Customer management case studies

International travel company

Issue
This was one of the largest travel organisations for students and young people in the world. It was founded in the 1970s initially with bases in Australia and the UK and now operated from over 100 countries. Originally set up to provide just discounted airline tickets and basic accommodation for young people, it now offered a whole range of holidays, arranged work and volunteering abroad and sold insurance. After an unsuccessful attempt to appeal to a wider audience (i.e. non-youth) in the 1990s, the policy was to stick to their particular segment of the market. As their target audience usually only made one significant trip, their plan was to grow sales by offering them additional services, both at the start of the trip and during it. This had largely proved a successful model as their clients have usually come to the company if they required extra services whilst abroad. However as access to information on alternative suppliers has become much easier, their clients had become less ‘brand loyal’. So the growth and extent of electronic communication and the desire to have a closer and longer relationship with their existing customers, had led the directors to review their customer relationship management (CRM) strategy. Their target market was particularly tech-savvy and they need to ensure that they were using the right means of communication both for them to contact the client and vice-versa. This had to be balanced by the potential costs that could be incurred in the set-up of information systems versus the added value that they may bring.
Solution
As the consultant that they have brought in to help with their CRM strategy, I conducted a series of workshops with senior members of the management team. In these I identified the current state of play (As Is) and also confirmed what the future should look like (To Be). From this, it was clear that the broad strategy that the company needed involved a system that could personalise the service they offer, to increase customer loyalty but at a minimal cost. Like much of the travel industry, they operated on very low margins (typically 1-2% of the cost of the holiday), so any new CRM system had to generate significantly more sales to cover the expenditure. One option is to have a ‘reactive’ system where the company ensured that the client could easily contact them via email, webchat and social networking sites. The second option was a ‘proactive’ system where the company could ‘track’ the client during their trip and offer services as appropriate. The latter required a much more sophisticated systems such as dedicated email addresses, possible apps for smartphones etc and would need additional staff to monitor these.
Result
The company briefed their IT department to work out the costs of each system. They then estimated the likely additional business from each option and compared revenues versus costs. In the short term, they decided on the 'reactive' system but would review regularly as electronic communication changed.

UK Food company

Issue
This was a medium-sized, publicly quoted company based in the UK and with the majority of its sales there. It made ready meals and other chilled food products. It supplied the UK and Irish supermarket trade with products under their brand (known as ‘own-label’ products). It also sold products through the supermarkets under its own brands. The last few years had been difficult ones for the company: their overall sales were declining and so too were their profits. Their share price had halved in the last year after a series of profit warnings (notification to the City and their investors that profits will be below expectations). Some of the problems facing the company were:

  • Sales were growing strongly in the own-label sector (over 10 per cent a year) but they were making no profit in this sector
  • Sales in the branded sector were falling by over 15 per cent a year but they were making a profit here, even if that too was falling
  • The organisational structure was too complex and it was therefore difficult to make decisions: more critically, they did not present a united front to their powerful customers

Solution
I met with the managing directors and heads of marketing for all the divisions to get an assessment of their position with regard to their key customers. I then mapped out the company's overall strength with the main customers and identified areas where they could be co-operation between the competing divisions. I then set up the first cross operating company commercial teams to maximise these areas of opportunity e.g. Tesco’s expansion into the convenience sector.
Result
The divisions started to think more strategically with regard to the customers, as they now recognised that they were in a stronger position that they had previously thought. One benefit of this was that they were now prepared to walk away from unprofitable business.

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