraging areas are not so obvious.
“For example, its website (wry. Rollerblading. Com) enables its marketing executives to tot only obtain detailed information about what skate features customers want, but also link these wants to their individual characteristics like age, sex, and lifestyle (like hobbies and purchasing behaviors)” (Kerri et al. , 2006). The moment, that newspaper subscribers share the concern of the employee, the opinion needs to become part of an aggregate feedback evaluation.
We always tried to send messages to leaders; however, our system was not set up for cross functional communication. Marketing and customer retention Instead of engaging in market price battles, Classic Airlines should have targeted customer needs. Price is not the only element that influences consumer behavior. “The marketing department is responsible for facilitating relationships, partnerships and alliances with the organizations customers, its shareholders (or often other organizations” (Kerri et al. , 2006).
Test administrators are the voice of the company. When an incident occurs, management needs to realize when criticizing employees, a reaction is created that damages customer relationships. Instead, facilitating trusting connections with the employee will lead to stronger alignment throughout points of contact. Stakeholder Groups with Competing Values Interests, Rights and Values of Each Group Customers vs..
Management Quality products that please the consumer, while achieving sustainable productivity and efficiency.Programs need to link with customer value. Employees vs.. Consumers High-value maintenance, which expands market share while establishing Job security and lends to aligned enthusiasm.
Satisfying needs and wants. Management vs.. Lower Level employees Each level contains dynamics that are best balanced through communication. Management wants to prove the success of effectiveness/efficiency and lower level employees are concerned with Job security. Developing cross functional communication to create new platforms for continuous improvement goals.