Developing a CRM Strategy

Topics

customer relationship management, profitability, strategy, promotion, environment

Teaching Notes

Using a CRM strategy is probably one of the best solutions for the problem in the following case study. Please note that there is an updated version of this activity now available, which also includes an interactive spreadsheet.


Review the activity below or download the PDF student worksheet

Student Worksheet: Developing a CRM Strategy


Student Discussion Activity

Help Save Our Music Festival

You’ve been called in as a consultant to help the organizers of a “religious music festival” and your task in this activity is to develop a strategy to increase attendance for this organization’s main event.

This festival is held each year over an October weekend in a small country town about 2-hour drive from a major city. The festival has been held for 7 years with moderate success. However, the organizers believe that it has far greater potential.

Recent Attendee Survey Results

Attended before?

  • Yes = 21%
  • No = 79%

Age Group

  • Under 15 = 12%
  • 15-19 = 30%
  • 20-24 = 38%
  • Over 24 = 20%

Awareness of event

  • 52% family/friend
  • 18% church
  • 15% brochure
  • 12% web site
  • 3% other

Attend with a group?

  • Yes = 74%
  • No = 26%

Are you religious?

  • Yes = 59%
  • No = 41%

General Background Information  

Promotion Methods Used

  • Web site
  • Brochures sent to major church youth groups

Pricing

  • Adult = $15 per day or $30 for 3 days
  • Students = $10 per day or $20 for 3 days

Facilities

  • Basic food/drink outlets
  • No alcohol
  • Some security/medical
  • Portable toilets

Accommodation/Transport

  • Caravans and camping within 15mins
  • No transport

 

FINANCIAL OVERVIEW

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Attendance

700

1,200

1,900

2,500

2,800

3,000

3,200

Avg Entry Fee

25

25

25

25

25

25

25

Total Entry Fee

$   17,500

$   30,000

$   47,500

$   62,500

$   70,000

$   75,000

$   80,000

Food/Drink Sales

$   21,000

$   36,000

$   57,000

$   75,000

$   84,000

$   90,000

$   96,000

TOTAL INCOME

$   38,500

$   66,000

$ 104,500

$ 137,500

$ 154,000

$ 165,000

$ 176,000

Web Site

0

0

0

$     5,000

$     5,000

$     5,000

$     5,000

Brochures/Posters

$   20,000

$   20,000

$   20,000

$   20,000

$   20,000

$   20,000

$   20,000

Security/Facilities

$   10,000

$   10,000

$   10,000

$   10,000

$   20,000

$   20,000

$   30,000

Administration

$   15,000

$   15,000

$   15,000

$   15,000

$   15,000

$   15,000

$   15,000

Cost of Food/Drink

$   10,500

$   18,000

$   28,500

$   37,500

$   42,000

$   45,000

$   48,000

Equipment hire

$   30,000

$   30,000

$   30,000

$   30,000

$   30,000

$   30,000

$   30,000

TOTAL COSTS

$   85,500

$   93,000

$ 103,500

$ 117,500

$ 132,000

$ 135,000

$ 148,000

GROSS PROFIT

$  (47,000)

$  (27,000)

$     1,000

$   20,000

$   22,000

$   30,000

$   28,000

Environmental Analysis

Corporation

  • It is important that the event maintains a religious message.
  • Looking for the event to earn a profit of $100,000 plus in coming years.
  • Limited/no funds to contribute now – needs to be self-supporting.

Competitors

  • Other concert events are growing in popularity – likely to clash on some weekends.
  • Non-music (e.g. sporting events) are competitors as well
  • Increasing numbers of ‘no alcohol’ events for teenagers/young adults.

Customers

  • Focus groups indicate that participants are generally satisfied.
  • Travel is a concern – and need to organize their own group travel.
  • Word-of-mouth recommendation appears to be the strongest reason to go.

Social

  • More emphasis/acceptability of more diverse events
  • More affluent teens and young adults.
  • Decreasing church attendance levels.

Technology

  • Virtually all teens and young adults have access to internet.
  • Quality of music and sound is expected to be very high.

Economic

  • Continued economic growth expected.
  • Youth unemployment still expected to remain at high levels.

Political

  • Big problems with public liability – will need $30,000 insurance policy next year.
  • Likely to be increasing requirements on health (e.g. food), security and safety.

Student Discussion Questions

  1. What is their financial/profit forecast without a strategy change?
  2. Therefore, how much extra profit will a strategy change need to generate?
  3. Outline a relationship-based marketing strategy to recover this profit shortfall.

Related Activities

Implementing a CRM Program

What CRM Tactics Should We Use?

CRM’s Mutual Benefits

Marketing Financial Forecasts