crm_implementation at disney theme parks
DESCRIPTION
This paper is basically about the CRM practices taken at Disney theme parksTRANSCRIPT
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.
1 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 Hong-
Kong 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.B13 Source http://www.americasgreatestbrands.com/brand-case-studies.php?key=disneyland&label=Disneyland&url=www.disneydestinations.com4 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.
5 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.
6 Source: “Is customer relationship management working for you,” A discussion paper from Ogilvy One and QCI.
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Enquiry Management
Win Back
Targeting
Welcoming
Getting to know
Customer
Customer development
Managing Problems
QCI Model
Customer Management Activity
Fig-17
7 Source :QCI, 2000
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Competitors
The Customer Experience
Process
People and Organization
Information and Technology
Analysis and
Planning
The Proposition
Measuring the effect
2. Payne’s Model
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.
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CRM Strategy and Implementation Model
Fig-2
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CRM Readiness Assessment
Process 1: Strategy development
Enabling Process
Process 2
Value Creation
Process 3
Multi Cannel Integration
Process 4
Information Management
Performance Assessment
Employee Engagement
CRM Project Management
CRM Change Management
Comparison between the Two Models
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, data-
smart cards linked to Disney's customer database could help Disney return to a multi-
tiered 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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