Harvard Case - Air Miles Canada
"Air Miles Canada" Harvard business case study is written by Thomas O. Jones, Leonard A. Schlesinger, Roger Hallowell. It deals with the challenges in the field of Service Management. The case study is 19 page(s) long and it was first published on : Jul 1, 1993
At Fern Fort University, we recommend Air Miles Canada implement a comprehensive strategy focused on enhancing customer experience, leveraging technology, and strengthening its brand image. This strategy will involve a multi-pronged approach, encompassing service innovation, customer engagement, and strategic partnerships.
2. Background
Air Miles Canada is a leading loyalty program in Canada, offering rewards to customers for their everyday purchases. The case study highlights the company's challenges in maintaining its competitive edge amidst evolving consumer preferences and the rise of digital loyalty programs. Air Miles faces competition from other loyalty programs, such as Aeroplan and Scene+, as well as the increasing popularity of credit card reward programs.
The main protagonists of the case study are:
- Air Miles Canada: The company faces the challenge of maintaining its relevance and growth in a competitive market.
- Consumers: Consumers are increasingly demanding personalized experiences, seamless digital interactions, and greater value from loyalty programs.
- Retail Partners: Air Miles relies on its retail partners to drive customer engagement and loyalty.
3. Analysis of the Case Study
The case study can be analyzed through the lens of Service-Dominant Logic, which emphasizes the co-creation of value between the service provider and the customer. This framework helps understand the challenges Air Miles faces in delivering value to its customers in a rapidly changing market.
Key Issues:
- Declining Customer Engagement: Air Miles faces declining customer engagement as consumers shift towards digital platforms and seek more personalized experiences.
- Limited Digital Capabilities: The company's digital platform lacks the features and functionalities to compete with newer, more technologically advanced loyalty programs.
- Brand Perception: Air Miles faces challenges in maintaining a strong and differentiated brand image in a crowded market.
- Competitive Pressure: The emergence of new loyalty programs and the increasing popularity of credit card reward programs put pressure on Air Miles to innovate and adapt.
Analyzing the Service System:
- Service Blueprinting: Air Miles' service blueprint reveals touchpoints where customer experience can be improved. These include the redemption process, online platform usability, and communication channels.
- Service Quality Gaps: The SERVQUAL model can be applied to identify gaps between customer expectations and perceptions of Air Miles' service quality. This includes reliability, responsiveness, assurance, empathy, and tangibles.
- Customer Journey Mapping: Mapping the customer journey highlights key moments of truth where Air Miles can improve customer experience, such as the initial sign-up process, earning miles, redeeming rewards, and customer service interactions.
- Service Innovation: Air Miles needs to explore new service offerings and innovative ways to deliver value to customers. This could include personalized recommendations, gamification, and partnerships with new types of businesses.
4. Recommendations
1. Enhance Customer Experience:
- Digital Transformation: Invest in a comprehensive digital transformation to improve the online platform's usability, personalize customer experiences, and offer seamless integration with mobile devices.
- Customer Relationship Management (CRM): Implement a robust CRM system to gather customer data, analyze preferences, and personalize communication and reward offerings.
- Service Design: Reimagine the customer journey by focusing on key moments of truth and redesigning service touchpoints to deliver a more seamless and enjoyable experience.
- Service Recovery: Develop a robust service recovery process to address customer complaints effectively and build loyalty through positive resolution.
2. Leverage Technology and Innovation:
- Technology-Enabled Services: Integrate new technologies like AI-powered chatbots, personalized recommendations, and blockchain solutions to enhance customer engagement and streamline operations.
- Service Innovation: Explore innovative service offerings like personalized rewards, gamification, and partnerships with new types of businesses to attract and retain customers.
- Multichannel Service Delivery: Offer a multichannel service delivery strategy, allowing customers to interact with Air Miles through various channels, including online, mobile, and physical locations.
3. Strengthen Brand Image and Competitive Advantage:
- Brand Repositioning: Reposition the Air Miles brand to emphasize its value proposition and differentiate it from competitors. This could include highlighting its unique features, partnerships, and customer benefits.
- Strategic Partnerships: Develop strategic partnerships with complementary businesses to expand reach, offer new rewards, and create a more holistic customer experience.
- Employee Empowerment: Empower employees to provide exceptional customer service and create a positive brand experience. This includes investing in training, providing incentives, and fostering a service-oriented culture.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of Air Miles' current situation, considering:
- Core Competencies: Air Miles' existing infrastructure, loyalty program structure, and strong brand recognition provide a solid foundation for implementing these recommendations.
- External Customers: The recommendations are aligned with evolving customer preferences for digital experiences, personalization, and value-driven rewards.
- Competitors: The recommendations address the competitive landscape by focusing on innovation, customer engagement, and brand differentiation.
- Attractiveness: The recommendations are expected to enhance customer engagement, drive revenue growth, and improve Air Miles' overall market position.
6. Conclusion
Air Miles Canada has a strong foundation to build upon. By focusing on enhancing customer experience, leveraging technology, and strengthening its brand image, the company can regain its competitive advantage and thrive in the evolving loyalty program landscape.
7. Discussion
Alternatives:
- Merging with another loyalty program: This could provide economies of scale and access to a larger customer base. However, it could also lead to brand dilution and potential integration challenges.
- Focusing solely on digital offerings: While this could attract tech-savvy customers, it could alienate existing customers who prefer traditional rewards.
Risks:
- Investment costs: Implementing the recommended changes requires significant investment in technology, marketing, and employee training.
- Integration challenges: Integrating new technologies and systems can be complex and time-consuming.
- Customer resistance: Changes to the loyalty program may face resistance from existing customers who are accustomed to the current system.
Key Assumptions:
- The recommendations assume that Air Miles has the resources and commitment to implement the necessary changes.
- The recommendations assume that consumers will respond positively to the improved customer experience and innovative offerings.
8. Next Steps
Timeline with Key Milestones:
- Year 1: Implement the digital transformation, develop a robust CRM system, and redesign key service touchpoints.
- Year 2: Launch new service offerings, explore strategic partnerships, and invest in employee empowerment initiatives.
- Year 3: Continuously monitor customer feedback, refine the service system, and adapt to evolving market trends.
By taking these steps, Air Miles Canada can position itself for long-term success in the competitive loyalty program market.
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Case Description
Air Miles Canada both increases customer loyalty by rewarding shopping frequency at specified merchants, and enables its sponsors to develop a new, more complex understanding of their customers' (and potential customers') shopping habits, thus making future customer acquisition more efficient.
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