Originally posted by prberk
I'm sorry, but I do not know which business school you went to.
Several things are wrong about your blanket statement:
1. 500,000 members times $40 each = $20,000,000 easy money. This more than covers the cost of flyers and administration. These flyers and administration are essentially ads that would have to be made anyway in some form: only in this case you have a complete mailing list of die-hard fans that are not only reliable, but PAY to be on the list. Most businesses in the entertainment or resort business actually spend that kind of money just to find mailing lists.
2. The discounts are more than taken care of by the frequent use by these loyal customers. Most business schools teach, correctly, that the most valuable customer is the repeat customer: because they have already proven that they are interested. Discounts and flyers sent to them remind them and bring them back much more often than the same money spent on mass marketing.
3. The pre-existence of the Disney Club (or its predecessor, the Magic Kingdom Club) does NOT prevent the company from starting the Visa promotion, or any other promotion. Many promotions are run concurrently. Once again, here it is the PRODUCT that is key. If Disney has a superior product, Visa will want to be involved, even without exclusivity. Because otherwise, Disney might give the preference to MasterCard, or American Express (as they have up until now, with "White Glove Treatment" for AmEx cardholders). Don't forget that there are always the AAA discounts that run concurrently, too.
So, sorry niteobsrvr, if I seem rude in my response to you, but your assumption about "business" is just not right.
Business, and especially advertising, is more than just a simple formula. Loyalty is priceless. Loss of loyalty is an even greater price still.
OKay, yep you were rude. but thats ok, I forgive.
You Dont need to go to business school to understand my point.
Item#1
In a company like Disney that measures revenue in billions, $20 Million is not considered substantial and thats revenue not profit. After Administrative costs and the cost of the priveledges themselves I am sure we are talking just a couple of million in profit if anything at all. Now in a company like Disney a couple million is basically the same thing as a couple of dollars to us. If you lose it you typically don't go searching for it.
Again my point is that 500,000 people using a perk does not justify it. When you are as big as Disney you neeed programs that spread your brand to as many people as possible. Given the approximately 30,000,000 people who visit Disney World every year, 500,000 members is not a successful program. I would measure a successful program as one utilized by at least 10 to 15 percent of your clientel at a minimum.
Knowing that Disney does a tremendous amount of research before they do anything, I am sure they heard that people would be much more interested in a Disney branded credit card that cost them nothing vs. a $40 annual fee for a club membership.
Not to mention Disney or not, many people right now do not part with their money as easily as they did a couple of years ago due to the economy etc. This is fact has been in the news a lot recently. Many people probably fail to see the value of a isney discount card, when they can get just as good if not better deals just by calling the reservation number.
Item #2
Better than 80% of the people who walk through Disney's gates every year are repeat customers. That means approximately 24 million people every year. So why aren't there at least 2 to 3 million people taking advantage of the Disney Club. The number 1 answer I would bet is that they don's see the value in it unless of course they could go to Disney every weekend which I bet 95% of the people who visit cant do that or don't even want to.
Also, the guests at Disney who feel "priviledged" are often the ones who abuse the hospitality they recieve. To remove this upper eschelon feeling, you have to remove the exclusivity. Paying 40 bucks for a club membership gives many the idea they have "rights". If you have a Visa, oh well, you have a Visa and no connotations of priviledge.
Item 3 and 3.5
Promoting a Brand is important as is developing loyalty. However, it doesnt work to target a niche when you want to promote a brand. It takes mass marketing. A disney branded Visa will see much more action than the Disney Club and a lot of the Marketing funds will come from VISA and the interest everyone pays. Disney has a knack for getting things done with someone else's money (Its a part of the company heritage).
The whole point for belonging was to get great discounts on resort rooms. I also would use it at the Disney Stores for birthday and Christmas presents. 
