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Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Caring: A New Business Caring: A New Business Paradigm to Connect with Paradigm to Connect with the 21the 21stst Century Customer Century Customer
Kalyan Raman, Northwestern Kalyan Raman, Northwestern UniversityUniversity
TOURISM BRANDING FORUM , MAY 4-6, 2011Innovation, Branding & Technology for Tourism Brands
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Caring Ties Innovation, Branding & Caring Ties Innovation, Branding & Technology TogetherTechnology Together
Innovation—Look at the World DifferentlyInnovation—Look at the World Differently Branding—Relationship BuildingBranding—Relationship Building Technology—Applying Science to Solve Technology—Applying Science to Solve
ProblemsProblems
Why Caring is Relevant to Tourism…
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
U.S. Tourism IndustryU.S. Tourism Industry In the U.S. alone, Travel and Tourism is a $1.3 trillion In the U.S. alone, Travel and Tourism is a $1.3 trillion
industry. If $1 were equated to a second of time, industry. If $1 were equated to a second of time, then $1.3 trillion would equal over 41,000 years! then $1.3 trillion would equal over 41,000 years!
The Travel and Tourism industry is one of the The Travel and Tourism industry is one of the country's largest employers with 7.3 million direct country's largest employers with 7.3 million direct travel-generated jobs. You could fill the Orange Bowl travel-generated jobs. You could fill the Orange Bowl stadium a hundred times over with people directly stadium a hundred times over with people directly employed in the industry. employed in the industry.
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
U.S. Tourism Industry cont.U.S. Tourism Industry cont.
There is $163 billion direct travel-generated payroll There is $163 billion direct travel-generated payroll and one out of every eight U.S. non-farm jobs is and one out of every eight U.S. non-farm jobs is directly and indirectly created by travel and directly and indirectly created by travel and tourism. tourism.
Approximately 2.6 million hotels rooms are sold Approximately 2.6 million hotels rooms are sold everyday in the U.S. That is enough rooms to lodge everyday in the U.S. That is enough rooms to lodge every person living in San Francisco, Atlanta, every person living in San Francisco, Atlanta, Washington, D.C., Miami, and Denver combined! Washington, D.C., Miami, and Denver combined!
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Tourism & Global InfluenceTourism & Global Influence
There is a strong correlation There is a strong correlation between Tourism expenditure per between Tourism expenditure per capita and the degree to which a capita and the degree to which a country is a global player. country is a global player.
Projections of growth in tourism Projections of growth in tourism indicate the relative influence indicate the relative influence that a country will exercise in the that a country will exercise in the future. future.
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Tourism & ShoppingTourism & Shopping
• Spending by resident and international travelers in the U.S. averaged $1.6 billion a day, $68 million an hour, $1.1 million a minute, and $19,000 a second!
• Shopping is the most popular domestic trip activity—30% of all domestic trips. That's 342 million trips with shopping sprees!
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Big Spenders & Hard-Core Big Spenders & Hard-Core Vacationers Vacationers
Most liberal money-spenders are tourists from Most liberal money-spenders are tourists from Germany ($72.7 billion), USA ($69.2 billion) & UK Germany ($72.7 billion), USA ($69.2 billion) & UK ($59.6 billion), ($59.6 billion),
Longest vacations—Italy (42 days on the average), Longest vacations—Italy (42 days on the average), France (37), Germany (35), Brazil (34), UK (28), France (37), Germany (35), Brazil (34), UK (28), and Canada (26). and Canada (26).
Shortest Vacations—USA (13 days). Shortest Vacations—USA (13 days).
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
THE MESSAGETHE MESSAGE
There was never a better time for There was never a better time for tourismtourism
But….But….High Growth Industries Attract Fierce Competition.
How will you differentiate yourself?
•Economists talk about Markets•We talk about People
Because
Markets are made up of PeopleOur customers are peopleAnd people respond to Caring
Innovation + Branding + Technology=
Caring
Innovation + Branding + Technology=
Caring
MEMORIZE THIS EQUATION!MEMORIZE THIS EQUATION!
Three Narratives about Caring
•Prefer human or robot as your care giver?•Caring in England—British perception of American friendliness•Person in wheelchair—Ignore or Inquire?
Companies say stuff like this…
But customers see…
And customers hear…
Customers are not commodities to beacquired and fired on whim…
Academics write papers like these…
And papers on how best to fire customers…
Once upon a time in Michigan…
The court exchange in the Dodges’ lawsuit against Henry Ford
“ What is the Ford Motor Company organized for except profits, will you tell me, Mr. Ford?”
“Organized to do as much good as we can, everywhere, for everybody concerned.”
“What is the purpose of the Ford company?”
“To do as much as possible for everybody concerned,” responded Ford, “give employment,…, and incidentally to make money,...., Business is a service not a bonanza.”
Ford was derided by the stockholders and the court—but that was back in 1917
The court exchange in Michigan
82 Years Later in 1999…
William Clay Ford, great-grandson,promoting the idea that business is a service
“We want to find ingenious new ways to delightconsumers,…, and make the world a better place for us all.”
Ford was enthusiastically supported by the shareholders and other stakeholders
How times have changed!
Times have changed.How do the world’s leading
Marketing thinkers view these Changes?
From “A Career in Marketing/Advertising,”Gregory Beyer, [email protected]
The New Business Climate
Two of the Four Key Elements of All Professions
• A Commitment to the Public Good•An Enforceable Code of Ethics
Harvard Business School Professor Rakesh Khurana (2005)
Critical Challenge FacingBusiness Today
Restore the image of business as a force for good rather than evil in the world
Wharton Business School Professor Paul Schoemaker (2008)
Fundamental Problem
Roughly 80% of our operating business models arebased on industrial-era logic
Don Schultz (2010), Northwestern UniversityPioneer of Integrated Marketing Communications
And this is a problem because…
Industrial Revolution Logic
MechanicalManufacturing OrientedSales OrientedAdam Smith’s Economics (1776)
The Spinning Mule, 1769
A Logic Ill-Suited to our Times…
GPS is enabled by Einstein’s Time-Dilation formula
Our TimesDictateA NewLogic
A New Logic
CustomizedCustomer OrientedCommunitiesA New Economics
A Qubit—0 or 1? Its Potentially Both!
How will yourespond to these
complex developmentsin business and society?
Caring
Caring provides a powerful unifying framework to integrate the interests of employees, customers, shareholders, suppliers and all the stakeholdersthat affect the company in an environmentwhere customers are increasingly suspicious of and resistant to marketing practices developed in times gone by
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
The Best and Worst of The Best and Worst of Customer ServiceCustomer Service
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Poor ratings in recent Consumer Reports Poor ratings in recent Consumer Reports researchresearch
The New York Times reported that in The New York Times reported that in June 2010, Dell sold millions of defective June 2010, Dell sold millions of defective PCs even though employees were aware PCs even though employees were aware of their problemsof their problems
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
CitigroupCitigroup
Fell on the low end of a number of Fell on the low end of a number of customer satisfaction surveyscustomer satisfaction surveys
Employee discrimination suits, Employee discrimination suits, especially one which contends that especially one which contends that the bank used the recession as an the bank used the recession as an excuse to fire women. excuse to fire women.
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
AppleApple
Apple has been # 1 in the University of Apple has been # 1 in the University of Michigan's American Customer Satisfaction Index Michigan's American Customer Satisfaction Index for the seventh straight yearfor the seventh straight year
Offer free tech support for 90 days and free Offer free tech support for 90 days and free computer software courses for buyerscomputer software courses for buyers
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Rated number one in the The 2011 Temkin Rated number one in the The 2011 Temkin Experience Ratings.Experience Ratings.
Based partially on high customer interaction Based partially on high customer interaction through Twitter, Facebook, phone support, and through Twitter, Facebook, phone support, and website.website.
Offers perks like free shipping on orders over $25Offers perks like free shipping on orders over $25
http://www.fastcompany.com/articles/2007/03/companies-that-care.html
Some Characteristics of a Caring Company
But can a caring company make money?
Success Stories about Caring Corporations
The SAS Institute in Carey, NC
Rigorous studies of the impact of caring on performance now exist…
Caring & Job Security
ROI and Other Measures of the Impact of Caring on Performance
•Chase Manhattan—115% ROI •Pepsi—300% ROI•KPMG—125% ROI within 6 months, 521% ROI by year 4•Aetna—30% increase in claims processed•American Express—$40 million increase in sales•UPS—reduced turnover from 50% to 6%
As a result of implementing caring practices
How does Caring achieve its magic?
Caring—A Chain of Beneficial Effects
Lower Employee Turnover
Lower Hiring Costs
Higher Morale
Higher ServiceQuality
Higher CustomerSatisfaction
Higher Loyalty
Lower Training Costs
Higher Profitability
New Opportunities in TourismRelating to Caring
New Opportunities in TourismRelating to Caring
• Smartphone—Technological Opportunity
• Disaster Tourism—Humanitarian Opportunity & Ethical Issues
• Medical Tourism—Humanitarian Opportunity & Potentially Society-Changing Opportunity
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
The Role of the SmartphoneThe Role of the Smartphone
If 2010 was the year of the Smartphone, 2011 will be the year of travel through that Smartphone.
• For comparing fares, predicting price drops, getting pinged for one-day (or even one-hour) specials, finding hotels, gas, bathrooms, Starbucks, and attractions.
TsunamiTsunami Hurricane Hurricane
KatrinaKatrina Holocaust Holocaust
Concentration Concentration CampsCamps
West Bank & West Bank & Gaza StripGaza Strip
Ethical Issues
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Medical TourismMedical TourismMedical TourismMedical Tourism
American patients seeking healthcare American patients seeking healthcare abroad between 500,000 to 750,000 in 2007abroad between 500,000 to 750,000 in 2007
In 2008, 1.3 million Americans traveled In 2008, 1.3 million Americans traveled abroad to seek healthcare — expected to abroad to seek healthcare — expected to double by 2010.double by 2010.
Medical Tourism industry, currently a $20 billion market, could reach $100 billion by 2012.
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Off Shore Medical CareOff Shore Medical Care
Deloitte and Touche predicts that medical Deloitte and Touche predicts that medical tourists from the U.S. will grow to nearly 1.3 tourists from the U.S. will grow to nearly 1.3 million in 2011, and more than 1.6 million in million in 2011, and more than 1.6 million in 2012. 2012.
Among the top ten medi-vacation Among the top ten medi-vacation destinations are Mexico, and Latin America destinations are Mexico, and Latin America — Costa Rica, El Salvador— Costa Rica, El Salvador
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Latin America and MexicoLatin America and MexicoLatin America and MexicoLatin America and Mexico
Latin America, particularly Costa Rica and Panama, Latin America, particularly Costa Rica and Panama, are fast becoming tourist spots for medical are fast becoming tourist spots for medical travelers—150,000 foreign patients in Costa Rica in travelers—150,000 foreign patients in Costa Rica in 20062006
Mexico has become a Mexico has become a top medical tourism top medical tourism destination destination with 40,000 to 80,000 American seniors with 40,000 to 80,000 American seniors spending their retirement there, receiving nursing spending their retirement there, receiving nursing home and health care.home and health care.
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Comparing the CostsComparing the CostsComparing the CostsComparing the Costs
Medical care in Panama would cost Medical care in Panama would cost 40% to 70% less in comparison to 40% to 70% less in comparison to the U.S.the U.S.
Mexico offers 25% to 35% savings Mexico offers 25% to 35% savings for dental and cosmetic surgeryfor dental and cosmetic surgery
Costa Rica offers 30% to 40% Costa Rica offers 30% to 40% savings for dental and cosmetic savings for dental and cosmetic surgerysurgery
Brazil offers cosmetic surgery for Brazil offers cosmetic surgery for 40% to 50% less40% to 50% less
Companies could save up to 70% on Companies could save up to 70% on medical costs for their employees. medical costs for their employees.
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
CARINGCARING Not just a feel-good conceptNot just a feel-good concept
To apply the principles of caring to businessTo apply the principles of caring to business—identify the key influencers of caring—identify the key influencers of caring
And this is tricky becausecaring is not what you might think…
Caring Transcends its Everyday Caring Transcends its Everyday MeaningMeaning
The basic element in my view of the goodsociety is the centrality of others
Statistics is the most important science inthe whole world
Kenneth Arrow, Nobel Laureate in Economics, Stanford UniversityKenneth Arrow, Nobel Laureate in Economics, Stanford UniversityFlorence Nightingale, Pioneer in Nursing—The Science of CaringFlorence Nightingale, Pioneer in Nursing—The Science of Caring
A famous scientist said,
Another famous scientist said,
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
Adam Smith—Father of Adam Smith—Father of Capitalism?Capitalism?
The Wealth of Nations—The Wealth of Nations—
well-known, highly citedwell-known, highly cited
Theory of Moral Sentiments—Theory of Moral Sentiments—
unknown, uncitedunknown, uncited
Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com
The Wealth of Nations—the “Invisible Hand” The Wealth of Nations—the “Invisible Hand” guiding the marketguiding the market
Theory of Moral Sentiments—the “Invisible Theory of Moral Sentiments—the “Invisible Hand” guiding the individual’s conscienceHand” guiding the individual’s conscience
Smith’s Smith’s sixthsixth revision of the revision of the Theory of Moral Theory of Moral SentimentsSentiments was on his deathbed (Heilbroner was on his deathbed (Heilbroner 1986)1986)
Adam Smith—Champion of Caring?Adam Smith—Champion of Caring?
MORAL: Caring is subtle and full of surprises—here are more…
The Misquote of the The Misquote of the Century!Century!
What is good for General Motors is What is good for General Motors is good for the United Statesgood for the United States
Charles E. Wilson, former CEO of GM,& Secretary of Defense in Eisenhower admin
What Wilson Actually SaidWhat is good for the United StatesWhat is good for the United States is goodfor General MotorsGeneral Motors Reported in Peter F. Drucker: Managing
In a Time of Great Change (1995)
Jeffrey Sachs, the“Shock Therapist” in
Jeffrey Sachs, Promoter of a“Caring” Approach
What do these Surprises Portend?
Peter F. Drucker: ManagingIn a Time of Great Change (1995)
Caring is the emerging logic of our new world
The Good News
Caring will improve the performance of your organization—successful implementation is achievable once you understand the principlesof caring
Caring is not just good—its good for the bottom-line
Caring is not a fad—it increases customer loyalty