JMoore Wk6 Classic Airlines Problem Solution

Problem Solution: Classic Airlines 1

Running head: PROBLEM SOLUTION: CLASSIC AIRLINES

Problem Solution: Classic Airlines

Jim Moore

University of Phoenix

MBA 570: Sustainable Customer Relationships

Group MBAA0EO7A0

Milton Peters

December 8, 2008


Problem Solution: Classic Airlines

Classic Airlines, the world’s fifth largest airline, has been in business for 25 years and

employs over 32,000 people. Classic Airlines has a fleet of 375 jets, serving 240 cities and

operating over 2,300 flights per day (University of Phoenix, 2002). A decline in sales, market

share, profitability and membership in the rewards program has resulted in the airline facing a

restrictive climate in the industry based on airline consolidation and extreme competition. Based

upon the declining metrics and the latest customer loyalty report, Chief Executive Officer

Amanda Miller has tasked members of the leadership team with making sweeping improvements

to the frequent flier program. By using methods that will promote a measurable return on any

investment while still meeting the cost reduction goal and without discounting fares, reaching the

end-state vision is within reach. In addition, the Board of Directors recently mandated a 15%

across-the-board cost reduction over the next 18 months. Classic Airlines desires to boost

consumer and employee confidence by keeping costs down while increasing customer and

employee satisfaction in the company. To accomplish this, Classic Airlines will need to analyze

customer feedback to understand long-term forecasting and marketing objectives. The objective

of this paper is to present Classic Airlines’ issues and opportunities, stakeholder perspectives,

ethical dilemmas, definition of the problem, the end-state vision and propose the optimal

solution.

Describe the Situation

Issue and Opportunity Identification

Classic Airlines has several diverse factors influencing their marketing activities which

are largely uncontrolled. The company is faced with rising fuel and labor costs. These large

increases have forced cost-cutting through high passenger load ratios and better efficiency,


however, these costs remain an obstacle to high profitability. The airline industry is still

recovering from the effects of 9/11 after over-expansion following the downturn. Consumers

have also shown less willingness to travel on lower discretionary income in light of recent fuel

prices. Each company in the industry is facing similar issues, yet competition has increased.

Classic Airlines must identify where to cut costs yet continue to provide a positive return on

investment for shareholders.

Classic Airlines is facing declining consumer confidence in the airlines with a 19%

decrease in rewards members and of those members there has been a 21% decrease in activity.

Some members of the executive team appear to be more concerned with financial numbers rather

than improving customer service. Classic Airlines needs to maximize customer needs and

increase brand loyalty to regain customer and investor confidence. Marketing has become

increasingly important because it puts the customer first to achieve the company’s goals; Classic

Airlines’ marketing needs to know as much as they can about current and potential customers.

Classic already collects data on key customer comments which should continuously used to

leverage marketing efforts.

Classic Airlines has a solid base to start from to rebuild customer relations. The customer

should be at the core of the business to help determine consumer requirements. The company

already possesses an advanced Customer Relationship Management (CRM) system and they

have the opportunity to restructure a more integrated and valuable system using the existing tool

to its full advantage. The company could integrate the system across the phone and web portals

so they could extract more information from their customers to help improve the customer

experience. “CRM systems are tailored mainly for interactive marketing rather than large-scale


batch operations, and to work well as outbound channels they need real-time methods to - as the

saying goes - reach out and touch someone: e-mail and telemarketing” (Fowler, 2003, ¶ 6).

Classic Airlines could do a better job at performing customer segmentation analysis to

position the product for more than just leisure and business travelers. Classic Airlines needs to

focus on head-to-head positioning by competing directly with the other major airlines. Classic

Airlines should also seek to differentiate through service and quality (Kerin, Hartley, Berkowitz,

& Rudelius, 2006). Classic Airlines must understand why each consumer books and why they

are traveling. Classic Airlines has already identified that the segmentation strategy is outdated

and does not match what customer values. The CRM system could help to create and automate

personalized marketing to communicate with customers and increase loyalty. The software needs

to build profiles on its customers to help serve each individual customer. This, in turn, will

increase web site visits and ticket sales.

Classic Airlines’ loyalty rewards program needs to be revamped and once the program is

restructured, it needs to be properly marketed to the target customers. The company was over-

concerned with prices and not as concerned with the loyalty program so it has not grown with the

customers and the company. The loyalty program should be fully integrated with the CRM

system to produce best results. Customer feedback has already indicated that most business

passengers do not put price at the top of their list when choosing an airline. These travelers desire

specific benefits and services.

Classic Airlines has the opportunity of building a new alliance with Skyway Airlines

which many stakeholders would see as a strength-builder in the eyes of the industry. The alliance

would afford the customer added value by offering a more extensive set of rewards. Weber

(2005) states a number of benefits to airline alliance partners, obviously from the airlines’


perspective, “increased revenue and passenger numbers, greater reach, access to slots/gates and

greater frequency of services, more comprehensive route networks, economies of scale in

marketing, service costs, and the eradication of duplication of operational efforts” (p. 257).

Classic Airlines would be able to market this new alliance to maintain and attract new customers

over other airlines.

Classic Airlines’ internal stakeholders, specifically its employees, are suffering low

morale due to the public’s negative outlook, fear of job cuts and insecurities. The employees

listed the following on the consulting survey: “They want to feel valued, have career

opportunities and information available” (University of Phoenix, 2002). Motivated employees

are the cornerstone to a successful company therefore Classic Airlines needs to treat their

employees as internal customers, understand what the employees want, need and how the

company can deliver to boost morale.

Stakeholder Perspectives/Ethical Dilemmas

In addition to examining the issues, the company must consider the the stakeholders and

the associated ethical dilemmas. Classic Airlines has four main stakeholders in this scenario: the

employees, company management, shareholders and the customers. The employees in this case

have several interests that do not appear to be addressed by the company. The Vice President of

Human Resources has worked to educate employees on their importance to the organization. The

employees desire better compensation, job security, benefits, growth and advancement

opportunities. At times, management’s interest in company productivity may interfere with the

need to provide incentives and motivation for employees. If customer service employees are

satisfied with their jobs, they will be able to tend effectively foster good consumer relationships

which, in turn, will boost growth and shareholder value.


Shareholders desire a return on their investment and to feel secure that the company is

working in the shareholder’s best interest. The investors have chosen to invest in Classic Airlines

and have a right to be informed when the company is experiencing difficult times and what any

strategies or tactics will be employed to turn a profit. The stockholders want to know the trends

and the sales forecasts; management needs to give them the most informed answers, even if those

numbers are not what the shareholders want to hear.

The Executive management and CEO, Amanda Miller, identified the necessity of

positioning Classic Airlines for success by revamping the customer rewards program.

Management realizes that the the airline must improve the relationships with customers and

establish credibility with employees. Customers’ needs for better service may come in conflict

with cost restructuring. The customers want better service, amenities, flexibility, maximum

frequent flyer miles,and easy access to all the locations that they want to go, with the least

amount of layovers. They want to do this safely, on-time and with no problems with luggage

handling. Customer service can be a costly expenditure that management mistakenly sees as an

easy target. Classic will need to tailor their services with what customers truly value at heart – a

reality that management needs to face when considering how to restructure the rewards program.

Frame the “Right” Problem

After analyzing and understanding the issues, opportunities, and stakeholder perspectives,

Classic Airlines must formulate a problem statement that will help the company make the best

decision. The problem statement is - Classic Airlines will maintain its strategic position in the

airline industry by creating customer confidence and loyalty, improving profitability and aligning

with its stakeholders. This will enable Classic Airlines to become financially secure through


growth opportunities, formation of strategic alliances, the revamping of its marketing strategy

and exceeding customer expectations.

Describe the “End-State” Vision

Classic Airlines will maintain its position of being the fifth largest airline in the industry.

Classic Airlines will increase profitability and customer satisfaction, which will collaterally

improve the airline’s market share. The one-year goals attached to increasing market share

include a 15% increase in new customer base, a 20% increase in customer loyalty and a 30%

increase in customer satisfaction, measured by surveys and feedback. Classic Airlines’ reward

program will be revamped to reestablish customer loyalty through forming new alliances with

other airlines. In addition, the airline will address the problem of rising fuel cost by incorporating

a system that will save on fuel consumption and reduce costs without sacrificing quality service.

The 18-month goal attached to reducing operating costs is a 15% decrease.

Identify the Alternatives and Benchmarking Validation

After a thorough review of the problems, actions, and results for Classic Airlines and

other companies, the analysis revealed three key concepts that each corporation either did well or

failed to accomplish. These concepts involve integrating and enabling different channels with

existing CRM, performing customer segmentation analysis, revamping the rewards program,

expanding strategic partnerships and alliances and reducing costs.

Hawaiian Airlines (HA) was successful in concentrating on enabling its current CRM

methodologies by enabling the web channel. This effort resulted in HA’s price responsiveness to

be more agile and responsive to market forces and competition. Aloha Airlines, unfortunately,

wasn’t so adept at this process and ended up filing for bankruptcy after 60 years of doing

business. Aloha Airlines, having not taken risk into consideration or doing a thorough scanning


of the competitive landscape, failed in sustaining business and booking rates. Classic Airlines is

losing their competitive edge in the airline industry and must focus on creating a quality product

that will strengthen the bond between the company and its customers, resulting in a long-term

customer loyalty. The key objective for Classic Airlines is to determine what their customers

need in order to increase sales and booking rates without regard to channel. This can be

exemplified by JetBlue’s success in market research of customer’s desires. The research revealed

that customers want low fares, exceptional loyalty program benefits, more comfortable seats,

more on-board entertainment options and world-class customer service. JetBlue leveraged an

effective CRM system to improve its service offerings and become a carrier of choice in a

competitive landscape. Classic Airlines should follow JetBlue’s discovery and enable its CRM to

take advantage of customer needs and implement them. Classic Airlines does not have an

effective CRM and does not focus on customer relationships (University of Phoenix, 2002).

Classic Airlines could build a new alliance with Skyway Airlines which would help

Classic become the industry leader in this arena. Classic Airlines should look at other rewards

programs and understand that many successful programs use alliances to create synergy and

create growth through offering additional travel destinations. Ohmae (1989) raises the

importance of growth and reduction of fixed costs by forming partnerships, “To compete in the

global arena, you have to incur – and defray – immense fixed costs. You need partners” (p. 144).

Classic Airlines could rely purely on cost-cutting in order to turn the company’s profit-

margins problem around while waiting for the market to improve. Aloha Airlines, as previously

mentioned, attempted this strategy and was unsuccessful. The competitive landscape, at the time,

did not afford Aloha’s return to higher rates – without making other cuts in service routes or

flight frequency, Aloha Airlines could not return to a competitive state.


Evaluate the Alternatives

Classic Airlines will need to create value and establish new systems and procedures to

optimize productivity. With the help of other successful companies that are in line with their own

goals, Classic Airlines can begin to establish diversification in the airlines forum and show

stakeholders the benefits of a new venture. To be an industry leader, Classic Airlines will need to

embrace innovation facilitated by close interaction with consumers and other vital stakeholders.

The first goal, increase revenue, will be directly affected by having a sound CRM. A

properly managed CRM will guarantee future obligations are met, which in turn will increase

revenues and cash flow. Increasing profitability can be achieved by streamlining operations

across the organization. By analyzing the problems Classic Airlines can identify issues should

revenue or booking rates decrease.

Increasing customer loyalty participants and expansion of the customer base, the second

and third goals, can be achieved by revamped marketing techniques. A restructured rewards

system with the new alliance will help in meeting this goal. Although the process of expansion

increases capital expenditures in the near term, long-term effects of this program eventually help

the growth of the organization. By having an unyielding marketing management system the cash

conversion cycle will be drastically reduced.

The fourth goal, improving customer and employee satisfaction, is achieved by

implementing a solid CRM and instituting a viable restructuring plan. The restructuring plan

needs to be presented to the board of directors, management and employees. Classic Airlines

should also share the plan with its contractors, vendors and third-parties to glean professional

feedback. Classic Airlines should replace weak members of top executives and the board of

directors. Then reduce management layers because often unprofitable companies are bloated


with middle managers. Above all, communication of all changes to the main stakeholders

identified is essential and will boost morale and reduce uncertainty.

Identify and Assess Risks

Classic Airlines needs to choose the most viable solutions and perform further evaluation

of risks and benefits. Based on an analysis of alternative solutions and how these solutions meet

goals established by stakeholders’ needs, the secondary alternative was a clear winner. However,

Classic leaders have to bear in mind the risks and benefits associated with each available

alternative and the leaders must consider all these before choosing and implementing a specific

solution.

The major risks involved with seeking out and entering into alliances and partnerships

with other carriers include loss of customer base due to discontent with partner, alliance

members not adhering to agreements and lack of leadership buy-in. These are all low-probability

risks, however the consequences can be devastating to Classic Airlines’ profitability including

decreased revenue and customer inconvenience. Mitigation strategies for these risks include clear

communication to customer base before negotiating an alliance, foster strong relationships with

alliance members and draft a clear project plan for leadership buy-in.

With expanding the CRM component, there are risks of high-cost overruns, loss of

control with project scope, misalignment of goals, lack of change management and analysis does

not bring useful information. Budget-related risks are medium to high probability, however they

can be mitigation through the rough consequences by creating a high-performance team to

oversee the project and all aspects, conduct thorough research of contractors and vendors and

ensure that proper market segments are identified. The consequences of the risks include CRM


system would fail before implementation, heavy and unplanned financial outlays and resistance

to change on the part of stakeholders.

An overhaul of the current rewards program does not carry heavy risks, however, the

risks still need to be considered. Risks may include no membership increase, high costs of

analyzing and developing and lack of internal stakeholder buy-in. Budget considerations are high

probability, however the other risks are medium to low. The consequences include resistance to

change, cost overruns and implementation failure, all carrying high severity. The mitigation

techniques would again include clear communication, strong key-player emplacement for project

management and clearly documented project scope with necessary change management controls

in place.

Make the Decision

Any recommended solution should be made only after Classic Airlines has assessed and

analyzed existing marketing strategies and identified the various opportunities available for

improving marketing efficiency from benchmarked companies. Each recommended alternative

solution had an optimal individual strength that best satisfied one of the end-state goals. The

optimal solution for Classic Airlines will be a combination of the alternative solutions that

provide for integrating CRM, restructuring the awards program, and joining the marketing

alliance.

The optimal solution will allow Classic Airlines to meet their end state goals. Using the

above systems will allow them to build their brand image and profits, reduce operational costs,

and meet all customer demands. Analyzing and responding to ethical issues will give them the

ability to maintain a positive relationship with all vendors and stakeholders, while avoiding any

conflicts of interest.


Develop and Implement the Solution

In proceeding with the secondary alternative and most optimal solution, overhaul rewards

program and enter into additional alliances with other carriers, Classic Airlines first begin to

improve on the customer’s satisfaction through CRM. After finding the correct company to sub-

contract to and agreeing on price, the system will be upgraded. Along with the changes, a

representative of the new CRM software will take several weeks to train key players in

management.

The next phase will be to build strategic business alliances with business to improve the

rewards program. This will require several weeks of benchmarking and research to find the right

company and products. The marketing department will then begin its campaign to introduce the

first phase of the revamped rewards program.

Evaluate the Results

Classic Airlines has several options it can use to measure the results of the decisions it

made regarding its customer relationship management. When evaluating results, importance

must be taken to examine both quantitative and qualitative results. The first measurements will

be quantitative, where as the success will come from improved revenue as will be evident on the

monthly/quarterly financial reports and daily stock prices. A second measurement will be

qualitative which will be derived from questioning the passengers and employees through

surveys and the results provided by reports generated through the use of the CRM system.

By developing strategic alliances with other companies, Classic Airlines will be able to

provide its customers with destinations that are not presently available. Within the strategic

alliances, Classic Airlines may be able to better use or even prevent having to lay up it resources

aircraft during winter months. However, senior management and the workforce need to


understand that the loyalty program is not just points and gifts, the program is a true reflection of

Classic Airlines.

Conclusion

Classic Airlines is faced with the need to make a definite, strategic shift within its

operating structure. The goal is to evaluate all options available with regards to the updating

Classic Airlines’ rewards programs, value-added consumer packages and CRM solutions to

optimize key elements of the company’s overall business plans. For Classic Airlines to reach its

end-state, effective customer relationship management will be essential. This includes effective

forward looking environmental scanning, improved forecasting, and organizing for current and

future CRM initiatives. To manage its recovery and future growth, Classic Airlines must ensure

it maintains adequate customer levels and have plans in place to handle fluctuations in buying

patterns by its consumers. By fully marketing the benefits of expanding into new market areas

through strategic alliances combined with better customer service, Classic Airlines will one

again be a successful airline.

.


References

Fowler, J. (2003, October 1). CRM is a four-letter word. Direct, 15(13). Retrieved December 4,

2008 from General OneFile.

Ohmae, K. (1989, March/April). The global logic of strategic alliances. Harvard Business

Review, 67(2), 143-154. Retrieved December 5, 2008 from EBSCOhost database.

Kerin, R. A., Hartley, S. W., Berkowitz, E. N., & Rudelius, W. (2006). Marketing (8th ed.). New

York: The McGraw-Hill Companies.

University of Phoenix. (2002). Scenario Two: Classic Airlines. Retrieved November 19, 2008,

University of Phoenix, Week Four, Resource. MBA 570 – Sustainable Customer

Relationships Course Web site.

Weber, K. (2005, February). Travelers’ perceptions of airline alliance benefits and performance.

Journal of Travel Research, 43, 257-265. Retrieved November 22, 2008 from SAGE full-

text collections.


Table 1

Issues and Opportunities Identification

Concept Application of Concept in Scenario or

Simulation

Reference to SpecificCourse Concept(Include citation)

Personal Experience at your Organization

Customer value Classic Airlines is in a highly competitive industry and must differentiate their product from the competition through both a service and cost perspective. They can gain loyal customers by providing the benefits that targeted customers’ desire. Classic should listen to key customer comments such as “Treat me like a person, a paying customer, which is what I am” (University of Phoenix, 2002).

“Customer value is the unique combination of benefits received by targeted buyers that includes quality, price, convenience, on-time delivery, and both before-sale and after-sale service” (Kerin et al., 2006, p. 15).

Although my firm’s service offerings cater to a niche market, it is very dynamic and continues to grow. One paramount value that we have is truly showing the customer they are valued and listening to the customer’s issues.

Market Orientation towards the “customer era”

Classic Airlines is trying to focus on its customers’ needs by placing its focus on CRM processes to understand its customers and know exactly what they desire. Classic will be able to use this in their marketing campaign to satisfy the customer through personalized customization.

“An organization that has a market orientation focuses its efforts on (1) continuously collecting information about customers’ needs, (2) sharing this information across departments,and (3) using it to create customer value.The result is today’s “customer era,” in which firms seek continuously to satisfy the high expectations of customers” (Kerin et al., 2006, p. 20).

My firm focuses on the customer’s needs, not just based on what the customer voices, but also on market research and a proactive approach by observing industry and trends in the marketing arena.

Global Competition

Classic Airlines has been offered a marketing

“Intense competition in today’s fast-paced

My firm was acquired by our biggest

Problem Solution: Classic Airlines 16alliance opportunity that would integrate all customer-facing elements to improve the customer experience (University of Phoenix, 2002). This revamping could help Classic Airlines be successful under extreme global competition. Members of airline alliances can advertise their partnerships and generate loyalty. This alliance could set them apart from other airlines and create demand for Classic Airlines’ rewards program.

domestic and global markets has caused massive restructuring of many American industries and businesses. American managers are seeking ways to achieve success in this new, more intense level of global competition” (Kerin et al., 2006, p. 15).

competition in September. In the time leading up to the acquisition, and even during acquisition talks and negotiations, we received daily updates from the CEO regarding the state of the competition and motivation to “out-sell and out-service” the competition. During the negotiation of acquisition, we were still out-selling the competition to influence a “sweeter” deal.

Segmenting and Targeting Markets

Classic Airlines has one product and two main market segments, the business traveler and the leisure traveler. The company also segments different types of frequent fliers up to top-level frequent fliers. Classic Airlines knows that upper-echelon reward customers do not place a high importance on price, rather quality and service. The marketing campaign needs to be segmented to appeal to each type of customer and cater to them.

“Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action. Market segments are the relatively homogeneous groups of prospective buyers that result from the market segmentation process. Each market segment consists of people who are relatively similar to each other in terms of their consumption behavior” (Kerin et al., 2006, p. 233).

My firm offers a service which will differ in features based upon the market segment – individual emailers, resellers, or email service providers/marketers. We tune our service packages according to the segment and encourage loyalty by discounting if necessary.

Psychological Influences: Perception - Problem recognition

The decline in the Classic Airlines’ rewards program, the loyalty statistics and the exit interviews give data to Classic Airlines that is crucial to understand the decline in business

“Psychology helps marketers understand why and how consumers behave as they do. In particular, psychological concepts such as motivation and personality; perception;

My firm has enjoyed increased customer satisfaction rates year after year due to our focus and commitment to customer service, attending to the customer’s voiced

Problem Solution: Classic Airlines 17revenue statistics and negative feedback. Classic needs to understand needs of the customer are linked to the problem with the CRM product. Classic Airlines needs to conduct research to understand their customers.

learning; values, beliefs, and attitudes; and lifestyle are useful for interpreting buying processes and directing marketing efforts (Kerin et al., 2006, p. 126).

needs, and being proactive about making sure the customer is exceedingly satisfied with their interaction from initial sales approach to implementation and ongoing support of our service.


Table 2

Stakeholder Perspectives and Ethical Dilemmas

Stakeholder Perspectives and Ethical Dilemmas

Stakeholder Groups with Competing Values

List: Group X versus Group Y

The Interests, Rights, and Values of Each Group

Course Concept

Chief Executive Officer vs. Senior Management

The CEO, Amanda Miller, is a center of accountability as the leader of the organization her decisions will determine the future of the company. Presently Amanda’s decisions are opposite her staff’s where alliances are concerned.

“Meaningful customer relationships are achieved by the firm’s identifying creativeways to connect closely to its customers through specific marketing mix actionsimplemented in its marketing program” (Kerin et al., 2006, p. 16).

Employees vs. Classic Airlines

Interests: career progression plan, on the job training, incentive plans, motivationValues: ability to support family, productivity, accountability

Uncertainty is plaguing the employees who are worrying about their job security during an industry downturn and amid cost-reductions. The employees feel under-valued, insecure; want to have career opportunities and information available, and a challenging and motivating work environment. When employees are not motivated, their customer service tends to suffer and will conflict with the customers’ desire for good service.

Customers vs. Classic Airlines

Interests/Rights: customer care, fair price, convenience, timeliness, quality, incentives, options, innovations Values: honesty, integrity, accountability, trust

Classic Airlines’ executives need to properly identify key drivers of customer value and understand their customer. Currently they are not effectively using the marketing research from

Problem Solution: Classic Airlines 19customer surveys which leverage customer feedback and indicate what business and leisure travelers’ desire from Classic Airlines.

Stockholders vs. Classic Airlines

Interests/Rights: increased confidence, return on investments, receive high dividends, optimize revenue, early notification and involvementValues: integrity, loyalty

Classic Airlines must restructure and differentiate to beat out the competition which will increase shareholder value. Classic Airlines must bring back the dissatisfied frequent flier. The company must analyze industry/competitive trends to benchmark best practices to make the shareholders happy.


Table 3

Analysis of Alternative Solutions


Table 4

Risk Assessment and Mitigation

Risk Assessment and MitigationAlternative Risks and Probability Consequence and

SeverityMitigation Techniques

and StrategiesSeek out and enter into alliance agreements with other carriers

Loss of client base (Low)

Alliance members not adhereing to agreements (Low)

Lack of leadership buy-in (Low)

Decreased revenue (High)

Customer inconvenience and disatisfaction (High)

Alliance will not be implemented (Med)

Clear communication of intent

Foster strong alliance relationships

Draft clear project plan and get leadership buy-in

Expand CRM and implement new technology

High costs of analyzing and developing program (High)

Project scope could be too large (Med)

Analysis yields little useful information (Low)

Delays (Med)

Resistance to change (Med)

CRM system will fail before it begins (High)

Create a high-performance team to lead efforts

Research contractors/consultants and coordinate with the project management office

Ensure proper market segments are identified and understand customer needs

Overhaul current rewards program

No increase in members (Med)

High costs of analyzing and developing program (High)

Lack of internal stakeholder buy-in (Med)

Resistance to change (Med)

Cost overruns (High)

Implementation fails (High)

Create a high-performance team to lead efforts

Clear communication of strategy

Project scope should clearly outline costs and budget and obtain buy-in


Table 5

Pros and Cons of Alternative Solutions

Alternative Pros ConsSeek out and enter into alliance agreements with other carriers

Enables better access to gates and destinations

Increases loyalty program value

Increases brand awareness

Requires possible lengthy negotiations

Possible employee/internal stakeholder backlash

Integration challenges

Expand CRM and implement new technology

Increased customer satisfaction

Increased customer retention

Focuses business on segments

Increased brand awareness Increased customer

perception of Class Airlines focus on customer

Costly Uncertain timeline Requires training Growing pains transition

period

Overhaul current rewards program

Gets customers excited about their investment in the company

Attracts additional business

Promotes customer retention

Costly Uncertain timeline Requires development

time Requires complete

stakeholder buy-in


Table 6

Optimal Solution Implementation Plan

Action Item Deliverable Timeline Who is ResponsibleAssess and analyze existing marketing strategies; evaluate opportunities available to improve efficiency by benchmarking.

Within 60 days Board of Directors

Identify short-term goals in implementation

Within 2 weeks of decision Vice President – Customer Service

Budget creation and secure funding

Within 2 weeks Chief Financial Officer

Develop new marketing & segmentation analysis

Within 30 days Vice President – Marketing

Measure Results through Balanced Scorecard

End of the first year and mid second year

Board of Directors and CFO

Seek CRM experts & consultants help to form and implement strategic plan

Within 30 days Board of Directors


Table 7

Evaluation of Results

End-State Goals Metrics Target

Decrease operational costs Financial statements 15% decrease 18 monthsIncrease customer satisfaction Customer surveys/CRM data 85% customer satisfaction 1st

year; tiered increases thereafter

Continue with creating alliances

number of destinations and partners

No less then 40 additional destinations with in one year.

Increase Customer and Employee Satisfaction

Survey results, employee turnover, customer complaints, frequent flier account points increases

Decrease employee turnover by 5%Decrease customer complaints by 10%Frequent flier mileage accrual increase of 25%

Increase Profitability Financial statements Increase 10%

Documents

JMoore Wk6 Classic Airlines Problem Solution