Assessment on "Elizabeth Arden Day SPA"

Assessment 7 pages (2423 words) Sources: 1+

[EXCERPT] . . . .

Elizabeth Arden Day Spa

Current situation

Elizabeth Arden Red Door Spa is the largest branded luxury day spa chain in the United States. Red Door has a vision of "enhancing the lives of its guests." It aims to achieve this, with its spa service, through its stated mission of delivering impeccable customer service, expertise and the finest quality products" (RedDoorSpas.com, 2010). The chain operates 31 spas around the country. The spas operate with a differentiated strategy, targeting upscale and upper-middle clientele. Because it is a chain, Red Door also trades on its brand, which includes both the Red Door and Elizabeth Arden marques. These marques are associated with luxury and high quality of service. From the marketing perspective, Red Door backs up these associations with premium pricing and timelessly stylish but low-key imagery.

The company emphasizes direct marketing, used in conjunction largely with new media. The current customer service emphasis is on building relationships. In the spa business, referrals are an important source of new customers and repeat customers are vital to the ongoing survival of the business. The direct marketing strategy at Red Door incorporates a number of different strategies. The company builds a database of its customers, gathering information when they visit. Typically, if a customer needs to be enticed to provide this information, a sweetener is offered. Once the customer information has been captured, it is then used in a number of ways. The first is that the customer information is held for future bookings. This allows the staff to understand the history that has been built with the customer to that point. S

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ervices can be tailored if need be, but more importantly this knowledge provides the staff with cross-selling opportunities.

In addition to cross-selling, the database allows Red Door to target its customers for promotions and to generate repeat visits. This can work in a number of different ways. If the customer has not visited the spa in a given period of time, a communication can be sent reminding the customer about the spa or offering one of the current deals in the hopes that the customer can be enticed back. For all customers, the database affords the spa the ability to announce promotions. In addition, the spa can push referrals, often with the aid of a sweetener, to its existing customer base. For example, a current offer announced on the company's Facebook page shows offers 20% off on a customer's next visit for any referral they bring that makes a purchase. This helps to draw in new customers, who in turn will be asked for their referrals.

The company facilitates its marketing efforts through the use of a marketing dashboard. The company uses the dashboard to identify on a customer-by-customer basis who drives the most profit. This helps the dashboard to better target its promotions and direct marketing. In doing so, Red Door has seen significant improvement in its direct marketing campaign results. Prior to implementing the dashboard, the company had gathered 2.7 million names and addresses; the dashboard allowed the company to segment that list by visits and revenue-generated (Fletcher, 2009).

The company already had the identification part of the IDIC process complete. Its database provided a broad measure of the company's target market, for example, and what markets were unlikely to emerge as viable target markets that management may otherwise have assumed to be good target market options. The dashboard system allowed Red Door to better differentiate its customers, not just by demographics but by the actual revenue and profit that they brought to the company. This revenue could be measured both in terms of direct revenue and indirect revenue through the referrals that the customer generated.

Interaction with the dashboard took roughly the same form as before, except that in the time that the dashboard has been in place Red Door has expanded its social media presence -- a coincidence but it has combined with the dashboard to change some of the company's interaction processes. Red Door utilizes social media to communicate with some of its customers, but this is a small portion of the customer base (just 5900 fans on Facebook, for example). The direct marketing campaigns driven by the dashboard are far important. Today, Red Door is able to tell quickly whether or not a promotion is working. This allows the company to scrap failed promotions and to recycle or retool successful ones in the future. The result is increased customer interaction and more importantly, more customer interaction of the types that the customer prefers.

It is this customization that has driven the Red Door spa in the past couple of years. Customers can now be easily segmented on the basis of their preferred products and services. Promotions can be customized, either to those products and services (driving repeat visits) or to those products and services combined with others (cross-selling). The success of the past couple of years with the marketing dashboard is the result of being able to respond quickly to customer reaction to the promotions offered and give the customers only those promotions that drive firm profitability the most.

2. Re-design the customer service policies and strategies

Given that the current customer service program at Red Door has delivered excellent results, it would not make sense to suggest a complete overhaul. In this case, however, there are some key adjustments that could yield meaningful results. These are to leverage the fact that Red Door is a chain by providing chain-wide promotions; and to introduce a loyalty program that ties in all of the direct marketing elements that the company currently employs. These tactics both work within the IDIC framework. The loyalty program will be outlined in Question #3.

The current program is focused on individual spas, for two reasons. The first is that customers tend to patronize a single spa, rather than spreading their business through the chain. The other is that each spa has its own unique look and feel, and there is variability in the pricing structure. By streamlining the price and service offerings, Red Door can continue to deliver a luxury level of service, but can also cross-market across branches. The current customer base has already been identified. Red Door also knows which customers are strongest in referrals, a key point of differentiation for this strategy. The interaction in this case will be focused using the top referring customers to generate referrals for each of the different spas. These upwardly mobile women will know friends and family all over the U.S. The referrals can be generated on a chain-wide basis, with discounts and other sweeteners offered to the referrer for each new referral. By using the existing direct marketing architecture to build business in multiple cities simultaneously, capacity utilization at Red Door spas across America can be improved. This direct marketing strategy is especially important when Red Door opens a new spa in a city and needs to reach capacity as quickly as possible.

With respect to segmentation customers will be segmented in a matrix fashion, based on both the number of referrals generated and the location of referrals. For Red Door to target its referral promotions best, it needs to know which customers do the most referring, but also if those customers refer only within one city or if they have the capability of generating referrals in multiple metro areas. The matrix would have the following elements. On the geography side Local Scope, Regional Scope, National Scope and on the frequency side would be Star Referrer, Occasional Referrer, and Non-referrer.

The metrics that can be used to measure the success of this program are the number of referrals generated. For this we are seeking 20% improvement over the past year's rate of referrals. The dollar value of the transaction for the first referral is something we also need to measure. There is no target for this but this information will be used to set a baseline for future targets. The third metric will be the number of repeat visits for the new referrals in their first six months as a customer. We need to test the stickiness of our service for new members. The total dollar value of these transactions will also be measured. Again, we do not have specific targets but these results will be used in future programs because we will want to improve on the dollar value of the first transaction, the number of subsequent transactions and their dollar value when we enhance our referral program further in a year or two to allow it to add greater value. The sweeteners we will give for these referrals will be valued in the $50-75 range, so the break even will be revenue from the new referral of $100-$200 depending on the profit margin on the service or product the referral purchases (this is why we need to measure how much the referral spends -- so we can use that in setting our sweetener value going forward).

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Quoted Instructions for "Elizabeth Arden Day SPA" Assignment:

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Authentic Assessment (MARKETING CLASS) BOOK WE ARE USING: MANAGING CUSTOMER RELATIONSHIPS by: DON PAPPERS AND MARTHA ROGERS)

Project Description

Overview

It is an authentic assessment of your ability to apply, analyze, synthesize, and evaluate, with clarity and exactness, what you have learned during this course, and to demonstrate this ability through effective written communications.

Authentic assessment is a form of assessment in which students are asked to perform real-world tasks that demonstrate meaningful application of essential knowledge and skills. Student performance on a task is typically scored on a rubric to determine how successfully the student has met specific standards.

Directions

You will select an existing business on which to base your project. (ELIZABETH ARDEN DAY SPA)

You will choose a business that does not have a program for managing customer relationships as part of their overall customer service efforts. Your job will be to incorporate customer relationship management in the business*****s overall strategy and operations.

Selecting a business for your project (ELIZABETH ARDEN DAY SPA)

The company that you choose does not have to be a large, well-known corporation, but it can be. You might choose the local car maintenance shop that you have been doing business with for years. You might choose a new dry cleaning establishment in your neighborhood. These businesses are often flattered to have been chosen and glad to have some marketing ideas.

You might be surprised to learn that the company goal of the car maintenance shop is to generate enough profits to allow the husband and wife to retire in Florida on a nest egg of $2M. Their marketing strategy might be to *****get everyone who comes in here to do all of their car maintenance with us for the next twenty years and for each of them to bring in a friend who does the same*****. This is a marketing strategy even though the owner does not state it in the marketing terms you have learned.

The dry cleaning establishment, on the other hand, might have, as a business goal, to own a chain of four dry cleaning establishments in the county within the next ten years. Their marketing strategy might be to differentiate themselves from their competitors by offering free delivery.

Some students enjoy doing projects where they work. If the business is large, you might scale it down to one department or one function of the business. Just be sure that your work takes into account the business as a whole. Company goals and marketing strategies are sometimes published to employees and found in frames on the walls. If not, ask. You might be surprised what you learn.

If you have done business with a company and noticed that they do not seem to have a strategy for managing customer relationships, you might target that business. You will need to do a little research to determine whether or not this is a good candidate. You should be able to find what you need on the internet. You will not learn their secret strategies. However, you will learn enough to formulate your opinion as to their company goals and marketing strategies. This will be sufficient for the purposes of this project.

The company/business/firm selection is an important first task. You might reject more than a few choices before you settle on the one you want to use. Your colleagues and your instructor can help you during this process.

You will be provided with directions, but not leading questions. This means you will need to employ high-level cognitive skills in order to successfully complete this project. This assignment serves seven important learning objectives and assesses your ability to:

1. Incorporate the role of managing customer relationships within the company*****s overall business goals and marketing strategy.

2. Apply metrics to measure the success of customer relationship management efforts.

3. Differentiate customers by loyalty segments.

4. Evaluate technology-related tools (CRM) that will support various customer relationship management programs and goals.

5. Design customer loyalty strategies and programs.

6. Design customer service policies and strategies.

7. Demonstrate critical thinking and written communications.

Project Requirements

1. Current Situation

A. Identify your company and provide the company*****s stated overall goals and marketing strategy. If the company does not have a published statement of goals and strategies, state what you believe them to be based on what you have learned and observed about the company.

B. Provide a thorough description of the company*****s current customer service. Use the IDIC Model for managing customer relationships as your framework. Include the organizations and processes that are in place to accomplish the IDIC (Identify, Differentiate, Interact, and Customize) tasks. Comment on the strengths and weaknesses of the current processes. Include your assessment of the impact to the company goals and marketing strategies of the way the company serves its customers. For example, if the goal is to increase share of customer, does the customer service process include a way to collect information about the customer*****s potential need for additional services?

Do not provide a comprehensive description of the company. Only include the information required to satisfy the task at hand.

2. Re-design the customer service policies and strategies.

Provide a newly designed customer service program based on the principles of the IDIC model. Your design decisions should correspond to the assessment that you performed in #1 above. You can recommend small or sweeping changes. Sometimes one small, very insightful change can make a dramatic difference in the service a company provides. The changes could be organization, process, training or other. It should support the company*****s goals and marketing strategy. You should explain what principles of IDIC you are satisfying with your recommendations. For example, if you decide the sales force should have access to customer complaint information, you are basing your decision on the Interact building block and the principle of integrating across touchpoints.

3. Design customer loyalty strategies and programs.

Propose a customer loyalty strategy and create a customer loyalty program or programs. Incorporate the strategy and program(s) in the company*****s overall goals and marketing strategy. Those requirements and how they are to be met should be stated. Be very detailed in your descriptions. The program does not need to be extensive or complex, but it should meet the requirements of effective loyalty programs. If you have chosen a small, simply organized business, for example, you should be able to recommend at least three loyalty programs. Your recommendation would lack academic rigor if your only suggestion is that the business provide the customer with a card to be punched each time a purchase was made and the tenth purchase would be free. If, however, your recommendation involves creating a database generating real-time customer analytics used by multiple channels, one loyalty program, well worth the expense, would suffice.

4. Include differentiation of customers by loyalty segments in your customer service and loyalty program designs.

As part of your customer service policies and strategies design (#2 above) and your customer loyalty strategies and programs design (#3 above), classify your company*****s customers according to customer loyalty differentiation categories. Include those classifications in your designs.

5. Evaluate technology-related tools (CRM) that could support your customer service and loyalty programs.

Very clearly state the tasks you want the technology to perform for you. Identify the criteria against which you will appraise (benefits, costs, features). Identify at least three CRM systems as potential candidates. Describe the purpose of each of the software and analytical tools. Decide which would best support your programs. Early on in the appraisal process, it may be clear that one or two of the three systems is not a match for the needs of your business. In this case, your comparison can stop at the point where you have eliminated the system/s that does not meet your requirements. Complete the evaluation by showing how the remaining system meets all of your stated requirements.

6. Apply metrics that will measure the success of your customer service and loyalty programs.

Exhibit the metrics commonly used to show the value of customer service and loyalty programs. Illustrate how they would be used to measure the success of your particular programs. For example, if you recommend implementing a customer service training program, the goal of which is to prevent customers from leaving and taking their business elsewhere, show how many customers you predict you will save and what the saved revenue impact is for your program. Show the cost of the program. Determine the breakeven point. Select at least three sets of metrics to apply to demonstrate the value of your recommendations.

Submission Requirements

1. Academic style

This is a formal academic written assignment. As such, it should comply with MLA, APA, or other style guide. MLA is the style most frequently used in business and APA is the style most frequently used in graduate programs. You can decide which style you prefer to use, but you must consistently apply one style throughout your paper.

2. Length requirements

There is no minimum or maximum length requirement. However, a good goal should be ten pages of text excluding title page, table of contents, bibliography, and any exhibits you wish to include. If you are adequately analyzing the case and designing the improvements, reaching ten pages should be relatively easy to accomplish. If you are having trouble reaching ten pages, it might be an indication that you do not have sufficient depth to your analysis or specifics in your design. If your analysis greatly exceeds ten pages, be sure to edit carefully. One way to reduce length and, perhaps, make your paper more readable is to include exhibits. For example, you can perform your CRM tools evaluation and include it as an exhibit. You can reference the exhibit in your paper and state which one is most appropriate and why. Or, you could create a flow chart to depict the details of your processes and discuss them at a higher level in the body of your paper. The same would be true for your SWOT analysis of current customer service practices.

3. Word Processing Requirements

Please prepare your paper using any word processing software. Save it as: .doc, .docx, or .rtf format for submission. Double-space the main text. Use your own discretion for your exhibits. Use 12 point font and margins of one inch on all sides of the paper. Double-space throughout the paper. Follow style guidelines for setting long quotations, etc.

4. Submission Requirements

Upload your case study into your assignment folder by midnight of the due date listed in the course schedule. Inasmuch as this case study simulates a real work experience with real deadlines, late submissions will be subject to significant late penalties.

5. Grading

Your course project will be graded using the attached rubric. There are two grading sheets that parallel the rubric. You will receive a student self-assessment sheet to submit with your paper. This will provide you with the opportunity to apply the grading rubrics you deem appropriate. You will also receive a grading sheet from your instructor to help you identify how your grade was determined.

Student Aids

Project Conference Area

The Project Conference Area will contain documents, project due dates, and Q&A. Students can assist one another. This is a good place to test ideas and ask opinions. Questions for the instructor should be posted here and not through e mail.

UMUC Resources

UMUC provides excellent resources for students to use while writing research papers. UMUC*****s Library and Information Services can help you with your research http://www.umuc.edu/library and UMUC*****s Effective Writing Center can help you with your writing http://www.umuc.edu/writingcenter/. You are encouraged to take advantage of these resources. You pay for them with your tuition dollars. Their only purpose is to help you.

Grading Rubric

The following rubric will be used to assess your performance on this authentic assessment. Please refer to it frequently to be sure you are on track.

Student Feedback Sheet

Along with your grade, you will receive detailed feedback on your project that follows the format of the grading rubric and the self-assessment to help you understand how your grade was determined.

Project Requirements Grading Criteria and Points

Requirement

Points

1A

Current Situation: Company goals and marketing strategy

05

1B

Current Situation: Current customer service

10

2

Re-design customer service policies and strategies

15

3

Design customer loyalty strategies and programs

15

4

Differentiation of customers by loyalty segments

15

5

Evaluate technology-related tools

15

6

Apply the metrics that will measure success

15

7

Adhere to readability, style, and mechanics requirements

10

Total Points

100

15 Points 1. Current Situation (1A & 1B)

A. Company overall goals and marketing strategy.

0 ***** 1 Does not identify the company*****s stated overall goals and marketing strategy. Does not properly hypothesize the company*****s overall goals and marketing strategy.

2 ***** 3 Improperly identifies the company*****s overall goals and marketing strategy. Or, provides a hypothesis of the company*****s overall goals and marketing strategy based on minimal evidence.

4 ***** 5 Identifies the company*****s stated overall goals and marketing strategy. Or, provides a hypothesis of the company*****s overall goals and marketing strategy based on comprehensive evidence.

B. Current customer service.

0 ***** 3 Does not provide a description of current customer service. Does not use the IDIC model or does not properly apply it. Does not comment on the strengths and weaknesses or the comments are inappropriate. Does not assess the impact to the company goals and marketing strategies. Includes irrelevant information about the company.

4 ***** 7 Does not provide a thorough description. Minimally uses the IDIC model. Minimally comments on strengths and weaknesses. Assessments on impact do not reflect critical thinking.

8 ***** 10 Provides a thorough description, based on the principles of IDIC. Evaluates and judges strengths and weakness. Provides college level assessment of the impact on company goals.

15 Points 2. Re-design customer service

0 ***** 5 New design is not based on the IDIC model. Design does not correspond to the assessment in #1. The design does not support company goals and marketing strategy.

6 ***** 10 New design is based on the IDIC model and corresponds to the assessment in #1. Does not clearly link the new design to the company goals and marketing strategy or the principles of IDIC.

11 ***** 15 Creates new customer service policies and strategies and incorporates them in the company*****s overall goals and strategies. Designs are based on, and linked to, the principles in the IDIC model. The design can include one small change that yields dramatic results or a comprehensive overhaul of the company*****s system, but, it is a meaningful change.

15 Points 3. Design customer loyalty strategies and programs

0 ***** 5 Does not propose a strategy for the program or programs. Does not incorporate with the company goals and marketing strategy. Requirements, and processes are not clearly stated. Does not meet the requirements of effective loyalty programs.

6 ***** 10 Proposes a strategy and incorporates strategy, program, or programs within company goals and marketing strategy. Requirements and processes are stated. Most of the requirements of effective loyalty programs are met.

11 ***** 15 Proposes a strategy and incorporates the strategy, program, or programs within company goals and marketing strategy. Requirements and processes are clearly stated. Meets the requirements of effective loyalty programs. Recommendation includes a database generating real-time customer analytics used by multiple channels.

15 Points 4. Differentiation of customers by loyalty segments

0 ***** 5 The customer service re-design (#2 above) and the loyalty program design (#3 above) do not include classification of customers by loyalty categories or the differentiations are poorly executed or poorly explained.

6 ***** 10 The customer service re-design and the loyalty program design include classification of customers by loyalty categories. The categories are correct, but there is not a clear analysis as to how the customers are differentiated and assigned to the categories.

11 ***** 15 The service re-design and the loyalty program design include loyalty differentiation categories. The appropriate categories are included in the design. There is a clear analysis presented that interprets customer data. The customers are compared, contrasted, distinguished and classified. The differentiation is applied to the design of the new processes.

15 Points 5. Evaluate technology-related tools

0 ***** 5 The tasks and criteria are not clearly stated. Fewer than three systems are identified. The purpose is not described or is poorly described. The systems are not evaluated or the evaluation is poorly executed. The conclusion is unclear. There is no demonstration of how the selected system meets the stated requirements.

6 ***** 10 The tasks and criteria are stated. Three systems are identified. The purpose is described. The systems are evaluated, but the evaluation lacks depth or scope. There is a selection. It is unclear as to how the selected system meets all of the requirements.

11 ***** 15 The tasks and criteria are very clearly stated. Three CRM systems are chosen as possible candidates and the description of each of the tools***** purposes is clearly described. An in-depth evaluation is performed to assess each system*****s ability to meet each of the requirements. The evaluation concludes with a determination that one of the systems is the best match and a demonstration of how the system meets the stated requirements.

15 Points 6. Apply the metrics that will measure the success

0 ***** 5 The metrics commonly used to show the value of customer service and loyalty programs are not included or are not properly exhibited.

6 ***** 10 Metrics that are commonly used are included and properly exhibited. They illustrate how they would be used to measure success. The costs are shown. Fewer than three sets of metrics are demonstrated.

11 ***** 15 Three sets of metrics commonly used to show the value of customer service and loyalty programs are exhibited. There is an illustration of how each would be used to measure success. Costs and break-even points are included for each.

10 Points 7. Adhere to readability, style, and mechanics requirements

0 -3 There are several problems with the paper which may include:

Tone and/or style are not appropriate for the audience

Proofreading and/ or grammatical errors detract from the readability

Major problems in sentence structure

Academic writing style guide not used or consistently applied

Submission requirements not met

4 ***** 7 For the most part, tone and style are appropriate for the audience with some weaknesses such as the following noted:

Noticeable proofreading and/or grammatical errors that somewhat detract from readability of the paper

Sentence structure may be rigid and unvarying

Appropriate writing style guide use

8 ***** 10 The tone and style are appropriate for the audience

No noticeable proofreading or grammatical errors

Sentence structure and diction are effective and diverse

Submission requirements fully met

Appropriate writing style guide used and consistently applied

*****

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