Marketing 530: Individual Response Paper
Keith Calvert
Marketing 530
November 18, 2014
Individual response to the following questions (repeat question in your paper followed by your responses):
1) What are the biggest problems facing the company in terms of customer management and how could a rewards program help address these problems?
a) Customers can’t decide between choosing the “wellness” type of vacation available at Cabo San Viejo or a Hawaii style vacation. A rewards program would incentivize customers to visit the location more frequently so as to accrue points for future visits. When a customer visits the resort for the first time and signs up for a program, they may not take advantage of all the activities available at the resort because they know they will be back to visit multiple times.
b) Certain customers see the total cost for the reservation and think the price is much more expensive than if they went on a vacation to a place like Cancun. Often times they are not considering the total costs associated in the vacation such as taxis, food, activities, and so on. The rewards program will allow customers to find greater value in the all inclusive price-tag by reducing the cost with each visit based on …show more content…
reward points.
c) Over time, return customers’ expectations continually rise and the resort is faced with the task of living up to those expectations.
Cabo has extremely high satisfaction rates and results in which customers say their expectations have been exceeded. When a customer returns, the resort wants to exceed their expectations again and again. A reward system that offered complimentary services to return customers would have an extremely positive impact on these types of customers. For example; a customer may want to spend a day doing an activity that cost extra money but couldn’t justify it after spending so much to book the trip. If it were possible to take part in the activity for free their second time around based on a rewards program, they would be thrilled to have that
experience!
2) Should Cabo San Viejo adopt a rewards program? Why?
a) I think that Cabo San Viejo should offer a rewards program because it there are so many competitors that offer similar services and have programs available. Potential customers are being groomed to build relationships with these types of resorts and they become stickier over time because they would never want rewards to go to waste. The biggest issue to decide on is the way in which rewards are given to their loyal customers. Cabo will never compete on price because they have been successful as a premier spa resort for decades and believe that their services are valuable enough to demand a steep price. They also attract the type of customers to which money is no object and are patrons because of the experience they plan to receive. Adding a loyalty program will enhance the experience just to enough to provide an element of surprise to their customers, while not offering discounts and possibly insulting guests by suggesting they would need a discount to return.
3) If Cabo San Viejo were to adopt a rewards program, how should points be awarded?
a) Loyal customers return time and time again to receive the wellness benefits, the pampering and the education on a how to live a healthy lifestyle. As first time guests, they are often surprised by the level of detail and care they are exposed to by the employees and how special it makes them feel to be given such a high level of service. This first experience is often good enough to incentivize them to return again without any loyalty program to encourage them. I would suggest several levels to the rewards program that can add value to returning customers, but also not take away from the unique aspects of this premier resort.
i) Bonus Nights for Day Spa Customers – As mentioned in the case, many customers visit the day spas in Aspen or Miami and dream of visiting the resort in Palm Springs one day. I would offer a reward function in which a day spa member can earn a free night based on their number of day spa visits. This would encourage day spa visitors to come more frequently and spend more money, and also pay for the first say, 4 out of 5 nights, receiving the 5th night for free. In the end, the resort isn’t discounting the nightly rates, they are simply rewarding loyal customers for their patronage at their other locations. ii) Complimentary Activities – Each time a customer hits a level (20th night, 40th night, and so on), they receive a complimentary activity from their premier services. This can be something they have always looked forward to but never wanted to spend the extra money on such as tennis or cooking lessons. They will look forward to their trip back in anticipation of this activity that will make this visit different from their last. iii) President’s Suite – The final level of the loyalty program would be the President’s suite in which the most elite customers will automatically have access to when they arrive. A customer making several trips a year will get to know the staff very well and will have had to spend a substantial amount of money. They would receive the most elite status and have a room with more amenities than the rooms they have used in the past. For the customers that have anything and money is no object, the prestige of having the President’s Suite at the top spa resort could be the type of reward any client would be thrilled to have.
Marketing 530
November 18, 2014
Individual response to the following questions (repeat question in your paper followed by your responses):
1) What are the biggest problems facing the company in terms of customer management and how could a rewards program help address these problems?
a) Customers can’t decide between choosing the “wellness” type of vacation available at Cabo San Viejo or a Hawaii style vacation. A rewards program would incentivize customers to visit the location more frequently so as to accrue points for future visits. When a customer visits the resort for the first time and signs up for a program, they may not take advantage of all the activities available at the resort because they know they will be back to visit multiple times.
b) Certain customers see the total cost for the reservation and think the price is much more expensive than if they went on a vacation to a place like Cancun. Often times they are not considering the total costs associated in the vacation such as taxis, food, activities, and so on. The rewards program will allow customers to find greater value in the all inclusive price-tag by reducing the cost with each visit based on …show more content…
reward points.
c) Over time, return customers’ expectations continually rise and the resort is faced with the task of living up to those expectations.
Cabo has extremely high satisfaction rates and results in which customers say their expectations have been exceeded. When a customer returns, the resort wants to exceed their expectations again and again. A reward system that offered complimentary services to return customers would have an extremely positive impact on these types of customers. For example; a customer may want to spend a day doing an activity that cost extra money but couldn’t justify it after spending so much to book the trip. If it were possible to take part in the activity for free their second time around based on a rewards program, they would be thrilled to have that
experience!
2) Should Cabo San Viejo adopt a rewards program? Why?
a) I think that Cabo San Viejo should offer a rewards program because it there are so many competitors that offer similar services and have programs available. Potential customers are being groomed to build relationships with these types of resorts and they become stickier over time because they would never want rewards to go to waste. The biggest issue to decide on is the way in which rewards are given to their loyal customers. Cabo will never compete on price because they have been successful as a premier spa resort for decades and believe that their services are valuable enough to demand a steep price. They also attract the type of customers to which money is no object and are patrons because of the experience they plan to receive. Adding a loyalty program will enhance the experience just to enough to provide an element of surprise to their customers, while not offering discounts and possibly insulting guests by suggesting they would need a discount to return.
3) If Cabo San Viejo were to adopt a rewards program, how should points be awarded?
a) Loyal customers return time and time again to receive the wellness benefits, the pampering and the education on a how to live a healthy lifestyle. As first time guests, they are often surprised by the level of detail and care they are exposed to by the employees and how special it makes them feel to be given such a high level of service. This first experience is often good enough to incentivize them to return again without any loyalty program to encourage them. I would suggest several levels to the rewards program that can add value to returning customers, but also not take away from the unique aspects of this premier resort.
i) Bonus Nights for Day Spa Customers – As mentioned in the case, many customers visit the day spas in Aspen or Miami and dream of visiting the resort in Palm Springs one day. I would offer a reward function in which a day spa member can earn a free night based on their number of day spa visits. This would encourage day spa visitors to come more frequently and spend more money, and also pay for the first say, 4 out of 5 nights, receiving the 5th night for free. In the end, the resort isn’t discounting the nightly rates, they are simply rewarding loyal customers for their patronage at their other locations. ii) Complimentary Activities – Each time a customer hits a level (20th night, 40th night, and so on), they receive a complimentary activity from their premier services. This can be something they have always looked forward to but never wanted to spend the extra money on such as tennis or cooking lessons. They will look forward to their trip back in anticipation of this activity that will make this visit different from their last. iii) President’s Suite – The final level of the loyalty program would be the President’s suite in which the most elite customers will automatically have access to when they arrive. A customer making several trips a year will get to know the staff very well and will have had to spend a substantial amount of money. They would receive the most elite status and have a room with more amenities than the rooms they have used in the past. For the customers that have anything and money is no object, the prestige of having the President’s Suite at the top spa resort could be the type of reward any client would be thrilled to have.