What Are the Characteristics of Cabo San Viejo’s Customer Base? How Healthy Is the Firm’s Customer Base?

...

4) If the firm were to adopt a reward program, what should its strategic objectives be?

Ans) If a reward program is to be adopted by Cabo San Viejo, firstly they need to make sure that the data they have regarding the customers are complete and accurate.

The major objective of a reward program is to retain customers. Thus, in case cash/discount coupons are given to the customers, it should only be redeemable at Cabo San Viejo. Cost of getting into agreements for making promotion partners that will accept these coupons would be very high as well. Moreover, customers may not be interested at all to buy anything from their stores or avail their services.

Their customer base is quite diverse. The rewards should be designed is such a way that it creates a positive effect on every customer. Also, giving monetary benefits are not always a good idea. A mere thank you and a surprise gift could do the work, as a general reward program eliminates the element of surprise. It really delights the customers and helps in creating a positive word of mouth.

For this reward program, customers should be qualified on the basis of their frequency of availing services. Thus, a guest who comes every year for four nights each year for 7-8 years should be chosen over a guest who comes first time and stays for 30 nights.

The organization also has to make sure that their new or less frequent customers should not feel any sort of partiality against them. They should not feel inferior to the customers falling under this reward program. Thus, a similar but a little low valued reward program for these types of customers can also be designed to encourage them to continue availing their services. 5) If the firm were to adopt a reward program, how should the reward program be structured? On what basis should the points be awarded? What type of rewards the firm should offer?

Ans) If a reward program has to be adopted by the firm, the benefits included in the reward should be of monetary advantages. As 82% of guests have household income of $1,50,000, the monetary advantages would turn to be the right option for reward program. The cost of 5 nights stay is around $5844 which is affordable by a particular sector of the target audience. So, providing them an intangible value would not make any difference. Therefore, providing them with qualitative incentives like free service or a gift once they enter will make the know that their loyalty is being recognised and rewarded by the management.

6) You all have experienced a loyalty program in your life. You need to work out what could be the objective of the program, it’s structure and likely target.

Ans) Loyalty Programs are mostly introduced in any business / sales point / service point to retain the non-returning customers.

For this case, the target customer is around 3500 new guests per year mostly from California of which 75% are expected to be females.

Around 60% of the returning customers return after 5-6 years, and the goal occupancy rate is to be increased to 270 out 288 seats.

Objective is to get more price sensitive customers as the Day Spas to try the Cabo San Viejo Overnight Resort, repeat customers who only visit Cabo San Viejo Overnight Resort would not be eligible for discounts, this may be potential negative outcome.

Main objective is to recognize repeat customers, making them feel valued and part of Cabo San Viejo family.

Add ons provided to Loyalty Customers would keep them connected and attached. Membership Programs also provides help maintain cross functional marketing.