Crm_implementation At Disney Theme Parks

Executive Summery Over the past 50 years, the idea of a Disney vacation has evolved from a single park in Anaheim to the multifaceted resort destination of Walt Disney World Resort . . . to the ever-increasing variety of ways to vacation with Disney today. But as noting comes at a fairly cheap price, Walt Disney has also witnessed a series of major ups and downs in there operations during the 1990s. Revenues were declining, profit and loss account showing negative profits and many of the newer Disneyland opened in foreign countries were facing cultural conflicts. In this assignment emphasis is given to the kind of steps that the various Disney Theme parks took to hedge them against the probable tourist turn-offs. The platform on which they decided to implement CRM is based on both the use of information technology and complimented with quality line-staffs. Disneyland used advanced communication technology like GPS, Infrared devices to communicate with the customers not only when they want but also when the customer wanted. They tried to build a kind of relationship with the customer by keeping their previous records and providing them with the kind of service they preferred without asking them. Presently the kind of Information technology Infrastruccture Disneyworld is using can easily give them edge against their rival competitors but at the same time it is important for Disneyland to that uses of IT in the CRM is just to facilitate their operations smoothly and a clear distinction should always be made between when to use IT and when to use human resource?

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Company Background Disneyland is more than a place. It is an experience that transcends global boundaries. Disneyland describes any Disney theme park because despite language, culture, design, and entertainment differences, guest feelings and experiences are the same at every Disneyland Park around the world. The Disneyland brand lives in many markets, including the theme park, family vacation, restaurant, and travel industries, and is consistently a leader in these categories. During the past 50 years, nearly 2 billion guests have passed through the gates of Disney theme parks around the world.

The first Disney theme park came into existence in the year 1955 and was located in the California. Since then Disney expanded its theme parks both in numbers as well as facility and the adventures they are offering. Presently there are 11 Disney theme parks across the world which is located in fine different countries across the world. In 2002, Walt Disney became 100 years old. Once know exclusively for its revolutionary and fascinating animated moves, Walt Disney has rapidly expanded its operations and ventured into a number of fields. Its vast empire now includes Disney theme parks, several movie production companies, special-effects firms, professional sport franchises, cable and network television, publishing companies, retail stores, a cruise liner, theater production and even estate holding. The company operates in North America, Europe, Asia Pacific and Latin America, with the US being the major market. The company is headquartered in Burbank, California. The company recorded revenues of $31,944 million during the fiscal year ended December 2005, an increase of 3.9% over 2004. The operating profit of the company was $4,654 million during fiscal year 2005, an increase of 3.7% over 2004. The net profit was $2,533 million in fiscal year 2005, an increase of 8% over 20041.

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Source: Datamonitor, Database: Datamonitor Company Profiles Authority, Link: http://search.ebscohost.com/login.aspx?direct=true&db=buh&authdb=dmhco&AN=1792&site=ehost-live

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In this assignment we will be concentrating mainly on the “Disney Theme Parks”. The first Disney Park was conceived and funded by Walt Disney himself. After mortgaging his house and selling part of his company to the ABC network. 182 acres land in Anaheim, California became the site of Disneyland, which opened in 1955. The next theme park “The Magic Kingdom” Walt Disney opened at Orlando, Florida in 1971 followed by Epcot in 1982, Disney-MGM Studios in 1989, Disney’s Animal Kingdom in 1998 and Disney’s California Adventure in 2001. Disneyland and Disney World attracts tourists from around the world, especially Asians. So Disney entered into a licensing agreement with a Japanese company called Oriental Land and opened Tokyo Disneyland in 1983. In exchange for a small initial investment of $20 million, the 45 years license gives Disney licensing fee plus 10 percent of admissions and 5 percent of food and merchandise sales2. With the opening of the HongKong Disneyland resort in September-20053, guests can now experience Disney’s 11 theme parks across five different locations across the world including Tokyo and Paris.

Need For Customer Relationship Management: “To accomplish more, sometimes you need to see less4”. This quote perhaps holds true in all the service that are being marketed across the globe. Services sector across the world has now become more customers oriented like ever before and customers are given the utmost importance. So there is always a need to become more and more customer oriented and emphasis is always given to align all the services and operations keeping customer first in the mind. In doing so the role of the company’s employee also becomes very important because they are basically dealing with the customers at the front end. According to a survey at companies such as Walt Disney Employees share such a strong 2

Source: Robert Neff, “In Japan, They’re Goofy about Disney” Business Week, March 12, 1990,p-64; “Will Tokyo Embrace another mouse?” Business Week, September 10, 2001; “Cowboys and Samurai: the Japanizing of Universal,” Wall Street Journal. March 22,2001, P.B1 3 Source http://www.americasgreatestbrands.com/brand-casestudies.php?key=disneyland&label=Disneyland&url=www.disneydestinations.com 4 Source: Ad-line of one of a series of Tiger Woods ads that are part of the Accenture rebranding campaign 2004

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vision that they know in their hearts that what is correct for the company5. So when we are talking about Disney Theme parks Customer relationship management becomes very important. Customer relationship management is a corporate level strategy which focuses on creating and maintaining lasting relationships with its customers. In the early 90s Disney Theme Parks witnessed a major drop in the attendance of customers and henceforth a major decrease in the revenue as well. There were many reasons for the fall in attendance. Long queues, fidgety crowds and high tickets prices were some of the reasons of customer’s turnoffs. It became important for Disney to understand that expanding the Disneyland to various part of the world needs to taken care in a more sophisticated manner. The visitors across the world are different and their likings and preferences are completely different. Walt Disney was operating in a service industry were communication with the customer is very important and it is always important to keep your customers happy every time you serve and always should try to improve your performance. This is a kind of industry were “word of mouth” give a lot of popularity (or discredit) to the service provider. Walt Disney, to provide better services to the customer, took help of Customer relationship management.

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Source: Brain Dumaine, “Why Great Companies last,” Business Week, January 16, 1995, p.129.

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Customer Relationship Management Models: In the recent past it’s been observed that almost all the companies across the world have understood the need of CRM. But at the same point though customer management growth is continuing, its implementation is still a question mark to most of the companies and it is not working properly. As per the recent research from Ogilvy One and QCI, the top 10% of companies in Europe and the US could save costs or generate revenue in excess of £20 billion through more effective Customer Management systems6.

1. The QCI Customer Management Model One of the models that are widely used in the organization is CMAT. CMAT is a diagnostic and benchmarking tool which provides companies an assessment approach for comparison of its own performance with the global. It also allows them to dram a platform from where they can judge the needs of the customer in a better way and allow them to serve efficiently. It comes from QCI, a leading Customer Management consultancy with a partnership with Ogilvy One and the WPP group. The QCI customer management assessment tool consists of 260 best practice questions that provide companies and management a much better and clearer opinion about CRM abilities that can be achieved throughout answering the boxes on questionnaires. They cover all the elements of QCI management model. The CMAT assessment results to identify clear plans, real deliver and satisfied customers. It also provides a better co-relation between the customer satisfaction level and CRM.

QCI Model 6

Source: “Is customer relationship management working for you,” A discussion paper from Ogilvy One and QCI.

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Competitors The Customer Experience

Customer Management Activity Enquiry Management

Targeting

Analysis and Planning

The Proposition

Welcoming

Win Back

Managing Problems

Measuring the effect

Getting to know Customer Customer development

Process

People and Organization

Information and Technology

Fig-17

2. Payne’s Model 7

Source :QCI, 2000

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The purpose of CRM is to efficiently and effectively increase the acquisition, growth and retention of profitable customers by selectively initiating, building and maintaining appropriate relationships with them. The second Model is based on the method of interaction between different target group in order to test concepts, results and ideas. It also draws on approaches used in the work on ‘contemporary marketing practices. Payne’s Model Consist of five cross-functional processes and four key implementation CRM elements. The Strategy development process defines the ultimate goal that is needed to be achieved with the help of CRM. The process starts with selection of the most proper channel in a particular segment and then creating optimal customer experience within and across all the channels. Information management is all about gathering information form all the possible points where communication with the customer takes place. It also includes gaining customer insights so that service delivery can be improved. Lastly Performance assessment, as can be understood from the name, check that the quality of the service level with the sets standards.

CRM Strategy and Implementation Model

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CRM Readiness Assessment

Process 1: Strategy development

Enabling Process Process 2

Process 3

Process 4

Value Creation

Multi Cannel Integration

Information Management

Employee Engagement

Performance Assessment

CRM Project Management

CRM Change Management

Fig-2

Comparison between the Two Models

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Both of the models have similar goal; i.e. to access the quality of the CRM services and also to improve it. Both the model also tries to improve the relationship with the customers. Both the models also provide a subjective and qualitative framework to judge the existing service level of the organization and the points where they need to improve. To continue further, both the model gives significant importance to the inputs from the customers to improve the service level. Customer’s attitude, behavior, wants, needs, is to name a few whose importance is taken care in both Models. Also both the model is conceptualizes IT in there basic framework. One of the major differences that comes across when we study these two model is that QCI is mainly implemented by the external consultants wherein Payne’s have an internal implementation across the cross-functional processes in order to achieve greater service level.

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CRM Implementation at Disney Theme Park: Euro Disneyland, Disney’s second theme park was opened overseas, in 1992 located outside Paris. The park initially had to deal with criticism from some people and apathy from many others. Some French intellectuals characterized it as a cultural wasteland. The park lost close to $2 billion in its first several year of operation. It becomes important to mention here that the impact of culture does affect the global marketing strategies. It is important to understand for a company like Walt Disney that globalization doesn’t mean “Americanization”. This was one of the main reasons for the initial failure of Paris Disneyland. It is always important to understand the local culture of the country of operation and accordingly frame your operations. Disneyland Paris failed flopped at first because it failed to take local culture values and behaviors into account. In the words of Disney Chief “When we first launched, there was belief that it was not enough to be Disney. Now we realize that our guests’ needs to be welcomed on the basis of there won culture and travel hobbits.” The realization, and the changes it spawned, has made Disneyland Paris the number one tourist attraction in Europe-even more popular than Eiffel tower. The park now attracts more than 12 million tourists per year. And Disney recently introduced a new movie-themed park to accompany the revitalized Paris attraction. The new park blends Disney entertainment and attraction with the history and culture of European film. A show celebrating the history of animations features Disney characters speaking six different languages. Rides are narrated by foreign –born starts, including Jeremy Irons, Isabella Rossellini, and Nastassja Kinski, speaking in their native language8. In the early 1990s there were high hopes for the new California Adventure Park, especially because attendance at Disneyland decreased 8%. Disney world’s attendance also fell by 4% and the theme park as a whole saw a subsequent 30% decline in the earning. With all new roller costars, popular attractions from other Disney parks, and an 8

Source: Paulo Prada and Bruce Orwall. “ A Certain ‘Je Ne Sais Quoi’ at Disney’s New York-movie – Themed site Near Paris Is Multilingual, Sevres wine –and better sausage variety,” Wall Street Journal, March 12, 2002.p.B1

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emphasis on the California lifestyle, one analyst predicted that the new park would increase attendance at Disneyland by 50% - to 20 million people annually. To encourage guests to visit both the parks in Anaheim, Disney created a three day dual park pass and priced it at $99 compared to a one day pass at either park for $43. The early response for California adventure has been weak, at best. In mid-2002, attendance at this venue was down 10% compared to 2001, which was judged to be a poor start. A drawback of the park, according to some patrons, is scarcity of activities for young children. To remedy that problem, California adventure worked on a new kid’s area and a thrill ride similar to one in the Disney-MGM studio parks in Orlando. Meanwhile, prices were discounted to lure more customers through park’s turnstiles. Also to attract more and more visitors Disney came up with few ideas. Disney authorities came to know that the Disney theme parks are seen as a place especially for families. In an attempt to position itself differently and change the perception of the visitors Disney came up with few ideas. They tried to target particularly four types of market: Younger couples, older couples with grown children, families with young children and families with teens. By emphasizing its golf courses, pleasure island9a nightclub –type atmosphere located in downtown Disney) and fine dinning options. Disney world through this tried to attract from honeymooners to retirees, with

the later group they

expected to bring their grandchildren. To gain a strategic advantage and in an attempt to serve the customers in a better way information technology can give Disney Theme parks a major platform from where they can an ideal develop a CRM model. Use of GPS, Smart sensors, wireless technology and mobile devices are to name a few. In context of Disneyland, a perfect example could be “Pal Mickey9”. Pal Mickey is a ten and half (10.5) inch stuffed doll with a powerful infrared sensor fitted on the nose, which allows the doll to act as a virtual tour guide by providing tips which can be helpful in deciding that on which ride the queue is minimum and which is the next event that is going to happen. By providing this kind of facility 9

Source: “Time to invest” EWeek Editorial Board (www.Eweek.com) January 12th, 2004.

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actually the visitor feels more comfortable in decision making and the waiting time decreases drastically. The Doll also contains a small speaker to provide voice information to the customer, a central processing unit to process information. The working and information exchange between the doll and the central data base is very simple. There are around 500 infrared beacons are concealed in the different parts, like lamp-posts, rooftops, and bushes, of the Theme Park. These infrared beacons can communicate with the central data base or center. These beacons are capable of two way data transmission. They first receive data from the doll about the position of the customer and then transmit to the central database and then in-turn receives the desired information from the central data base and transfers to the doll through the nearest infrared beacons. Thus the desired information is passed to the tourist on a real time basis. Once the doll receives any information it starts vibrating which tries to convey a message to the tourist that it received a message. The tourist in-turn can press a small button on the doll and hear to the voice information through the speaker of the doll. Though this technology seems to work quite efficiently and sounds useful in providing proper guidance to the customers. But there is one negative issue that is may lead to. Disney authorities might be alleged to track their customers without the prior knowledge of the visitors, which can be offend-able in some cases. This can act as a deterrent but with the kind of image Disney is having one can safely say that people will not take it offensively. The use of IT doesn’t ends here. We can always broaden the scope and level of services that we can provide to the customers. Earlier Disneyland was not able to track if any tourist visits the place twice within the same country. Things would have been more difficult if the tourist next time visit Disneyland in some other country. But with a central data base in place which is linked to the entire Disneyland of the world and tourist identification devices in place at the entry, Disney can actually provide that customer the kind of services as per hid choice and preference. This will lead to a kind of preferred tourist feeling in the mind of customer and he will feel much better. In this process

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Disney can also make assumptions about the visitors buying behavior and personal preferences in real time and at the same time refine and re-check information to get better judgment about the customers and collect more date about the customers. Also one step further can be taken by providing personal messages on their cell phones once they are inside the park area. Once the data is centralized, information can flow virtually form one side to another. For example, the same information that a visitor might give to a reservations agent when booking a vacation could be viewed later by the visitor's hotel concierge, who could then make personalized recommendations without having to ask the guest for any additional information. Disney is known to have Park fleet of 267 buses. With the use of IT they can also reduce the waiting time for the customers by allowing the buses to run as and when needed and not on a fixed scheduled time. This will also reduce the operation time. Disney also came up with new concept. Disney hotels use their room television sets to review and act as electronic interface between the customer and the company. Travelers can buy the photographs taken of them during the various rides during the day. And some Disney observers expect even more experience-driven pyrotechnics, including a form of pay-as-you-go pricing. Rather than charge customers one fee for the entire day, datasmart cards linked to Disney's customer database could help Disney return to a multitiered pricing structure such as the old A-ride, E-ride approach, which charged customers more for the best and most popular rides. The concept is just another aspect of the effort to use technology to attract people back to the parks and perhaps segment customers for customized rewards according to the frequency of their business. From the ideas which we have discussed earlier we can see that Disney is trying hard to use IT to take a strategic advantage. Disney IT driven CRM strategy is likely to give them edge against their rivals- Universal Parks & Resorts and Six Flags Inc. Also Disney provides a next generation use of IT to communicate with the customers and take care of their need.

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Meanwhile, analysts warn that company officials need to be mindful of their product. Technology alone is not going to solve the problem. Human infer-face is always required at a certain level. When the emotional attachment part comes IT cannot always give to advantage. Disney should very well understand the difference between when to use IT and when to use human interface and this can be the one of the important challenges that Disney might face in the coming years. Also Disney should also understand that they need to be always innovative in providing entertainment to their tourists and retain their reputation across the world as “the happiest place on the earth”.

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