Case Analysis of Cabo San Viejo: Rewarding Loyalty



Case Analysis of Cabo San Viejo: Rewarding Loyalty

Subject of the Case: Whether to formulate a loyality program, if yes, what should be the design

Problem Statement: In order to meet the challenge introduced by the competitors, the fitness brand of Cabo San Viejo was considering designing a loyalty and rewards program for its customers

Background:

Cabo San Viejo is a place for people who want to become self-actualized individuals.

These are happy and healthy people who enjoy the sunshine and pool, gourmet meals, spa treatments, tennis matches etc.

Cabo is a leading health and fitness brand serving customers since 1977, with its branded day spas and high end operations in five different locations.

The company is recently facing a lot of competition from different avenues including resort hotels, day spas and other health clubs.

In 2005, Cabo San Viejo operated five properties: One full-service, overnight destination resort (Palm Springs, CA) and four smaller, CaboDaySpas (Miami, Hilton Head, SC, Aspen, CO, and on Nantucket Island in Massachusetts).

The destination resort was widely regarded as among the best in the world, having been featured in publications such as Conde Nast Traveler, Travel Leisure, Smart Money, Spa Finder, Departures, Gourmet, and the Mobile Traveler Guide.

Although the CaboDaySpas lacked the distinguished history of the Palm Springs property, they, too, were well regarded.

Key Issues

Can Cabo San Viejo enhance customer equity through the rewards and loyalty program?

Can Cabo San Viejo successfully implement the program?

What should the rewards look like in the loyalty based program?

Solutions:

This form of a customer loyalty program has many justifications, which emphasize its immediate implementation. Most importantly, the program generates customer equity. The concept of customer equity iterates the perception of the public about the brand, its product and its services (Peppers & Rogers, 2004).

Furthermore, the health oriented brand has to immediately pursue aggressive ...