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Red Cross

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ed Cross In the article, “Customer Analytics: A New Lifeline for the Red Cross and Other Nonprofits?”(Knowledge@Wharton, Feb 01,2012) The Red Cross has set out to solve one of their most pressing issues, converting one time donors to regular donors. The donations needed are both blood donations and monetary, and they claim that both types of donations are dangerously and consistently low. The tool that the Red Cross has in mind is Customer Analytics. Customer Analytics can be characterized as: * Inherently granular: must be individual-level * Forward-looking: orientation towards prediction not just description * Multi-platform: combining behaviors from multiple measurement systems, but with best efforts to do so at the individual level * Broadly applicable (and industry agnostic): consumers, donors, physicians, clients, brokers, etc. * Multidisciplinary: marketing, statistics, computer science, information systems, operations research, etc. * Rapidly emerging: traditionally viewed as just one form of "business analytics," but starting to take on its own unique identity as a "standalone" area of analysis and decision making. * Behavioral: many firms' customer analytics problems incorporate descriptors such as demographics and attitudes; but, the customer analytics' primary focus is on observed behavioral patterns * Longitudinal: it's ALL about how these behaviors manifest themselves over time. By using the science of Customer Analytics, they hope to tap into new donors, reactivate previous donors, and create a highly consistent donation sources. In order to implement the Customer Analytics they need $10 billion dollars in software alone, not to mention the consultant fees that are essential for interpretation. Additionally, the privacy issue for customers is a delicate subject, especially since the Red Cross has little visibility to the people who provide support. Additionally, the supply and demand issues for The Red Cross have long been a major problem for them, and their ability to keep the donations properly allocated and utilized has been questionable. The Red Cross has been one of the leaders in disaster relief and blood banking for many years, and they depend on the charity of others in order to operate. Inversely, we depend on The Red Cross as well for support in our time of need. Being one of the primary suppliers of blood in the United States they most likely would be categorized as an Oligopoly. The RC has very few major competitors, and collectively all the small blood banks added together provide the most competition. Nationally they are one of the few major non-profits to provide processed blood products, and relief services. Over time, the lack of competition has caused them to become careless in many ways. This article leads a reader to believe that the only source of their economic turmoil is the drop off in donations. Customer Analytics would be useful if all other aspects of your business is sound and in order. The primary challenge for The Red Cross would be to truly understand and successfully implement Customer Analytics. If they were able to master the usefulness of Customer Analytics, would they be able to face some of the harsh realities that would be revealed in their quantitative and qualitative analysis? This is an important question because The Red has not been very self- reflective in the past. Speaking from experience, The Red Cross has long been plagued with violations of ethics, and accountability. The FDA (Food and Drug Administration) is the governing body for the Red Cross; this is due to the fact that blood and blood products are put into a person, and thus must be monitored for safety/purity. The FDA has stated that The Red Cross has not been in compliance with good manufacturing practices since 1985, and over time incurred countless fines, shut downs, and completely failed inspections (Recer,P ABC News , Dec 02,2012) . Additionally, even though their practices are substandard, their prices are going up nationally. The increased price from $130-$150 in 2000, to approximately $200 in 2002 with more increases pending (The Finance Watch, 07.23.2002). The RC fails to realize that when the customer satisfaction has dropped the demand for their product will also drop. When the product quality is in question, it is a poor choice to raise the prices of a unit of blood. As a result, some private hospitals and communities have started running their own blood banks, an example is Aultman Hospital of Canton OH. The reason for smaller entities taking up the daunting task of running a blood bank is due to Medicare refusal to cover the increased costs introduced by The Red Cross, and the less than consistent blood product purity. Another problem that arises for The Red Cross is the issue of wasted blood donations, and misappropriated monetary donations. The September 11th attack brought some scrutiny and criticism on The Red Cross’s practices for projecting need for donations and how they utilize the donations. The terrorist attacks caused The Red Cross to send out an urgent appeal for disaster donations. Over 475,000 units of blood were collected, and only 258 units were needed to treat survivors. The system used to monitor need and to regulate distribution is almost non-existent ( Young,E 21. Feb. 2002) . The public paid very close attention to the actions of the RC during 9/11, and the misuse of the products angered the donors. Also, the disaster in Haiti has been a point of criticism for many donors, mainly due to the lack of visibility into the relief efforts and the controversy of the misappropriated funds. The Red Cross has plans to build a luxury hotel and conference center for executives. A ten acre property with a $10.5 million structure used to house rescue workers will be leveled and be replaced by the luxury accommodations. Of course the donations of generous people will be used to facilitate this project, and obviously will not bode well with donors (CNBNEWS.NET,April.06.2012). Even though we know all these aspects of The Red Cross’s practices we are dependent on their services. They supply approximately 46% of the Nation’s blood supply currently, but more outside entities are adopting blood bank responsibilities to reduce the dependency (Finance Watch 07.23.2002). Ultimately, The Red Cross is focusing on retention of donors and efficiency in their processes by utilizing Customer Analytics. The Minimum Efficient Scale for the RC should be high in order to provide blood to all who need transfused, both emergency and routinely. Unfortunately, the RC falls short on their innovations to improve their supply chain. Yet, they believe they are best in class for their blood expediting. Overall the real task for them would be executing positive change, and complete and total compliance to iron clad protocol, mainly because they have not taken advice, protocol, and the law very seriously in the past. The economic welfare of the Red Cross is entirely dependent on the customers satisfaction, especially for blood products. Once the support of the hospitals is lost then all the Customer Analytics available will be pointless. My recommendations for The Red Cross, is to provide all donors full visibility into their relief efforts as they occur. The visibility will assure customers and donors alike to trust and invest in a worthy foundation. In an age of technology and real time information access, donors want to see how their money and blood donations are being used. A periodic video diary should be available on The Red Cross website, and a monthly report of line item use of funds should also be on their website. Additionally, if you are a donor you should have access to a representative assigned to you to respond to questions and handle the allocation of your donation. To further instill confidence, they should spend the donations on increasing the efficiency and safety on the archaic facilities where they currently process blood. Another aspect of quality of product is the employees collecting and processing the blood. The employees of The Red Cross are notoriously overworked and under paid, and have a very high turnover rate of employees, especially bottom tier positions. These positions are the front line for collection and processing blood products. Thus the safety and consistency of these blood products are completely dependent on the handler of the donation. These new practices should become a campaign for The Red Cross and allow the community in each area of a Red Cross collection center to have visibility into their practices, and having the ability to show the public how they work will also prompt the desire to support such an important charity. People are inspired by dedication, precision, science, and the opportunity to help others with confidence. The compliance with the FDA will be publicized and the constant cost of fines and shut downs will be eliminated. All the additional costs coupled with the lack of understanding of real competition made the Red Cross open to much more competition. The great thing about more competition is the excellence it produces. It is possible that the only way the Red Cross will improve and price compete is in the face of real competition. The Nation would be happy to support and allow the RC to be a primary provider of blood. The only thing standing in the way of the RC holding such a high position is their hubris. In the end, full accountability and visibility will sell itself, and the financial issues that currently cripple The Red Cross will eventually disappear.

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