Canyon Ranch Business Model

Canyon Ranch is a leader in the spa and health resort industry that was founded in 1979. It strives to be a place where people can not only choose to relax by getting a massage but can also work on their health through nutrition classes and even work on their fitness. Canyon Ranch came to be where they are today by offering much more than the local day spa and by paying close attention to each and every individual customer's needs.

"No matter what feeling better or feeling healthier means to you, Canyon Ranch is a place that helps you connect to a happier lifestyle. Everyone experiences a different Canyon Ranch; we'll meet you where you are." Harley Mayersohn, Vice President of Marketing Issues, however, have started to arise now that Canyon Ranch is starting to face some intense competition and are subsequently looking at possibly greater utilizing their IT system to allow them to offer an even better experience to their customers.

Personalization and CRM Strategy A major question being asked by Canyon Ranch is whether or not to engage in a personalization and customer relationship management system (CRM). Canyon Ranch should in fact engage in a personalization and CRM strategy. It enforces the perception of good customer support and high quality service. They need to understand their customers, their needs, and general trends.

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They can utilize the information they have already gathered over the years to do this. For example, since women represented about 75 percent of Canyon Ranch's customers, they can focus on offering products and services that keep women hooked. However that is not enough; they need to get closer to knowing their true customers not just their age, gender, and income level, but also their spending habits in the Spa or the Destination Spa.

They should be able to track down the cost of every product and service, at what time it was purchased, and how much was spent per customer along with the frequency. Whatever information is collected can and must be utilized by all functions and services across the company as a tool to offer integrated packages. Canyon Ranch's main advantage is the high quality and service standards, CRM is important to keep this image. Also, this will allow them to better market their services and continue to grow.

By using a CRM system they would be able to offer an even better experience to their customers. Being a company that does not heavily advertise they rely on word of mouth to promote their company and its' services, which will only happen if a customer has an exceptional experience while they are at Canyon Ranch. Therefore, it should be a priority to ensure that every customer receives an exceptional, unsurpassable experience with which they can share in conversations with friends and acquaintances.

Canyon Ranch needs to make their services unique and irreplaceable in order to justify their high costs, which are competing against other lower cost alternatives for their customers' disposable income. Allowing customers to personalize their services will create customer loyalty and eventually advocacy for the resorts. In order to fully benefit from this personalization, Canyon Ranch would need to implement an IT-enabled CRM system.

To help implement a CRM system and to offer a more personalized experience, Canyon Ranch could adopt a loyalty program. All services and products that a customer purchases would be recorded and stored through the use of a loyalty card, this would allow Canyon Ranch to discover what each individual customer likes and would allow them to offer specialized discounts and programs to each customer.

This would be beneficial to Canyon Ranch since some of the visitors have special needs and not every product and service offered would be a good fit for them. Over time Canyon Ranch would also be able to see what preferences the customers have. Say for instance a particular customer always books a garden view room at the hotel versus a courtyard view. Then, one week the hotel finds that they still have a garden view room that is vacant for the coming weekend. Using customer preferences data from a CRM system, they could invite the customer to come stay that weekend in a garden view room at a discount of 25% off the normal booking rate. Or, they could even off the discounted rate for a courtyard view room to try and entice the customer to try something different.

Another idea would be to have each customer fill out a survey after each service and stay so that Canyon Ranch can capitalize on their areas of strength and work on the areas that need improvement. There could even be a section that allows customers to offer ideas and possible solutions for any issues that they experienced. This would not only provide Canyon Ranch with helpful feedback, it would also give guests the perception that the resort is serious in addressing all customer concerns. A more internal solution in some ways would be to have customers fill out a survey rating the doctors, masseuses, dietitians etc. and have a "reward" system of sorts for the employees that would be contingent on customer ratings, such as a small bonus or an extra vacation day.

This would help to motivate employees to make sure that they are doing all they can to help give customers the best experience as well as help in retaining the good employees. However, care should be taken to not pit employees against each other just against themselves so that customers remain the priority and not competition amongst the crew. Additionally, the reward system should be designed to motivate the employee but not encourage actions resulting from greed such as providing customers with "free" products or services at a cost to the company in order to receive good ratings.

Canyon Ranch needs to stay vigilant in monitoring other alternatives that their customers have in the market, both direct competition like other spas, nutritionists etc. as well as indirect competition like cruises and other items on which people could use their discretionary income. They need to find ways to promote themselves as an experience that cannot be found anywhere else. They should also market to other demographics, such as men or couples and provide services that would be of interest to those particular groups. For example, men are increasingly becoming more concerned with their body image so perhaps the facilities can bring in a celebrity fitness trainer or even a sports player to provide fitness classes or one-on-ones.

IT/IS Infrastructure A major contributor to accomplishing these goals and to offer a truly personalized experience would be through utilizing the IT system that they currently have in place. They could use the system that they presently have to implement the loyalty card and even consolidate survey results. They currently use the system as little more than a log to keep track of the services that are purchased and the rooms that are booked.

They do not even monitor products that are purchased while the customers are there. As of right now they have twenty IT personnel. They do not necessarily have to expand their IT department they just need to reorganize it and potentially even reduce that number. They should have a person responsible for information from each individual location, so one person in control of the information from the location in Tucson, one in control for the information from Lenox, etc.; support personnel can be added as needed. There should be individual databases for each location to be able to really hone in on the trends for that resort but all locations should have the capability for integration into one main database to allow assessment of the company as a whole.

Conclusion and Recommendation Overall a strategy for Canyon Ranch should be to focus on their strength as a leader in the high standard service and try to alleviate the competition concern by making their model one that has a high entry barrier. This can be achieved by first improving greatly on their IT systems to reach a good level of integration of services. Also, Canyon Ranch should address the issue of growing competition; to counter the tendency of hospitals to offer Spas, counseling, nutrition, and fitness center, they should propose to partner with hospitals to offer these services in conjunction.

On the other hand, they need to keep the Health and Healing departments as the industry leader in terms of quality. This again can be achieved by integration with other services through IT system and retaining and acquiring good talent. Obviously, Canyon Ranch suffers from a very high turnover rate so they need to understand the cost of this and how to reduce it. The cost could be more than the direct dollars spent to the image of Canyon Ranch because customers would feel more comfortable if they deal with the same faces when they return, and that is at the core value of Canyon Ranch - they treat customers as special people.

Canyon Ranch should focus on keeping customers by giving more perks and long term advantage for returning customers and perks for friends' referrals, family members and so forth. On another frontier, Canyon Ranch should consider expanding, and expanding internationally. The trend of growing demand in the US on these services will be followed by the rest of the world. They should consider partnering with high end hospitals in other countries and invest in some market research for various countries regarding these global ventures.

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