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Cabo San Viejo

Cabo San Viejo

Company Background

• Founded in 1977 by Dave and Florence Blumenthal

• Has a 5 Properties1 Palm Springs Resort4 CaboDaySpas

Cabo San Viejo History

Dave and Florence Blumenthal founded Cabo San Viejo in 1977 in Palm Springs, California

Create a place where smokers, overweight people & others could feel better and learn how to live healthier lives

In 1982, leading magazine journalist wrote a piece on Cabo San Viejo, billing it as the nation’s “prime total vacation/fitness resort” and bookings took off

Company Overview• Located in Palm Spring

California, 150 acres in the foothills of the San Bernardino Mountains

• Facilities had expanded to include an air-conditioned, 100,000 square-foot spa complex, 4,200 square foot golf performance area, and 13,000 square foot Aquatic Centre

• Accommodate a maximum of 288 guest

Company Overview

Operating high-end destination health resorts and branded day spas

Have two product line: Cabo San Viejo and CaboDaySpas

Primary value proposition is the concept of wellness

Market Competitor

Cabo San Viejo

Destination Spa

High-End Health Clubs

CruisesLocal Day Spa

Vacation Resort

Marketing ApproachHandle pricing and promotionsLittle cross marketing with Cabo Day SpasNever made a financial commitment to large-scale promotionsFrom Brochure, leaving it to public relations on Radio, TV and print media

6 persons marketing department6 regional sales managers12 reservation specialist2 public relation officers

Marketing and Sales Approach

Sales ApproachPackages to high-end travel agencies in US and CanadaIn Summer, reduce rates by 35% and get different client base Organized receptions in major cities

Problems and Challenges in Marketing and Sales

Not to educate consumers

Lack of direct marketing approach

Didn’t purchase and use customer list

Misconceptions about Cabo San Viejo

The Clientele

• Cabo San Viejo customers were largely affluent, middle-age, and female

• 62% of return visitors returned again within five to six years

• Repeat guest comprised between 50% and 60% of all guest nights

• 32% of new guests returned to the resort within five to six years

• Cabo San Viejo receives about 3500 new guest each year

Customer meet reservation specialist

Reservation specialist consist:All female reservation staffWere highly knowledgeable Having undergone an intensive training

program

Booking a Visit

Reservation specialist help customers plan their vacation

Reservation specialist get

thank you card than anyone

The Typical Visit

Average visit lasted days

Average additional service: 165.36/day

Taking advantage of multiple services (spa, health and healing, fitness classes, etc)

Average guest spending : 455.97/day

Rising Expectation

Staff members were hired and trained to offer the very best in personal service.

Employee to guest Ratio

Surprise

Intangible Rewards

DATA ANALYSIS

Guest Analysis

YearAvg. Total Total Total Percentage of ageAge Stays 1st time Repeat <35 35-44 45-54 55-64 >64

1992 47 3576 1279 2297 13.2 27.2 32.6 21.3 5.81993 48 4123 1415 2708 12.9 27.3 32.9 20.5 6.51994 48 4329 1416 2913 11.5 27 32.7 20.5 8.31995 48 4703 1551 3152 12.4 25.2 32.3 21.6 8.51996 49 5219 1754 3465 11.8 25.9 33.3 20.4 8.51997 50 5832 2053 3779 11.4 24.7 33.4 20.3 10.31998 50 6774 2419 4355 11.5 24.1 28.5 23.5 12.61999 51 8244 3563 4681 10.1 22.5 30.8 23.8 12.82000 52 9446 4296 5150 9.2 22.2 30.6 25 132001 53 8748 3684 5064 7.8 22.1 32.1 23.8 14.22002 54 8399 3475 4924 8.3 21.2 30.7 25.3 14.52003 55 8540 3567 4973 7 18.4 31.5 27.6 162004 57 8698 3631 5067 5.6 17.4 32.4 28.4 16.2

2005, Q1 58 2013 828 1185 4.1 17.6 30.8 30.1 17.4

Guest Analysis

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 20040

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Total Stays1st TimeTotal Repeat

Accomodation $455.97Additional Services $165.36 +

$621.33Average visit (days) 7 xAvarege Spending in each visit $4,349.31

2004 guests = 8.698Newcomers : 3.631

Repeat : 5.067

Marketing cost : $2.76 millionAdvertising : $1.32 million

Guest newsletter : $150.000Direct mail : $198.000

Internet marketing : $120.000

Acquisition cost :$2.76 million/8698

= $317

Acquisition cost / Individual revenue:$317.31 / $4349.31

= 7.30%

Financial Analysis

Should Cabo San Viejo implement a rewards program?

Who should qualify? How should “points” be accumulated?

What should the rewards look like?

Should rewards only apply to Cabo San Viejo should they be redeemable at other places? If then latter, then

what types of partners?

A Loyalty Program?

How to Proceed

Contra Opinion :Some managers opposed to a loyalty program because of operational concernComputer system was not reliable to support such a program

History poor managementComputer system outdatedCustomer records inaccurate or incomplete

CONTRA• The client expect the best and

very demanding, its better for us to do nothing than to implement something that we really can’t deliver

• Everybody must get treated equally, whether first time or repeat customer

• Cabo san Viejo better focus on improving customer relationship management practices in other areas

• Reward program will eliminate the feeling of surprise

PRO

• Loyalty program will forces company about building customer equity in a systematic way

• Loyalty program forces you to clean up your database

• Loyalty program forces you to get the details right

• As a catalyst for creating a set of systems so that you are 100% certain and that you are treating your customers as well as you can possibly treat them

OUR RECOMMENDATIONS

COMPANY ANALYSIS

Demography All ages Male and female Job : less than high school, high school, collage, worker,

housewife income level : above $100.000

Geography urban and rural people USAWorld wide

Psychograph and Behavior : people want to rest and relaxation people who like to take vacation 5 times per year People who like spa treatments and pamper people who seek health experience people want to lead a healthier life traveler/ backpacker value oriented sensitive price

DemographyAbove 30 years oldMale and female

Worker, housewife$150k ++

GeographyUrban people

California

Psychograph and BehaviorPeople who like to take healthy vacation and want to rest and

have relaxation

SEGMENTATION AND TARGETING

Customer Loyalty MeasureLo

yalty

Like

hood

to R

enew

/ Re

purc

hase

Definitely will

Probably will

ProbablyWill Not

Definitely Will Not

Very Dissatisfied Very SatisfiedSatisfaction

Mercenaries

Loyalist

Defectors

Hostages

I am satisfied but I might look for

other better services.

I am dissatisfied and I will tell others how

unhappy I am with this service

I am very happy and I will tell other people about great

service!

I am not satisfied with the service

but I have no other options, so

I stick with it.

SWOT AnalysisStrength: First and Leading band Wide offerings Flexibility Excellent staff Excellent facilities

Weakness: Inaccurate and incomplete

customer database Little cross and direct

marketing Limited capacity Didn’t have a financial

commitment to large-scale consumer promotions

Uneducated consumers

Opportunities: Increase customer loyalty demand will increase with

increase in health awareness untapped market segments diversification and expansion

Threats: Stiff competition Increasing consumer expectation New entry players There are many competitor with

competitive price

7P Analysis

Product: Health and Relaxation Resort

Price: From $778,8/night

Place: Palm Spring, California

Promotion:Advertising, Guest newsletter, Direct mail, Internet marketing

People: Full ranged of wellness services

Process: Customer interact with reservation specialist

Physical Evidence: Beautifully landscaped ground

A Loyalty Program?

Should Cabo San Viejo implement a rewards program?Lo

yalty

Like

hood

to R

enew

/ Re

purc

hase

Definitely will

Probably will

ProbablyWill Not

Definitely Will Not

Very Dissatisfied Very SatisfiedSatisfaction

Mercenaries

Loyalist

Defectors

Hostages

Because most of visitors are repeat guests and they think that reward for them is important

Benefits : To understand the customer-firm relationshipMaintain consumer loyalty

We recommend Cabo San Viejo build customer data base and launch member card program to build customer relationship and maintain customer

loyalty.

Why should a Member Card?

Why Should We Use Database?Benefits :• To know customer’s data• To record customer wants• To decide which customer should

receive a particular offer• To know promotion given• To avoid serious customer mistakes

Key Concepts :• Customer database• Database marketing• Mailing list

To differentiate customer’s levelTo create sense of belonging from customersTo motivate customers on buying products

Who should qualify? How should “points” be accumulated?

Platinum

Gold

Iron

Lead

Good relationship customers

Poor Relationship Customers

Most profitable

Unprofitable

Customer Pyramid

Leveling member card based on consumer value

Lead Basic

Gold

Platinum

Titanium

Iron

Gold

Platinum

Potentials

Prospects

First-time

Customers

Repeat custome

rs

Clients

Members

Advocates

Partners

Basic

Gold

Platinum

Titanium

Points

Every $100 spent equals to 20 pointsPOINTS Card Type

< 1000 Basic

1000 – 3000 Gold

3000 – 5000 Platinum

> 5000 Titanium

One member card consist only one name. Only the card’s owner available to use the card.

First comer automatically get Basic Member Card

What should the rewards look like?

Basic

Gold

Free bikingGolf discountSummer Camp discountBirthday card

Birthday giftsCandid photos Flower and welcome drink

Platinum

Titanium

Special event promotion(anniversary party)

Special dinner (dinner for Platinum + Titanium members only)

Free for some facilities in CaboDaySpasFree in-room massagePrivate fitness lesson

Rewards for facilities at Cabo San Viejo given at low occupancy time

Put the Reservation Specialist’s name on birthday cards, promotion, or other delivered gifts

Reservation required for claiming the reward, so Cabo San Viejo could prepared well before the customer come

The reward doesn’t have to be given at the same year, but depend on customer’s time availability

Terms and Conditions

Should rewards only apply to Cabo San Viejo, or should they be redeemable at other places? If then

latter, then what types of partners?

WHY?

It also has reward that could be redeemable at CaboDaySpa

As a synergy between Cabo San Viejo corporation to maximize their profits

RECOMMENDATION FOR MARKETING AND SALES PROBLEMS

Not to educate consumers

Misconceptions about Cabo San

Viejo

Insert Cabo San Viejo in television program to inform about the

TRUE benefit and value.

Like : “Wisata to Cabo”

Lack of direct marketing approach

Didn’t purchase and use customer list (No customer database)

Create Consumer Database

RECOMMENDATION FOR MARKETING AND SALES PROBLEMS

Build relationship with travel agents

Direct marketing to East Coast region

More collaboration with CaboDaySpas

30% of new comers come as a result of direct referrals by travel agents

Increase the potential market

Increase potential new comers from CaboDaySpas location