What do you do when you're a boutique hotel in Cabo San Lucas, Mexico, competing against a growing number of large-scale resorts? You throw seven years of traditional advertising out the window and start fresh with a customer-focused plan.

That's exactly what Karla Colin and Claudia Vargas decided they must do after Casa Del Mar Beach Golf & Spa Resort's guest revenue began to ebb. Colin, general manager, and Vargas, director of sales, sought to make the hotel competitive again following the decline in travel after September 11 and increased hotel competition along the Baja Peninsula over the past four years. These events led occupancy rates to dip down to the high 40 percent range. Prior to this the 56-room, 19th century style hotel perched on the edge of the Sea of Cortez easily sold itself, focusing only on pricing to lure visitors and maintaining an average mid- to high 70 percent occupancy.

Rebirth would only come from implementing a rejuvenated customer strategy, driven by an executive schooled by the industry leader in delivering such strategies. Colin was that executive, having come to Casa Del Mar from the Four Seasons Hotel in Mexico City. For Colin, the importance of designing a business strategy around the customers was second nature. She knew upon joining the boutique hotel in 2002 that it could benefit from the same type of famed strategy for which the Four Seasons is known.

As it turns out, Casa Del Mar's staff already provided courteous service to guests, but an "official" emphasis on the customer was lacking. At that time, management used the property management system (PMS) to track guests' experiences, like when they stayed, but failed to log guest information. Basic customer information, such as names, addresses, and telephone numbers, was virtually lost—registration cards containing that information were haphazardly tucked away once the guests checked out of the hotel.

In addition, the marketing staff relied on sporadic advertising in travel publications and trade directories to build brand awareness. The results were inconsistent messaging and poor targeting. And without accountability measurements in place, no one ever knew exact results.

Finally, Casa Del Mar's static Web site was "woefully inadequate," according to Colin. With out-of-date content and no mechanism to capture customer data, the resort received little attention through its e-channel—now vital as travelers are increasingly using the Web to research and book travel.

Retention as a growth strategy
With Vargas, Colin decided to focus on repeat business, emphasizing targeted service to keep and grow these valuable customers. "We wanted to offer the best and personalized service…to [drive] the best repeat business," Colin says.

Colin and Vargas decided to build the resort's new strategy around four components: product (improve the customer experience); promotion (adopt a one-to-one relationship approach); place (solidify and expand marketing materials distribution); and price (use a value approach). The success of this plan depended first on Casa Del Mar's employees. "We knew we had to romance the guest before, during, and after their stays," Colin says. "Everybody in the hotel is involved in this: maids, bell boys, third-party providers, the transportation company, security…"

Bringing everyone onboard with the new strategy involved extensive training and coaching, but not before the management took the time to motivate the staff. This included explaining the future impact of the customer plan and how it aimed to benefit everyone, as well as giving employees new uniforms, providing health/vacation benefits, and conducting team-building exercises. Each month human resources sends a list of all the employees' birthdays to Colin so she can give them a personal birthday card and cake.

Colin believes a motivated staff accepts new directives with greater ease. Vargas explains that in Mexico people want to believe that what they're working for is important. "They needed this motivation, and needed us to tell them that they're doing well," Vargas says. "It's letting them know how important all their efforts are—even being well dressed and on time."

Once Colin saw that a strong bond had formed between employees, she began educating the staff about the importance of ensuring guest satisfaction. To do this Colin formalized the training process by indoctrinating employees in every aspect of the resort to experience it as a guest. This gives them the experience they need to personally assist with any guest request and to understand the importance of delivering a quality experience. "Our philosophy at the hotel is based not only on customer satisfaction, but 50 percent of what we do here is also to make employees loyal," Colin says. "They believe in their own capabilities and love to see results. I believe in their talents and promote and motivate. That's part of the success of it."

Colin also instituted daily meetings with the supervisors to provide reports on their particular departments. These supervisors not only observe their employees, but also how the guests perceive the operation. In these meetings, they provide insight on how to improve the customer experience. For example, a recent visitor with health problems needed a large refrigerator in his room to store his medications. The reservations manager told Vargas and Colin in one of the daily meetings, and maintenance and housekeeping provided the refrigerator. Staff also continuously checked on him due to his poor health.

With the employee infrastructure strong, Colin and Vargas moved to deploy the marketing and database components of the hotel's new customer-focused strategy. They knew that for the strategy to work, Casa Del Mar needed a better understanding of its guests. Working with Madigan Pratt, managing director of marketing optimization firm Madigan Pratt, they developed a road map for the first major initiative, which began in the summer of 2003.

The management team first located several years' worth of old registration cards—about 15,000—to be entered into the PMS. Unfortunately, only 2,000 had complete contact information. In tandem, the team redesigned the registration cards, which at the time didn't include a space for email addresses. Now all guest information is added to the system when a guest checks in. And when the resort's new Web site went live in February 2004 the hotel began holding a sweepstakes every two months with a five-night- stay giveaway. Participants must provide their personal information to register. Since its launch, the sweepstakes has garnered 500 names every month. With the new plan emphasizing capturing and inputting customer information into the PMS, the resort's customer database has grown to more than 6,000 entries.

Fresh data offers positive change
Using the new data, the team created seven customer segments that it targets with messaging relevant to their specific interests. These segments include: prospects, previous guests, weddings/honeymooners, travel agents, meeting planners, wholesalers, and media. Within each segment, the resort differentiates customers by assigning values based on such factors as special interests, geography, and income.

With every database-segmentation ap-proach comes a targeted, relevant communications strategy. Casa Del Mar is no exception. The resort needed to change its voice to emphasize its customer benefits. Management also scaled back the traditional media used in the past and started relying on the new database to create targeted promotions to its customer segments. For example, when checking out, guests are asked to complete a survey. If they do they receive a small memento of Cabo. Colin then sends them a personalized thank-you note that contains a certificate—an incentive to return. The monthly email newsletter Cabo Vacation Update serves as a regular communication vehicle, providing pricing and availability, updates, news, promotions, and even features a selection of visitors' favorite Cabo vacation photos. Vargas says this type of marketing brings greater value than blasting guests with coupons. "This kind or relationship lasts throughout the year," she says.

Colin and Vargas are pleased with their accomplishments, but plan to evolve the program. They are working with Pratt to consolidate Casa Del Mar's databases into one CRM program, which will allow for greater customer differentiation and improved messaging. This program, which Pratt calls Occupancy Optimizer, brings together a marketing strategy, applies technology, and layers a creative element. The system will help the resort to manage the data, standardize it, and assign customer values, as well as divide customer groups into demographics, length of stay, and seasonality. As a result, the resort will be able to profile its best customers and identify prospects that look like potential guests.

The results of the strategy revamp speak volumes. Employee retention prior to the strategy adoption hovered around 5 percent. It's since jumped to 20 percent. Customer satisfaction is also on the rise with surveys producing a 95 percent and higher score. Customers' overall experience between 2004 and 2005 held steady at 96 percent. According to Trip Advisor, an online site where people provide hotel reviews, Casa Del Mar is rated the second most popular hotel out of 41 in the area.

The resort has seen a 68 percent increase in revenue since 2003, and from 2004 to 2005 room revenue alone increased by $1 million—an 18 percent rise in room occupancy. Colin attributes this largely to fulfilling her initial goal of reaching out to Casa Del Mar's existing customer base and increasing the repeat guests from 30 percent to 45 percent since 2002. She's not stopping there. She set the goal at 50 percent. "I'm not only proud of what I do, but what the employees accomplished," she says. "If service isn't excellent, we shouldn't be here."