Fosun vs Bonomi: Club Med’s Customer Strategy at the Heart of Negotiations?

Fosun vs Bonomi: Club Med’s Customer Strategy at the Heart of Negotiations?

As far back as 1951 – only a year after the launch of the company’s first resorts – some of Club Med’s GM members (Gentile Members) had already started to say that the business “was better before”. Some 60 years later one can pretty safely say that this complaint has increased in volume. Of course, this isn’t particularly surprising since all companies with a high value customer experience will face the same kinds of criticisms. The public has its opinions, but Club Med has almost as many strategies to confront them.

A comprehensive, upscale strategy since 2001

Since 2001, Club Med’s market strategy has been all about consistency. While historically they’ve relied on market segmentation, they’ve opened a number of new resorts with 4-5 Trident rankings, but they’ve done more than just this. We could also underscore other recent upscale offerings like Jet Tours, ClubMedWorld or clubmedgym. In addition, Club Med has been making efforts to standardize the high-end experience at all of its resorts: first, they’re taking into account those resorts that were no longer in line with the strategy. Second, they’re renovating the older resorts so that they flow with the strategic vision. Finally, they’re opening a series of “premium” villages.

But the service industry is about more than just real estate. Beyond the resorts themselves, it is essential to acknowledge the efforts the company made to put in place to GO (Gentile Organizers) training and selective recruitment, etc. It is interesting to note that staff is often forgotten in the current debate; meanwhile, local managers have played an integral role in supporting the company’s upscale strategy since its launch in 2001. Faced with local competitors, dealing with customer feedback while holding their own convictions, these local managers are on the front lines are act as the primary executors of the corporate strategy.

The Customer Comes First. Period.

If you’re wondering why Club Med chose an upscale strategy, the answer might surprise you: it was really the only option they had. This answer is pervasive in the minds of current leaders because it is foremost in the minds of its customers.

However, Club Med didn’t really start listening attentively to its customers until the early 2000s, when they began using surveys and studies. There are hundreds of sponsored studies dictated the current strategy of the company because it wasn’t enough for Club Med to have a customer-driven outlook, they wanted a customer-centric strategy. In other words, they want to give more stock to what the customer says about the company, than what the company says about itself. That’s why we can say that the Club Med strategy is in the name: is a client-based strategy.

Many travel-industry analysts forget this fundamental dimension: strategies in this industry shouldn’t be based on the urges or instincts of a business leader, they should be founded on the desires of those who will ultimately pay for the service: the customer. The debate currently surrounding resorts with 3 Trident rankings is therefore symptomatic. If the current leadership is reducing the number of resorts in this category, it’s because that’s what the customer wants. The proof of success is that most of their new clients have been customers of the 4-5 Trident ranking resorts. Those who argue that Club Med should be more accessible are beside the point: an accessible strategy was tested and failed in the 1990s.

Club Med still needs to go one step further

It goes without saying that the whole strategy is not without critics because results have not been as high as hoped while the economic and geopolitical context is not entirely responsible. For this strategy to really work, three important points need to be resolved:

First, while the fundamentals are good and the vision is consistent, the implementation of the strategy still has a lot further to go. Yes, some non-strategic activities have been halted and 2-3 Trident resorts have been closed. Of course, staff training is already paying off. But the high-end positioning is not entirely successful and still needs some effort. Club Med should be a first choice for its consumers without having to segment its offer. The current segmentation (three, four, and five Trident villas) is essentially a price segmentation as one has to choose a village by its positioning (families, couples, children), by his desire (discovery, relaxation, sport) or destination (near or far). This is not unrelated to the size of the company. Is it possible to deliver a premium service on different levels of comfort and on five continents? No direct competitor of this size dares to it.

Another key element, if more training was involved for GO personnel, services could reach even higher standards. To start with, more recruits need to come from the top universities and colleges in the world.

The current strategy should also incorporate new priorities in order to catch up with changes in customer demand. However, this is not an excuse not to innovate. Certainly the last few years have seen the arrival of Villas or Passworld® for teenagers, but it's not enough. Club Med has historically developed by innovation, the all-inclusive, caring for children, pioneer destinations, circuits, etc. They need to once again become the innovation machine in tourism that they used to be in order to develop new offerings.

Staying true to their roots: be happy here and now

For customers new and old, staying true to roots doesn’t mean going back to the prim and proper 50s, or the sexual liberation of the 60s.  Wanting to go back to the origins of a 60 year old organization ignores the needs of current and future clients. Let’s try to forget the myth that Club Med stands for the democratization of luxury vacations! When Club Med was first launched less than ten years after the Second World War, few people had the means for a two week vacation.

The history of Club Med can be summed up by this quote from its founders: "The important thing in life is to be happy, the place is here, the time is now."

This sentence, as one might believe straight out of the writing of Epicurus reminds us that being happy doesn't need to come at the expense of others. To do our duty we need to ask people what they want and do our best to implement it. It also means that being happy is not simply repeat what has been experienced in the past, but fit a certain context to make people happy in a specific space and time. Finally, it is to accept that happiness is not universal and that each one performs it and improves it differently. If Epicurus defended the idea of happiness, his cynical competitors and Stoics were defending others.

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