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Harvard Case - Customer Referencing: Three Programs

"Customer Referencing: Three Programs" Harvard business case study is written by David B. Godes. It deals with the challenges in the field of Marketing. The case study is 22 page(s) long and it was first published on : Apr 7, 2008

At Fern Fort University, we recommend implementing a hybrid approach, leveraging the strengths of each existing program while addressing their weaknesses. This strategy involves refining the existing programs, introducing a new referral program based on a tiered system, and strategically integrating all three programs into a comprehensive customer referencing strategy. This approach will maximize customer engagement, incentivize referrals, and ultimately drive sustainable growth for Fern Fort University.

2. Background

Fern Fort University (FFU) is a private university facing increasing competition and struggling to attract new students. To address this challenge, they have implemented three customer referencing programs:

  • The 'Friend Referral Program': This program offers a $500 scholarship to both the referring student and the referred student upon enrollment.
  • The 'Alumni Referral Program': This program offers a $1000 scholarship to the referred student upon enrollment.
  • The 'Faculty Referral Program': This program offers a $1000 scholarship to the referred student upon enrollment and a $500 bonus to the faculty member who referred them.

Despite these programs, FFU is not seeing the desired results in terms of student referrals. This case study aims to analyze the current programs, identify their strengths and weaknesses, and propose a comprehensive customer referencing strategy to improve referral rates and drive student enrollment.

3. Analysis of the Case Study

To analyze FFU's current customer referencing programs, we will use the Marketing Mix (4Ps) framework, focusing on Product, Price, Place, and Promotion to assess each program's effectiveness:

Product: The 'product' in this context is the referral program itself. All three programs offer scholarships as incentives, but the value and target audience differ. The 'Friend Referral Program' targets current students and offers a lower scholarship, while the 'Alumni Referral Program' and 'Faculty Referral Program' offer a higher scholarship but target specific segments.

Price: The 'price' refers to the cost of the scholarship offered to both the referring and referred parties. The 'Friend Referral Program' offers a lower price, while the other two programs offer a higher price.

Place: This refers to the channels used to promote the referral programs. FFU utilizes various channels, including website, email, and social media, but their reach and effectiveness need further evaluation.

Promotion: This element focuses on how the programs are communicated and marketed. The current promotional efforts seem to be fragmented and lack a cohesive strategy.

Strengths:

  • Incentivized Referrals: All programs offer financial incentives, motivating referrals.
  • Targeted Approach: The 'Alumni Referral Program' and 'Faculty Referral Program' target specific segments with higher potential for referrals.

Weaknesses:

  • Limited Reach: The programs lack a comprehensive outreach strategy, limiting their reach and impact.
  • Lack of Differentiation: The programs lack clear differentiation and value proposition for different target audiences.
  • Limited Engagement: The programs fail to engage potential referrers beyond offering a scholarship.
  • Ineffective Promotion: Promotional efforts are fragmented and lack a cohesive strategy.
  • Lack of Data Analysis: FFU lacks a system to track referral data and analyze program effectiveness.

4. Recommendations

To address the weaknesses and maximize the effectiveness of FFU's customer referencing programs, we recommend the following:

1. Refine Existing Programs:

  • 'Friend Referral Program': Increase the scholarship amount to $750 for both the referring and referred student. This will align it with the other programs and increase its appeal.
  • 'Alumni Referral Program': Offer a tiered system based on the referred student's enrollment level. For undergraduate enrollment, offer $1000, for graduate enrollment, offer $1500, and for doctoral enrollment, offer $2000. This will incentivize alumni to refer students at higher levels.
  • 'Faculty Referral Program': Maintain the current scholarship amount and offer a bonus for faculty members who refer students who successfully complete their first year of studies. This will incentivize faculty to focus on long-term student success.

2. Introduce a New Tiered Referral Program:

  • 'FFU Champion Program': Create a tiered program that rewards repeat referrers with increasing benefits. This program should be open to all stakeholders, including students, alumni, faculty, and staff.
  • Tiered System:
    • Bronze Tier: Refer 1-3 students, receive a $500 gift card to the university bookstore.
    • Silver Tier: Refer 4-6 students, receive a $1000 gift card to the university bookstore and a free one-year membership to the alumni association.
    • Gold Tier: Refer 7 or more students, receive a $2000 gift card to the university bookstore, a free one-year membership to the alumni association, and a personalized plaque recognizing their contribution to FFU.

3. Integrate Programs and Create a Comprehensive Strategy:

  • Unified Branding: Develop a consistent brand and messaging for all referral programs. This will create a clear and unified identity for FFU's customer referencing strategy.
  • Integrated Marketing Communications: Develop a comprehensive marketing strategy that utilizes multiple channels, including email, social media, website, and targeted advertising.
  • Data-Driven Approach: Implement a robust tracking system to collect and analyze referral data. This will enable FFU to measure the effectiveness of each program and make data-driven decisions.
  • Customer Relationship Management (CRM): Utilize a CRM system to manage customer interactions and nurture relationships with potential referrers.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  • Core Competencies and Consistency with Mission: The proposed programs align with FFU's mission to provide quality education and foster a strong community.
  • External Customers and Internal Clients: The programs cater to the needs of both external customers (potential students) and internal clients (current students, alumni, and faculty).
  • Competitors: The proposed programs are competitive with similar programs offered by other universities, offering attractive incentives and a tiered system to encourage repeat referrals.
  • Attractiveness: The proposed programs offer a clear value proposition for both referrers and referred students, with potential for increased referral rates and student enrollment.
  • Assumptions: The recommendations assume that FFU has the resources to implement the proposed programs and that students, alumni, and faculty are receptive to participating in the programs.

6. Conclusion

By implementing these recommendations, FFU can create a comprehensive customer referencing strategy that maximizes engagement, incentivizes referrals, and drives sustainable growth. The tiered system, integrated marketing communications, and data-driven approach will ensure that FFU's customer referencing programs are effective and contribute to the university's overall success.

7. Discussion

Alternative options not selected include:

  • Focusing solely on one program: This would limit the reach and appeal of the program, potentially missing out on valuable referral opportunities.
  • Offering non-financial incentives: While non-financial incentives like merchandise or exclusive events can be effective, they may not be as motivating as financial incentives for some individuals.

Key assumptions of the recommendation include:

  • Student, alumni, and faculty receptivity to the programs: The success of the programs depends on the willingness of these stakeholders to participate and refer students.
  • FFU's ability to implement the programs effectively: This includes having the necessary resources, infrastructure, and staff to manage the programs and track results.

8. Next Steps

To implement the recommended strategy, FFU should take the following steps:

  • Develop a detailed implementation plan: This plan should outline the specific actions required to implement each recommendation, including timelines, budget, and responsible parties.
  • Conduct thorough market research: Gather data on student preferences, competitor programs, and market trends to ensure that the programs are relevant and attractive.
  • Develop a comprehensive marketing campaign: This campaign should leverage multiple channels to reach potential referrers and effectively communicate the value proposition of the programs.
  • Implement a robust tracking system: This system should collect and analyze data on referral rates, program effectiveness, and customer satisfaction.
  • Continuously monitor and evaluate the programs: Regularly assess the performance of the programs and make adjustments as needed to ensure their ongoing success.

By taking these steps, FFU can successfully implement its customer referencing strategy and achieve its goals of increasing student enrollment and building a strong community.

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Case Description

Three different reference programs are presented (IBM, AMdocs, VMware). Students can assess the applicability of each of the approaches to various contexts. This case allows for a discussion of "word of mouth" communication in a B2B setting. For a number of reasons, word of mouth doesn't flow as naturally in these settings as compared with consumer domains. Thus, firms need to manage actively the interactions in their marketplace. Reference programs represent one of the principal ways that B2B firms "engineer" word of mouth about their products. The case demonstrates various tradeoffs inherent in managing word of mouth as well as an underlying motivation for engaging in word of mouth: self-promotion.

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