Executive Summary:
Canyon Ranch is considered the top-level destination spa and charges significantly higher rates compared to other destination spas. However, competition within the industry is growing. Day spas are now partnering with medical professionals to offer services such as nutrition, homeopathy, physical therapy, and general medical practice. Additionally, certain hospitals have started incorporating spa treatments into their offerings and wellness centers are now including nutritionists.
Canyon Ranch is currently grappling with the challenge of expanding their business while preserving the core principles that define Canyon Ranch. In terms of IT infrastructure, their systems are rudimentary and not particularly efficient. They rely on a CLS based system for recording transactional data, while Guestware is utilized for managing customer preferences, support incidents, rapid response, and other related functions. Unfortunately, there is a lack of integration between Guestware and CLS. Furthermore, the program coordinator, who serves as the main point of contact for guests during their stay, does not always have access to all the necessary information in advance.
The restaurant and salon at the Ranch do not have POS software, which means they are unable to compile and track sales data. Each business unit at Canyon Ranch is focused on improving customer service and personalization, with Berkshire leading the way. The management is faced with difficult questions such as whether Canyon Ranch should develop a customer relationship management strategy to maintain its status as a top destination spa, and what should be done with the extensive amount of data collected during the customer experience.
Canyon Ranch, a Health Resort and Spa, was founded in 1979 by Enid and Mel Zuckerman with the aim of creating an inspiring and motivating environment for people to transform their healthiest thoughts into action. In line with this objective, most IT functions have been kept separate from the guests. However, this disconnection from technology extends beyond just the guests.
Canyon Ranch is lacking the technology necessary to pursue new clients by utilizing statistics from its numerous visitors. Additionally, the program coordinators often lack the necessary information to assist guests effectively. Furthermore, the company’s restaurants and shops do not have a POS system, making it impossible to track sales. In terms of situational analysis, Canyon Ranch’s strategic vision revolves around creating an environment that inspires and motivates individuals to transform their healthiest thoughts into action.
Canyon Ranch has prioritized maintaining a healthy environment by separating IT functions from guest areas. Regrettably, this disconnection from technology extends beyond the guests. Despite having a wealth of visitor data, Canyon Ranch lacks the necessary technology to utilize statistics in attracting new clients. Additionally, program coordinators often lack essential information to assist guests, and the restaurants and shops lack a POS system to track sales effectively.
The booming Spa industry in the U.S. posed a threat to CR as other companies targeted it directly, jeopardizing CR’s uniqueness. However, authors have highlighted CR’s Health and Healing department as the gold standard that sets it apart from competitors. Undoubtedly, this industry’s prosperity made it challenging for CR to compare and analyze its rivals.
Despite being known for its excellent services and facilities, CR had to revamp its marketing and IT strategy due to increased competition and industry changes. The current strategy focused on acquiring and nurturing innovative expertise in both resort and spa services and IT infrastructure. The goal was to lead the spa industry by finding solutions that added value to various business functions and activities, such as improved management and use of data for informed decision-making. The strategy also aimed to attract new customers, retain existing ones, align strategic goals with IT strategy, and maintain their prestigious reputation as a leader in the industry. Additionally, CR aimed to provide unique services and enhance customer experience by offering unmatched packages compared to competitors.The top-level management of Canyon Ranch recognized the potential value of IT in their business strategy, leading them to make evidence-based decisions. They implemented a CRM system to achieve their business and strategic goals, which focuses on the company’s relationships with customers, clients, and sales prospects. This technology helps organize, automate, and streamline various business processes, specifically in sales, marketing, customer service, and technical support.
Mike Randle, the Corporate IT director, discussed the complete IT evolution within the organization since 1996, which ultimately resulted in the adoption of a CRM system. Previously, IT was perceived as having low importance in the business and was primarily utilized for managing computer systems and isolated tasks. However, the management eventually recognized the advantages of integrating computerization into their business operations.
This change was primarily prompted by the growing competition in the spa industry. However, upon analyzing this case study, it becomes evident that CR as an organization was facing issues and lacking in certain areas, which will be discussed in detail in the following sections.
One major problem that was identified is the poor IT infrastructure. Firstly, CR had a decentralized IT infrastructure, meaning that the destination resorts and spa clubs were operating independently. Additionally, they were using a UNIX-based legacy system called the Computerized Lodging System (CLS) since 1986. This system was mainly used for scheduling purposes and did not cater to other functions. Furthermore, tracking of other activities was not performed effectively as CLS was designed to efficiently handle transactions and did not gather data strategically for decision-support systems. Even after implementing an IT system, some special activities/services relied on a paper-based list system, further contributing to ineffective data management. Despite having data that was 10 years old, CR was unable to track important information such as the exact expenditure of their guests.f) The implementation of Guestware by CR was a strategic and wise decision for CRM purposes. However, due to its inability to integrate with the legacy CLS system, Guestware operated as a standalone system. This limited the potential use of the software and hindered CR from fully benefiting from it.
CR faced a lack of point-of-sales (POS) software in various departments. As a result, individual transactions could not be tracked independently.
h) The data management at CR was inefficient, leading to the loss of valuable data in some cases. Additionally, the collected data could not be utilized for decision-making processes aimed at aligning strategic goals and enhancing CR’s competitiveness.
2. Poor marketing skills: CR did not prioritize marketing efforts, and their marketing strategy was outdated. As a result, heavy advertising was not pursued.
CR did not have a formal recognition or reward program, which could have generated a stronger customer base and motivated customer loyalty. Despite advancements in the marketing industry, CR did not focus on expanding their business to generate more revenue and gain competitiveness over their rivals in the spa industry. They primarily sought to attract new customers through direct communication and affiliations with similar partners. Their static website did not help in attracting and connecting with both new and old customers. Additionally, although the Health and Healing department showed rapid growth and was a differentiating factor, it was not effectively marketed. Increasing competition led CR to implement IT practices, but they faced a threat from other emerging companies offering spa treatments.b) The prices for CR package were higher compared to other packages offered by other companies.
c) The uniqueness of CR, which was its Health and Healing aspect, was imitated by other spa clubs and medical centers. They provided the same service at significantly lower prices, posing a significant threat to CR’s competitiveness and overall established characteristics.
Potential Alternatives:
a) The marketing department can attract more new customers through customer profiles, and knowing which cosmetic products are selling will lead to more efficient stocking and marketing in the salons. One way to achieve this is to replace the CLS system with a PMS system that can interface with Guestware and support a POS function. Additionally, the new system should allow program coordinators to personally access member information and requests instead of going through the reservation department.
b) Utilize the data gathered from CLS and Guestware to implement a Customer Relationship Management system. This system will create profiles of potential customers, enabling marketing to accurately target potential guests.
c) Enhance the website to create a more interactive experience for visitors. This includes features such as online booking, virtual tours, and rotating articles promoting spa treatments.
Analysis of Alternatives – SWOT Analysis of Canyon Ranch:
Strengths:
– Canyon Ranch is renowned as the industry’s gold standard.
– Their Health and Healing component is unparalleled in a similar setting (all under one roof).
– 55% of in-house guests are repeat customers.
– Health and Healing showed the fastest growth.
– They have locations near all major US markets, maintaining a staff-to-market ratio of 2.5 to 1.
Weaknesses:
– Some locations heavily rely on customers who fly in.
– Program coordinator turnover is high at 50%.* The absence of adequate IS infrastructure hinders the utilization of customer data, while neglecting to acknowledge repeat customers as a valuable asset.
* Numerous opportunities exist to gather and exploit extensive data for enhancing business operations.
* Leveraging direct communication with the current 2 million unique visitors on the website is a key area to focus on.
* Enhancements should be made to transform the website from a static platform to an interactive one that fosters online communication.
* A significant threat arises from day spas partnering with medical professionals, offering similar services as Canyon Ranch.
* Furthermore, hospitals are venturing into the spa and wellness sector by incorporating nutritionists into their services.
1) The implementation of CR’s IT-strategy was slower than the market pace. To expedite this, seminars can be conducted throughout the organization to generate a flow of ideas for efficient data capture from top-level management to frontline managers.
2) There were more female customs at CR compared to males. To address this, CR can offer special packages and implement an advertising strategy to attract more male customers.
3) CR’s marketing strategy was inadequate and can be improved through internet utilization, which may require the hiring of an industry expert or marketing consultant.
4) Implementing reward programs can aid in attracting new customers and retaining existing ones.
5) Conducting formalized customer feedback sessions and questionnaires can help evaluate CR’s services, gather suggestions, and cater to custom requests.
6) Enhancing CRM at CR involves gathering valuable data and linking it to the main database, allowing all systems within the company to be connected. This can provide strategic information.
7) To enhance user experience, CR can improve its website by incorporating an interactive chat box for customers to connect with the website and the brand.The recruitment process for CR should prioritize the skills, mindset, and cultural fit of potential employees. Additionally, applicants should showcase their unique personal abilities through practical sessions rather than presentations.
Conclusion Canyon Ranch should implement a personalization and CRM strategy to centralize customer data. By consolidating data from their current decentralized IT infrastructure, they can address customer needs quickly and effectively. CRM can also facilitate targeted marketing programs for individual customers.
The company can use the CRM strategy to evaluate its customers and develop features, products, or services that suit their preferences. This information can be used by different locations to personalize the customer experience before their visit. Additionally, the CRM strategy can identify data that needs to be captured. Insights from additional purchases and wait-list sign-ups can help determine the demand for current offerings and allow Canyon Ranch to add more popular items while reducing underutilized ones.
