2022 Student Case Competition: Maximizing Customer Value at The CageBy
2022 Student Case Competition
The Student Case Competition is sponsored annually by IMA® to provide an opportunity for students to interpret, analyze, evaluate, synthesize, and communicate a solution to a management accounting problem.
It was 8 a.m. on Saturday morning, and Sanjay Danani had come in early to his office at The Cage in Kallang, Singapore. He still had an hour before his scheduled futsal game (a form of soccer played indoors on a hard court) with a group of friends. The 9 a.m. game has become a regular exercise session for the 10 of them, all in their 50s, ever since Sanjay and his business partner, Rajesh Mulani, founded The Cage in 2005. He was proud of what he and Rajesh had created—a fully homegrown company where people can play a game of their favorite sport, rain or shine, at any time of the day with friends and family. It isn’t only an avenue for fitness but also social interaction.
Despite the venue’s apparent attractiveness, recent trends and developments that could impact the business were very much on Sanjay’s mind, including youths’ preference for online games, identifying ways to improve female participation, a push for cashless transactions, and consideration of a potential expansion into a new location.
The company’s full name is We Want to be Footballers Pte. Ltd. (WWTBF Pte. Ltd.), but it’s mostly referred to as The Cage. A small to medium-size business, The Cage is based in Singapore. The initial futsal facility had 5 vs. 5 futsal pitches (courts), which remain the mainstay, but it expanded into bigger pitches for 7 vs. 7 and 11 vs. 11 game variants. The facility also diversified into other games and events, such as cricket, archery, and birthday celebrations.
Sanjay and Rajesh are avid soccer fans—self-described “wannabe footballers”—who spotted an opportunity to provide indoor sporting facilities and connect people through sports. This was a boon in a country like Singapore, with an established workaholic culture and heavy rainfall. The customers loved the company’s offerings, and business was brisk. They have leveraged their first-mover advantage and continue to be leaders in the field.
From its flagship location in Kallang, The Cage expanded to two new locations: Bukit Timah (BKT) and Home United FC Youth Football Academy (HYFA). All three locations are described in Table 1.
Their 15 full-time and three part-time staff handle booking services, finance, administrative, and IT functions, and include a general manager (GM) and operations/maintenance team at each venue. The finance function currently handles the management of payables, receivables, GST (goods and services tax) and other taxes, refunds and reimbursement, loan repayments, and bank reconciliations. The administrative function involves payroll, leave management, head count management, training, and general office management.
The Cage focuses on creating value not just through price but by adding value to customers’ experiences. Management segments customers based on the time of use and characteristics into the following groups: B2B, schoolkids, regulars, and ad hoc (see Table 2).
Given the nature of The Cage’s business, optimizing capacity and maximizing the yield from each available slot are key success factors. Online, over-the-counter, and telephone booking systems are available to facilitate booking of the slots (see Figure 1).
The Cage’s online page displays the availability within the facilities in real time and in a user-friendly way, similar to how one would book an online movie ticket. When customers select their desired facility and time slot, the system then securely processes the payment via PayPal and creates the tax invoice and the accounting workflows. For over-the-counter and telephone bookings, all booking staff have real-time access and can facilitate bookings easily.
VALUE CHAIN ACTIVITIES
The Cage’s key activities in delivering the service to its customers include advertising, sales, pre-service activities, on-pitch experience, and customer relationship management (CRM). Here are the current efforts in these key areas:
- The Cage relies mainly on word-of-mouth recommendations from satisfied customers.
- Initiatives such as Instagram posting of MVP achievement by customers on their own Instagram page allows for some reach, but it’s limited.
- A co-marketing initiative between The Cage and Footsy International Ltd. (Footsy) involves the sale of unsold off-peak-hour slots at a discount through Footsy’s phone application.
- The Cage has social media accounts on Facebook and Instagram, with slightly more than 4,000 likes on Facebook and 600 followers on Instagram.
- Multiple booking options and an integrated payments system provide convenience to customers.
- Telephone booking is linked to the CRM system via VoIP (Voice over Internet Protocol). Upon receipt of a call from a recurring customer, the caller ID is immediately reflected in the system.
- The booking system is integrated with the Odoo enterprise resource planning (ERP) accounting system. The ERP system is updated when a booking status is set to “completed.”
- The Cage offers cashless payment options and convenience of payment:
—Online booking is paid through PayPal, with a discount given for online payments.
—For bookings made via other options, The Cage offers what it calls “Play and Pay Later”: Customers have the option to make a cash or electronic payment after the game. This policy aligns with the founders’ values of moving away from a transactional relationship.
- The Cage procures high-quality equipment and facilities.
- There’s a focus on cleanliness and regular maintenance at all its facilities, including the restrooms.
- The maintenance staff is very experienced, and all staff are sent for regular safety workshops.
- The Cage sends alerts to its customers at the point of first booking and a reminder 48 hours before the scheduled booking so that no-shows are minimized.
- Staff actively manage the game and show flexibility: Players aren’t rushed to wrap up their game if the next group hasn’t arrived. Staff will engage with customers as they warm up to reduce the perception of wait time. And if a team is short of people, staff will step in to balance the game in some instances. GoPro cameras on each pitch capture the action and experiences for players.
- “Sweeteners” are provided, like coolers near the pitch to let customers keep their drinks cool.
- Staff actively engage with customers. Customers are referred to by name, and a casual approach is used to get feedback from customers.
- New customers receive personalized emails in gratitude for their patronage and are enticed with $5 vouchers to provide their feedback.
- The Cage takes customer feedback and recommendations seriously, implementing actions where appropriate.
- The Cage also offers off-the-books complimentary sessions for its regular customers.
The company’s expansion led to an increased workload, particularly for the finance and administration department. From the home base in Kallang, the finance and administration team supports all the other venues, including booking services (which includes customer inquiries).
The directors recently implemented a preliminary internal allocation mechanism to share out the costs of booking services. Sanjay felt it’s an important mechanism to help shape the right behavior in terms of usage, saying, “Kallang needs to look into the allocation of costs, especially with the higher volumes. Kallang used to carry the bulk of the cost. The other locations used to go for a free ride. So, now we try and pass some of the cost over to the other locations.”
As 9 a.m. approaches and Sanjay joins his friends, all of these issues are on his mind. Dealing with competition from online gaming, reaching out to customers through social media, improving capacity utilization at the different locations, going fully cashless, and shifting customers to online booking all require attention and improvement.
Further, he’s also considering reviewing the value chain activities for improvements, delegating more autonomy and decision-making power to the GMs, and implementing a performance management tool such as a balanced scorecard.
Sanjay knows he can’t focus on all of these initiatives at once, but he’s unsure which are currently the top priorities. He has asked for your help in considering The Cage’s competitive position and how to maximize the value provided to its customers.
- Perform PESTEL and SWOT analyses for The Cage to assess its competitive situation, opportunities, and areas of risk. (Note: PESTEL analysis considers external forces, including political, economic, sociocultural, technological, ecological, and legal, and helps identify the organization’s opportunities, limitations, and threats. SWOT analysis is used to understand an organization’s internal strengths and weaknesses as well as its external opportunities and the threats it may face. The findings from the analyses can be used to formulate/strengthen the company’s strategies.)
- Using a value chain approach, how is The Cage creating value for its customers via its primary activities? Assume the company’s overall strategic emphasis is customer intimacy. Primary activities are advertising, sales, pre-service activities, on-pitch experience, and CRM.
- For each of the activities from question 2, identify at least two suitable key performance indicators (KPIs). You may also identify KPIs for any proposed activities. Organize your KPIs and any other leading/lagging metrics into a balanced scorecard for The Cage. Recommend a suitable dashboard design with data visualizations (e.g., charts and graphs) for use by management.
- What should Sanjay’s next steps be in preparing the GMs to take on added responsibilities? Your recommendations should cover, at a minimum, the skills needed, autonomy in decision making, incentive mechanism, and segment reporting. Provide a segment report format with suitable performance measures for the GMs to use for each venue. Consider whether the segment report should include allocated cost for booking services and finance and administration costs, and suggest suitable cost drivers to be used for allocation of these shared services costs.
- How can The Cage continue to stay relevant to its customers in the face of competition, changing social behavior, and the latest infrastructure developments? Consider the role digital transformation might play in making some of these decisions, especially relating to customer engagement and operational process improvements. Discuss any potential problems that may hinder successful implementation.