Xabi Alonso doesn't have much coaching experience, but he was quite successful when he took charge of Leverkusen, and many believe he will do the same.
Regardless, I still believe in Real Madrid. They have a strong mentality, especially in the Champions League. They always have the upper hand in important matches.
Do you even need much coaching experience to succeed in your managerial career? Take a look at Pep Guardiola, all he had was a good understanding of the game football and infuse your own ideas. Xabi Alonso is yet another who has worked under the best managers in the world, I'm not surprised he had immediate impact. For his long term success and that of the squad, every big manager should have that tactics to accommodate both big and small players. This is my brief addition for him to be successful.
The only thing that scares me about Xabi Alonso is the fact that if Real Madrid doesn't get some useful results right away, he'll be eliminated very quickly, because we know that Real Madrid has to win, always, and if you don't, you'll be eliminated easily.
If Real Madrid are not able to change their current performance, then their chances of doing well in the Champions League next season are very low. There is still some time left before the new season starts and during this time the manager may be trying to work on the various shortcomings of the team. Real Madrid are actually doing badly in some areas, but it is clear, last season we saw in La Liga and the Champions League that Real Madrid lost most of their matches only because of their weakness in defense. Now the manager should not give much importance to changing other positions in the team but should only give importance to strengthening the defense. I sometimes hear rumors that Real Madrid is focusing on buying more strikers, but this is not their main problem.