Case Study: Walt Disney World Resorts and CRM Strategy

By CIOinsight  |  Posted 12-01-2003 Print Email
With sliding attendance rates and a brand that's losing its luster among the children of the digital age, Walt Disney World is launching an ambitious, next-generation CRM play that's based on mobile, real-time interfaces with customers. The goal: to redef

Sitting on a curb with their three children one humid afternoon in October inside Magic Kingdom, the oldest of Walt Disney World's four Orlando theme parks, Jeff Pawlowski and his wife were in a sour mood. Long lines demanded waits of as long as two hours at some rides inside the 47-square-mile fantasy extravaganza, and the lines at the food stalls and restaurants weren't much better. "Today has been the worst," Pawlowski complained. His wife agreed: "Our neighbor came home from Disney on Friday and said there were no lines. We came here on Saturday, and it's not what we expected."

The Pawlowskis aren't alone. Throughout the amusement park industry, long lines, fidgety crowds and high ticket prices continue to rank as the top customer turnoffs. Meanwhile, Disney's theme parks have been particularly hard hit by sliding attendance figures and decreasing revenues. Bob Iger, Walt Disney Co.'s president and COO, told securities analysts on Nov. 20 that the Parks & Resorts division took in $6.4 billion in revenues in the year ended Sept.30, 1 percent less than 2002's $6.5 billion, which was already down 8 percent from 2001. Iger blamed the sluggish performance on lower hotel occupancy rates and a further decline in attendance, which had already fallen 14 percent, to 37.7 million, in 2002, from a peak of 43.2 million in 2000. Analysts say international visitors are staying away, thanks to the flat global economy, rising anti-American sentiment and a continued fear of flying since the Sept. 11, 2001 terrorist attacks.

Ticket prices aren't helping: They've risen 20 percent since 1998, and at $52 per person per day, they're already at the psychological limit of what consumers are willing to spend for the theme park experience, say some analysts. Disney has cut ticket prices by up to 42 percent in some cases this year in an effort to drum up more business. That's stemmed some of the attendance erosion, Disney executives say, but it hasn't done much to the division's operating income, which fell 18 percent in fiscal 2003, to $957 million from $1.2 billion in fiscal 2002.

At the same time, Disney's costs continue to rise: Analysts say insurance premiums have nearly doubled since the Sept. 11 terrorist attacks, and health care and pension costs for the company's 54,000 employees in Orlando alone cost the company nearly $250 million in 2003. Analysts also note that capital expenditures for the parks were down significantly in fiscal 2002. That's exactly the cost-conscious environment that prompted Roy Disney, nephew of founder Walt Disney, to refer, in his Nov. 30 letter of resignation from the company's board of directors, to "the timidity of [the company's] investments in our theme park business."

Clearly, the goal for now is to do more with less. And Walt Disney Co. CIO Roger Berry is at the center of that mandate—but not for all the usual reasons. To help Disney usher in what Disney Chairman Michael Eisner has called the company's "digital decade," Berry has been helping to create a risky but cutting-edge technology strategy designed to help Walt Disney World restore the luster of its aging brand, increase efficiencies and boost attendance—as well as the bottom line. Berry's mission: to use Walt Disney World as a test bed for one of corporate America's most ambitious tryouts of the business use of IT convergence—the combination of global positioning satellites, smart sensors, wireless technology and mobile devices, including one that looks like Mickey Mouse himself—to reinvent the customer experience, influence visitor behavior and ease crowding throughout the parks. The goal: to reduce the hassle for visitors to the park by creating a more personalized environment, with IT at the core. "The role of IT is changing," says Berry. "It's not simply an organization that deploys technology, but one that now integrates technology from a lot of different angles to improve the customer experience."



 

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