CRM and the World of Ski by Gordon Murphy   “It’s the passion, stupid!” quips Diane Murphy, the VP of Marketing Services for American Skiing Company when asked how, in a depressed travel market and given the weather volatility of recent years, the ski resort industry has managed to keep afloat.   “There’s nothing quite like flying down a pristine slope on a crisp morning,” continues Murphy. “Add to that a fun filled time with friends and family, that’s what keeps people coming back.” And it helps explains why ski resort corporations such as Intrawest managed a skier revenue growth increase of 8.5% over last year despite a tough travel market.   How has the tourism market affected the ski industry? Aspen Ski Co. VP David Perry indicated to the Aspen Daily News last May that in the past it was expected that Aspen’s four resorts would increase skier visits by 5% per year. But the September 11 attacks, the SARS scare, the Middle East situation, the economic climate, and poor weather have created one obstacle after another. The previous year’s increase of 3.5%, while better than many competitors, is considered a disappointment. “We started the season strong but then there was the war and the economic uncertainty and eroded consumer confidence, and the travel declined sharply because of that,” explained Perry to the Daily News.   As a result, there has been a shift to market more to skiers and snowboarders who live closer to the resort rather than to “destination” skiers and boarders (those who fly to the area).   A good example of this is Colorado. At the industry high point of 1997-8, Colorado attracted almost 12 million skier visits, 22 percent of the national total due to the state’s aggressive national marketing campaign, good weather, and a booming economy. But Ullr, the Norse god of winter is fickle - this was followed by two drop-off years of 5 and 4 percent fewer visits.   In response, the state launched a Colorado ski pass that allowed residents to ski resorts on selected dates for around $200, which flew in the face of previous season pass strategy, which consisted of individual areas marketing passes for $1000+ to people living within 50 miles of the resort. In 1998, the resorts themselves came up with inexpensive season pass options.   Julie Maurer, VP of Marketing at Booth Creek Resorts, explains. “The intent was to get more people to ski more often and broaden the market… even though a season pass is cheap… season pass holders help mitigate loss somewhat in bad weather years. Now for our Tahoe resorts, we have many pass holders in the Bay Area, which is three and a half hours away.” With an ‘autocharge’ feature backing the pass, it also becomes another tool in the resorts’ quiver of behavioral data tools.   The cheap pass idea was an instant success in driving up local ski traffic, and proved to be a godsend when the economy took a downturn, causing vacationers to seek closer destinations. In Colorado, Front Range (Denver/Boulder area) skiers have logged 42% more visits since 1996-7, according to the industry trade group Colorado Ski Country. And according to Ski Area Management magazine, the ski industry set a record in 2002-3 with 57.3 million skier visits.   The emphasis on regional marketing has resulted in some interesting customer analytics and CRM technology applications. For example, Vail Resorts’ Director of eMarketing Corey Ryan conducts “a lot of demographic surveying to stay current with consumer travel patterns and how we can best leverage that information to service our guests.”   Analytics plays a large role in customer strategy for the industry. But that’s not the only reason why ski resort corporations have successfully adapted to a difficult business climate. They are capturing customer behavioral data and conducting customer needs surveys on a scale that can only be imagined in other industries.   According to Ryan, Vail Resorts “identifies over 45 touchpoints where we can gain valuable information on our customers. The method of capture ranges from on-line surveys, to our loyalty program, to collection of customer information off of paper-based forms that are later put through a data entry process. All of this information is captured, cleansed, matched against our existing customer database and integrated into the data warehouse.”   Almost every resort conducts on-slope skier surveys. For example, at Booth Creek “resort ambassadors” conduct daily intercept surveys developed by a marketing research company.   The surveys, which are randomly conducted at virtually all of the 493 US ski resorts, take place during a trip up the chairlift or in the lodge and give Maurer and Booth Creek Holdings’ management team customer satisfaction scores for areas such as lift operations, parking lot attendants, and ski school performance. The passion for the sport to which ASC’s Murphy referred results in individuals eager to express their observations about the resort.   “In past years, we would compile the survey results at the end of the year and adjust for the next year. With today’s technology we can use these results to make almost real-time adjustments to [the business].” Maurer went on to say that Booth Creek builds employee incentives into compensation plans to bring about these changes.   What to do with all of this data? The “big four” ski resort companies – Intrawest, Vail Resorts, ASC, and Booth Creek Holdings approach CRM technology and loyalty programs in very different ways.   American Skiing Company is a big proponent of customized email marketing. “In our industry, people want to receive an email from us on a daily basis,” states ASC’s Murphy. “We’re fun. Memories of taking your kids skiing or that perfect powder day have our customers signing up for [ASC’s daily ski report email]. If we were a credit card company, we would have a tough go of it, especially on a ski industry marketing budget.”   It’s hard to imagine tens of thousands of customers signing up to be contacted by MBNA or Bank One on a regular basis. But it is the skier’s passion Murphy refers to that makes this marketplace different.   ASC outsources the handling of its data warehouse to Prevision Marketing (Lincoln, MA) and hands the keys to the data warehouse to each of their resorts. “While the database is centralized, we really think of it as decentralized – the resorts own the data,” said the effusive Murphy, who came to ASC from CRM services provider Epsilon for a lifestyle change.   With seven resorts accessing the ASC data warehouse, can this lead to over-marketing to customers? In order to prevent conflicting messages from different resorts, Prevision has set communication rules in place to prevent over-contacting and conflicting offers. “You’ll seldom find over-marketing is a problem,” continues Murphy. “On email we are careful – we never want to show up on a spam list. We want the customer saying to us ‘I want you to contact me.’ We allow the customer to set rules – a Sunday River customer can’t be contacted by Steamboat unless they request it.”   Intrawest is also a proponent of email marketing (in their case, Responsys), especially for targeted upsells. Intrawest VP of CRM Linda Denis explains, “One campaign that we worked together on with the Intrawest Golf team was a campaign that, in exchange for a little customer information, we were able to identify Intrawest ski customers who were interested in finding out more about the Intrawest golf resorts and offers… we have been able to grow the Intrawest Golf e-mail database tenfold and have now started sending relevant golf campaigns based on their geography and golfing preferences. This has proven invaluable to the team at Intrawest Golf and they are now reciprocating by helping to identify skiers with their golf base.”   ASC is also re-examining its EDGE card loyalty program. “Philosophically, we never want to put the customer in a position [with a loyalty program] where they ask ‘why didn’t my $5 lunch get put on my card’,” explains Murphy. Instead, ASC plans to focus more on the back end of the business, using the data to shape channel optimization and efficiencies.   Booth Creek takes a different approach. Two of their resorts, Northstar-at-Tahoe and Sierra-at-Tahoe, have instituted a unique loyalty program called Vertical Plus. Vertical Plus is a points system using a wristband with a chip that tracks at the lift base when a Vertical Plus member gets onto the lift, and tracks the number of vertical feet skied. Members can then look at their results on the web and redeem the feet points for anything from a free cappuccino to a multi-night stay at a Booth Creek resort.   All resorts agree on one thing – customer behavior information is invaluable. “Vertical Plus members are my premier customers, along with season pass holders,” explains Maurer. Several of the Booth Creek resorts back their season passes with credit card information (“Autocharge”), so pass holders need only swipe their pass for food, rentals, and other resort services, creating value for the customer while helping Booth Creek capture behavioral data.   Like Maurer and Murphy, Ryan at Vail Resorts leverages technology and customer information to “create operational performance benchmarks with a goal of keeping customer satisfaction extremely high.” Vail approaches their loyalty program in a slightly different way, tweaking their loyalty program to provide benefit to families who may not get to ski as often as they’d like.   “We've greatly increased enrollment in our loyalty program by creating a discount component to go along with the points/mileage component,” explains Ryan. “For the destination guest, a ski vacation is typically an infrequent purchase. [We found that] point programs work great for frequency, but provided little benefit to the family that visited us every 3 years. Our new structure provides immediate benefit to them by presenting an immediate discount on their lift tickets. The loyalty program is a critical component to our ability to capture and interpret our guest behavior.”   An independent ‘American Plan’ resort, The Balsams in Dixville Notch, NH, has perhaps the most unique CRM application. A maverick among modern resorts, The Balsams does not have any land sales, condos, or time-shares, and virtually all customers are overnight guests. As part of the American plan, The Balsams does not charge its guests for golf, skiing, bicycle rentals, its three nightclubs, or restaurant meals. It’s all included in the room rates, which vary by season but begin at $170 per person. It does sport a Donald Ross golf course and picturesque ski area. Because everything is included, yield management modeling is very important - the room rates produce virtually all of the revenue. Technology also plays an important role in their homegrown reservations system.   Because the Resort has 400 or so rooms of differing size, shape, and location, off the shelf reservation systems were not an option twenty years ago when it became apparent The Balsams needed to automate. Using Yankee ingenuity, The Balsams and their General Manager Steven Barba gained a degree of notoriety as the first application of Artificial Intelligence in the hospitality industry when a couple of guests from MIT developed their reservation system, which is still in use today. The system, which houses several-hundred thousand customer names, captures information from every customer touch.   Capturing information about the customer at the time of reservation is easy to do because The Balsams specifically requires reservations to be made as part of a conversation. Returning guests receive a jar of New Hampshire maple syrup and a handwritten “welcome back” note. Those celebrating significant anniversaries are sent a numbered gift from the League of NH Craftsmen. Their “Notch Club” e-newsletter has proved very successful driving direct and viral sales, according to Barba. “You drive past every other option on the way up here,” explains Barba about the remoteness of The Balsams, “and as a result we don’t fall into the same advertising model as other resorts.”   Vancouver-based Intrawest, the largest of the ski resort corporations with over 7 million skier visits and close to $1b in annual revenue has received much publicity for its development of a customer data warehouse and implementation of Unica’s Affinium suite to automate customer strategy. Linda Denis indicated that they use the Unica suite to “assist us in improving our ability to target the right customer with the right offer at the right time and to build, track and report on campaign results.”   Intrawest has stated that even in an economic climate as difficult as the current one, the company will continue to invest in CRM technology as long as it continues to provide ROI, with one caveat. Denis explains, “Key to our success has been our focus on operationalizing the people and processes first, and then making the technology decisions later. This is where most [organizations] fail – they buy the technology and think it will be the answer to all of their problems. If you can’t get the people working together using a process that is more and more customer driven then you are doomed to fail. Although this approach does require a lot more ‘manual lifting’ to start… it does enable you to get a few successes under your belt before going to the executive team and resorts for funding of the CRM infrastructure.   Intrawest also uses Pivotal software to remember customer information such as measurements, which helps keep lines moving in rental shops. Their use of Delano middleware technology pulls information from their hotels, rental shops, and ski and golf areas to give resort managers a better idea, in close to real time, of which guests are in the market for a particular product – from lessons to real estate.   Says Denis “At this stage the [Intrawest] CRM Team is working predominantly with the Resort Operations Group at Intrawest Corporation but is also working with the Intrawest Golf and Resort Reservations Team at Intrawest Corporation. We share similar customers across all Intrawest Corporation business units so it only makes sense that we start to work together on delivering a common customer experience and communications across our network of companies. Starting with their first ski or snowboard experience to eventually acquiring a mountain ski home, we hope to be able to communicate relevantly all through this customer lifecycle. What does the future hold for the industry? Radio Frequency ID (RFID) capture is another means of behavioral data capture cited by several of the resorts as something they are keeping an eye on – the customer would receive discounts and/or privileges in return for allowing their behavior to be tracked at resort shops much in the same way an EZ Pass account works on toll highways. Denis is quick to add, “But once again it is not about the technology – we need to work through the strategy, the people and the processes we want to move forward with first, and then we will decide on what the right technology enabler will be.” One thing is for sure – the passion for the sport will keep skiers and boarders coming to the slopes. The challenge for the ski area is, “Will it be my resort?”   (Gordon Murphy is a Director of Sales for Charlotte, NC-based Quaero corporation, a marketing and technology services company that assists firms in improving the effectiveness of their comprehensive marketing efforts and technology. He is a reformed ski bum who has previously worked for Peppers & Rogers Group and NCR Teradata and lives on Chebeague Island, Maine. Gordon may be reached at murphyg@quaero.com.)