crm hotel industry

8/13/2019 CRM Hotel Industry

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MERC Globals International Journal of Management

ISSN 2321-7278 (Print) and ISSN 2321-7286 (Online)

Vol. 1, Iss ue 2: October-2013, pp. 103-119

Permanent URL: http://www.mercglobal.org/ijm-vol1-issue2-oct2013.html

MERC Global

Customer Relationship Management Implementation Strategies in HotelIndustry

Brijesh Kumar Yadav

Junior Research Fellow, Faculty of Management Studies,Banaras Hindu University (BHU), Varanasi, Uttar Pradesh, India

ABSTRACT

Customers are becoming price sensitive, less loyal and more switchers in terms of preferring

products and services. Customer relationship management (CRM) is an authoritative tool,

which characterizes an imperious role to attract, retain, and maintain relationship with

customers for life time. However, the successful implementation of CRM is a distinguished

issue as only successful CRM implementation can accomplish the target of attracting,

retaining, and nurturing relationship with customers. CRM is venerated as business strategy,

fetched by organisations to proclaim the strategic relationship with customers, which

subsequently leads to the loyalty among the customers. The evinced work concentrates on the

implementation issues of CRM, which foster the organisations especially in the hotel industry

to retain customers for life time. Today, customers (guests) are laudably conscious about the

price, brand, and competition in the hotel industry. Therefore, patronage of guest loyalty is a

very challenging endeavour in hotel industry as customers vacillate brands even they are

fully satisfied. Furthermore, in this paper a manoeuvre is also elicited to recognize the

divergent implementation issues which are fastidious to successful implementation of CRM.

As the last endeavour, a CRM implementation model has been conceived, which will

augment the value in the implementation of CRM especially in the hotel industry.

KEYWORDS: CRM, CRM Implementation, Implementation Issues, CSF, Customer,

Loyalty, Hotel Industry

ARTICLE TYPE: Review paper

INTRODUCTION

The hotel industry is experiencing globalization, liberalization, increased competitiveness,

increased customer switching rate, increasing customer acquisition costs, less brand loyalty,


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Customer Relationship Management Implementation Strategies in Hotel Industry Brijesh K. Yadav

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the more price sensitivity etc. as other industries. Several studies manifest that the hotels must

concentrate on the implementation of CRM to engorge the guest loyalty, which ultimately

engorged the profitability of the entire organisation. CRM commits to accumulate and

archive information about customers and disseminate this information throughout the

organisation to ensure creation of customized services by an organisation to bestow a unique

customer experience.

CRM can bring many benefits to hotels like increasing customer satisfaction, loyalty,

customer retention, market share, tenure of customers with the organisation and decreasing

acquisition costs. Hospitality industry, which markets leisure, realizes it very challenging to

the implementation of CRM. Several Studies evince that more than 50% CRM

implementation program collapses, moreover does not apprehend predetermined goals and

objectives. Successful CRM implementation is which achieves target of attracting, retaining,

and nurturing relationship with customers. Therefore, successful CRM implementation in any

industry or organisation is a challenging task and requires commitment at each level of the

management. There are so many approaches proposed by eminent scholars for

implementation of CRM successfully, which encompass various dimensions.

In the evince chore, an endeavour is elicited to breakthrough issues in the implementation of

CRM effectively in the hotel industry.

CRM: AN OVERVIEW

The CRM has been defined by several scholars from different points of view. The concept of

CRM has been enriched from various viewpoints namely satisfaction, loyalty, retention,

allocation of recourses for retaining customers, top management involvement in support of

CRM, employee involvement, effective chain management, after sale services to customers,

organisational learning, organisational structure etc. In this part of the paper, views of several

contributors towards the concept of CRM have been covered.

The concept and definition of CRM is very fragmented and spread in several areas from

information technology to loyalty and from customer satisfaction to customer retention. Ngai

(2005) remarked that CRM is a widely accepted business approach throughout and indicates

that there is no definition, which is accepted unanimously. Zineldin (2003) orated that CRM

is a complex and holistic concept requiring appropriate business process and integrated

systems. Moreover, it also mandates effective system integration, information sourcing,


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MERC Globals International Journal of Management, Vol. I, Issue II: October - 2013

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targeting, leadership and evaluation within CRM strategies. Zineldin (2006) added that

customer loyalty and competitive positioning can be achieved by the organisation through

superior product/service quality, product differentiation, and CRM. He further emphasised

that high quality product and service along with CRM give the opportunity to provide

customer something new, distinctive and special.

Pyne and Frow (2005) developed definitional aspect of CRM and identified three

perspectives of CRM, moreover emphasised on the need for cross functional, process

oriented approach in CRM at a strategic level. They identified five key cross-functional CRM

processes namely value creation process, information management process, multichannel

integration process, strategic development process, performance assessment process. They

developed a new conceptual framework of CRM based on these processes and have defined

the role and functions of each element in the framework.

Ryals (2005) analysed that CRM endeavours deliver greater profitability of the organisation.

However, CRM should be implemented effectively. Customer relationship can be effectively

implemented by using various knowledge management measures such as technological tools

and informational infrastructure etc. (Cao and Gruca, 2011; Minghetti 2003). According to

Dyche (2001) CRM can be framed into following main categories i.e. operational CRM,

analytical CRM and collaborative CRM. The operational CRM facilitates the organisation to

face the customer, while analytical CRM in which customer data are used in such a way that

nurture the relationship with customers, tools like data warehousing and data mining are used

in analytical CRM. Collaborative CRM is an approach of collaboration with customers

through several channels which enhance the quality of customer interaction.

Sin et al. (2004) developed the CRM scale in which they have elicited four major constituents

of CRM namely key CRM organisation, customer focus, knowledge management, and

technology-based CRM. Key customer encompasses the profitable or important customers.

The CRM organisation encompasses organisational structure, organisation wide commitment,

human resource management etc., Knowledge management encompasses knowledge

generation, learning, dissemination, sharing and responsiveness, whereas technology based

CRM calls for all measures to be included which make organisation IT enabled.

Frow et al. (2009) perceived CRM as a process and stated that its dark side can be aligned

with Key CRM strategies to make it more effective. Scholars have stressed on the effective


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use of CRM and making valued customers, Ryals (2005) said that value of customers and

customer management strategies are interlinked with each other, while (Payne and Frow,

2005) vocalized that value creation process in which customers and the organisation receives

value is an interconnected process with the other linked process of relationship management.

Christopher et al. (1991) conversed about relationship approach in effective marketing and

argued that the relationship based approach is required as a new way of effective marketing

environment, they further emphasised that one-to-one relationship is required to make the

customer happy as well as organisation profitable. Reinartz and Kumar (2003) developed a

framework to suggest the projection of profitability of customers. They developed various

key implications which are useful for decision makers in long term relationships. Ryals

(2005) explained that retention of customers is not only an important area, but retention ofprofitable customers is decisive for any company.. Moreover, he confronted that value of

customer and customer management strategies are closely interlinked and analysis of

customer value will lead to the change in strategies of customer management.

Osarenkhoe and Bennani (2007) rationalised in their study that degree of success is purely

based on the level of involvement of employees of the organisation at several organisational

stages. Furthermore, they elicited in their study that involvement of top management,

systematic communication, customer loyalty, training programs are very authoritarian in

successful CRM implementation. Srinivasan and Moorman (2005) have nodded out in their

research that prior strategic commitments consign impressive results on the performance of

CRM investment. Love et al. (2009) educed that top management support is consequential in

successful implementation of CRM because employees will not follow the new ideas until

executive do not show high level commitment in it.

Gustafsson et al. (2005) discussed that customer retention is possible with the help of

customer satisfaction, affective commitment and evaluative commitment. CRM managers

have to elect the factors to focus on. If CRM managers fumbles that customer satisfaction is

the main driver of customer retention, all the programs and plans should endeavour to

augment the customer satisfaction. Harrison et al. (2004) remarked that companies must

proactively assist during every stage of the buying process and continuing the bolster after the

sale. They advocate over the use of business to business relationship practices.

Tanner et al. (2005) expressed that account management and organisational structure yearn to

be addressed in customer relationship management. They emphasised that all care should be


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taken into consideration in the adoption of the CRM special effect of environment and

cultural factors on employee. Companies should address the operational issues concerning in

the implementation and maintenance of CRM strategies. Bendapudi and Leone (2002)

signaled over the relationship of employee and customer, elicited that sometimes employees

and customers have stronger relationship rather than firm-customer relationships. They

proposed the management of customer-firm relationship and the firm-employee relationship.

The firm should offer more service, emphasis on corporate citizenship, and develop more

sources of links for customer contact.

Scholars also contributed in terms of CRM applications and its effectiveness in advancing

customer knowledge. Mithas et al. (2005) educed in their study that CRM applications

enhance the customer knowledge when firms share more information with their supply chain

partners. Their study also determined the mediating role of customer knowledge in effect of

CRM applications on customer satisfaction. Customer relationship perception and

relationship marketing instruments are very effective in customer retention and customer

share development. Verhoef (2003) investigated on the issue of customer relationship

perception and relationship marketing instruments. He examined the effect of these two

points on customer retention and customer share development and elicited that affective

commitment and economical relationship marketing instrument programs enhances customerretention and customer share development. Furthermore, He proposed that positive customer

perception and effective use of relationship marketing tools can be very progressive not only

for short term but for the long term too.

Morgan and Hunt (1994) in their research on relationship marketing remarked that

relationship marketing constitute a base for establishing, developing and maintaining

successful relational exchanges. Taylor et al. (2009) stressed on relationship commitmentand trust for successful relationship marketing and argued that CRM also enlightens in

terminating unprofitable customers though analytical CRM. Zeblah et al. (2003) conversed

that CRM is a philosophically-related offspring to relationship marketing which is neglected

in the most part of the literature. Further, implied that further exp loration of CRM and its

related phenomena is not only warranted but also desperately needed. Based on these several

contributions, it can be inferred that CRM concept is very vast and researchers have defined it

in different ways. Researchers emphasised on various issues but especially on loyalty and

retention of customers. Furthermore, it can also be inferred that CRM leads to the loyalty of

customers and that will ultimately result in the retention of the customers for a long time.


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CRM IMPLEMENTATION STRATEGIES

CRM is considered as an essential strategic issue. Therefore, needs to be addressed carefully

because implementation of CRM is very crucial in business practices. Scholars have

proposed several implementation models which can be adopted for successful

implementation of CRM in any enterprise. Various scholars (Pyne and Frow, 2005; Sin et al.,

2005; Bull, 2003; Parvatiyar and Sheth 2002; and many more) have contributed to the

framework of CRM for effective implementation and better organisational structure for CRM

performance.

CRM implementation is a holistic and complex notion, which organized around business

processes, information technology integration (Piskar and Faganel, 2009; Bull, 2003),

business process re-engineering and organisational learning centralized to a shared vision

(Chang 2007). People, process and technology are the key in the implementation of CRM

(Chen and Popovich, 2003; Zeblah et al., 2004). Business strategy, current organisational

capabilities and a sound reason of implementing CRM in the organisation is the pre-requisites

for a successful CRM implementation (Nguyen et al., 2007). Gillies et al., (2002) discussed

that a strategy which is based on the segmentation of customers is stipulated for

implementing a sound CRM solution. Customers must be integrated in the CRM

implementation process as customer integration in the process of CRM implementation canturn the customers loyal towards the organisation (Wetsch, 2006).

Osman and Hemmington (2008) stressed on transactional marketing rather than relational

marketing. They determined in their study that transactional marketing is an effective strategy

for the hotels. It is an eminent approach for creating guests loyalty in the hotel industry.

Furthermore, they also identified an alternative approach to customer loyalty through

transactional marketing rather than relational approach to maintain long term relationshipswith customers; transaction approach to marketing boosts the customer loyalty as it involves

a sense of transparency and consistency while dealing with customers.

Fletcher and Wright (1996) affirmed that successful CRM implementation mandates full

support and commitment of top management. Sigala (2004) evinced that perceived CRM

goals are met when the corporate goal for ICT (Information, Communication and

Technology) are put together with a focus on CRM applications. She has also germinatedseveral measures that managers yearn to adopt to enhance CRM benefits i.e. gaining support

of top management for cost reduction, revenue enhancement etc., determining the model for


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automation of business, involving middle level management in process and monitoring

continuously over ICT implementation. Wells et al. (1999) illustrated the key elements for

CRM implementation as business process analysis, redesign of customer data, accessibility of

organisational information, and ICT enabled customer interaction. According to them, these

four elements are very progressive in successful CRM implementation. Sigala (2005)

suggested the organisation of business processes, comprehensive understanding of the

customer base and technology for implementation of CRM. She also implied the regular

customer feedback from hotel guests irrespective of their profitability, customer base, culture,

environment for CRM to be effective in the hotel industry. She proposed it as an integral to

not only at the operational level but also at functional and corporate level.

Emperger (2004) highlighted the authoritative extracts from qualitative analysis of his study,i.e. guest profile management, campaign management and security, referred the appointment

of external consultants or CRM software companies to alter the business culture of the hotel

company as customer focus mandates change in business procedures. Lo et al. (2010) pointed

out CRM activities in the hotel industry, which helps hoteliers to conceive a better

understanding of customers requirements and expectations, managing the need of customers

and life cycle of the customers. Sigala and Christou (2002) notified that CRM is an influential

strategy to gain competitive advantage in current market scenario. Sigala (2005) in her study

coined that CRM is an imperative strategy for attracting and magnifying the guest patronage

in the hotel industry. OConnor and Murphy (2004) in their review on hospitality research

argued that researchers should enlarge their thinking process and should focus to enrich the

areas like management of IT resources in the hospitality industry.

Chang (2007) in his research pointed a thought on implementation of customer relationship

management, which consists business process re-engineering and organisational learning.

Furthermore, he augmented that if CRM is implemented with the factors, which is said to be

relationship quality that will convert into a good organisational performance. Piccoli et al.

(2003) stressed on increasing customer loyalty to enhance the organisational performance and

remarked that effective CRM implementation can increase customer satisfaction which

results in customer loyalty, therefore customer acquisition costs will go down and overall

performance of the organisation will automatically improve. Although, it is said that CRM

strategies are imperative for organisational performance but its implementation issue can

have both positive and negative effects (King and Burgess, 2007). Furthermore, they

disclosed that more than 50 percent of CRM projects fail due to some implementation issues.

Moreover, they recommended a successful CRM implementation model.


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Osarenkhoe and Bennani (2007) intimated the five core dimensions of relationship strategy

implementation. These dimensions are Structure, Staff, Style, Systems, and Schemes . The

structure contains the organisational structure for relationship management. Staffs are the

people of the organisation who will be endeavoured in the process of managing the

relationship. Style denotes the ways of performing anything by managers to evoke sure the

outcome of the relationship and implementation strategy. Systems are the structure of the

relationship platform at which the entire CRM strategies are implemented like services sales

process, supply chain management, order fulfilment system etc., and the last dimension is the

scheme which is a programme that support relationship implementation like loyalty and

relationship programmes, relational communication etc.

Yim et al. (2004) intimated the four dimensions of CRM implementation, first is focusingkey Customers in which deep customer relationship is encouraged which facilitate to have a

long term relationship with customers by running programmes, policy, schemes for

customers. The second dimension of CRM implementation is organizing around CRM ,

which describes that the organisational structure of the organisation should be flexible

enough to address the valuable relationship with customers at its prime priority. The third

dimension of CRM implementation is Managing Knowledge, as any successful CRM

implementation depends on customer information. Information related to customers must be

accumulated at various touch points where customers interact with company employees and

that information can be employed to engorge customer profitability. The last and fourth

dimension of CRM implementation is CRM based Technology, as information management

tools will foster for gathering, processing, analysing and retrieving information to take

necessary action to address the need of customers individually. Here, the four dimensions of

CRM implementation suggested by Yim et al. (2004) clearly put the way forward to make

CRM implementation a complete CRM strategy. These four dimensions have equal

importance in terms of successful CRM implementat ions in any industry as well as hotel.

Sigala (2005) in the research paper on hotel operations proposed an integrated and

comprehensive model of CRM implementation. The first component of the model is

Knowledge Management, which is considered as the critical success factor in the

relationship market. Knowledge management includes collection, analysis and retrieval of

information aligned with ICT (Information, Communication and Technology) management to

convert customer interaction as learning experience. Therefore, knowledge management

should strive to collect information on customer, from customers and from customers. The

second component of the model is Relationship Marketing, as only increasing business


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transaction is not enough but the style of guests interaction matters. Employees should be

expert to deal with technology and knowledge based work irrespective of their spatial, time

and cultural differences. The third component of the model is ICT Management. ICT should

be aligned with organisational infrastructure so that various touch points of customers can be

efficiently used by customers and employees. Moreover, ICT should be used to enhance the

per customer yield during the business.

CRITICAL SUCCESS FACTORS FOR SUCCESSFUL CRM IMPLEMENTATION

Extensive review of literature guides in finding the Critical Success Factors for Implementing

CRM, which also can be considered as critical success factors in the hotel industry. Table 1

states some critical factors identified for effective Implementation of CRM.

Table 1: Critical Success Factors for a Successful CRM Implementation

Critical Success Factors Contributors

Key Customers, Organizing around CRM, Managing

KnowledgeYim etal. (2004)

Staff, Style, Structure, Systems, Schemes Osarenkhoe and Bennani (2007)

CRM Processes and Integration of Information

Technologies

Bull (2003),

Piskar and Faganel (2009)

Efficient Leadership, Orientation towards

Customers, CRM Strategy Implementation and

Control, Customer Centric Approach

Piskar and Faganel (2009),

Smith and Chang (2010)

Employee Commitment to CRM Initiative Shum etal. (2007)

Employee, Process, Technology, Understanding

Customers

Zeblah etal. (2004),

Chen and Popovich (2003)

Business Strategy aligned with CRM Implementation

Program, CRM Capabilities, Reasons of

Implementing CRM

Nguyen etal. (2007)

CRM Commitment at firm level, Timing of CRM

ImplementationKrasnikov etal. (2009)

Customer Expectation Kim etal. (2012)

Cooperative Environment, Top Management

Involvement

Kotorov (2003),

Fletcher and Wright (1996)

Interdepartmental Commitment, Establishing Central

Data WarehouseXu etal. (2002)

Efficient use of Information Technology Ryals and Payne (2010)

Front Line Information System, Integrated CRM

PlatformParvatiyar and Sheth (2002)

Customer Involvement Wetsch (2006)


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PROPOSED CRM IMPLEMENTATION MODEL

Based on the comprehensive literature review, a model of CRM implementation especially

for hotel industry is proposed, which is depicted as figure 1.

Figure 1:Model of CRM Implementation in Hotel Industry

Description of Proposed CRM Implementation Model

This proposed CRM implementation model for hotel industry comprises divergent elements

in an integrated manner. In this proposed CRM implementation model, the top management

support is rationalised as imperative yearn for commencing any kind of structure to foster the

CRM implementation. Not to mention, it is also important that the middle level management

of the organisation, which has to commence the structure of the organisation around which a

CRM program is developed, should get prior consent of the top management for their full

support and commitment in CRM implementation. Staff, style and system are the three

important components, which are proposed as the integral part of a CRM structure of the


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organisation on which success of CRM implementation is anticipated. Staff can also be

termed as people or employee of the organisation. It is quite envisioned that staff has to play

an authoritarian role in successful implementation of CRM as they are the first point of

contact and responsible to manage relationships with customers (guests) in the hotel industry.

Additionally, the role of staff is critical in the overall CRM implementation process as they

are also pivotal to implement each step CRM endeavours. The second component of CRM

structure is style, which indicates the ways of handling the various processes by responsible

staff or managers. Here, it is coveted to have managerial abilities for performing operational

and analytical tasks by staff. The third component of proposed CRM structure is a system,

which intends a platform at which whole relationship related to operations is carried out.

Structure of CRM should be evinced by many other systems of the organisation like supply

chain management system, front desk system, back office system, online system, IT systemetc.

The second part of the CRM implementation model comprises two elements i.e. Knowledge

Management (KM) and Information, Communication and Technology (ICT). This part of the

model bolsters the CRM structure as depicted in figure 1. Here, knowledge management is to

consign the support for assembling information about the guests, the service pattern, guests

history etc. and disseminating the information to specific service points, where theinformation can be utilized to serve guests in an improved way. KM should be evinced by

ICT as manifested in the figure 1. Organisations may get the support of various related

software packages and other tools, which enables the users to extract the information from

the raw data, which is really very advantageous in KM.

Third and the last part of the model is CRM Strategies. CRM Structure and KM empower

staff/managers to equip any organisation with appropriate CRM strategies, which would beproficient to attract and retain the guests for life long. CRM structure facilitates the staff to

assess the real business value of any prospects or customer. CRM strategies should be

envisioned for customers based on customer lifetime value to the organisation. Therefore,

hotels should envision CRM strategies based on the analysis done earlier in CRM structure

with KM and ICT tools. Customer lifetime value (CLV) assessment will foster in envisioning

schemes, retention and loyalty program for prospects/guests. Success of CRM

implementation relies on retaining profitable customers and gradually terminating

unprofitable customers. CRM implementation should contribute in organisational

performance. Guests satisfaction, employee performance, employee retention, guests


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retention and loyalty, increasing market share, decreasing costs of operation are some of the

parameters of organisational performance in any industry. Hotels should also check the

organisational performance by evaluating such organisational performance parameters.

CONCLUSION, MANAGERIAL IMPLICATION AND FUTURE RESEARCH

The hotel industry is witnessing manifold challenges at the micro as well as macro levels.

Competition in the industry has gone at its apex level. Nowadays, the prime objective of any

hotelier is not only to attract the profitable customers but also retaining them for a lifetime to

convert them as loyal. Relationship marketing and customer relationship management

empower the organisations to do so. A successful CRM implementation is a crucial task for

organisations and requires management support, focusing key customer, organizing around

CRM, knowledge management, style, staff, system, efficient leadership, customer centricapproach, employee commitment, inter departmental commitment, efficient use of

information technology etc.

In this paper, a model of CRM implementation in the hotel industry has been proposed,

which highlights CRM implementation elements. CRM implementation germinates from the

conception on the support of top management. Other component of the model comprises of

CRM structure, KM along with ICT. CRM structure comprises staff, style and systems,whereas KM and ICT bolster the CRM structure for effective CRM implementation. CRM

strategies are the last component of the proposed model. CRM Strategies should be

envisioned on the basis of an evaluation of customers (guests) analysis of CRM structure of

the organisation with the assistance of KM and ICT and thereafter, a concrete strategy for

guests should be fostered.

The main objective of CRM implementation is to originate long term relationship with clientsand making sure that they remain in business terms with organisation for life time. Hoteliers

must understand their each guests personal characteristics to serve them foremost. Hoteliers

expected to spend time for studying the guests behaviour at a regular interval to retain them.

Practicing managers can study and understand the specific needs of guests by utilizing

organisational CRM structure, KM and ICT.

The current study highlights insight of CRM implementation strategies in hotel industry. The

study integrates important elements in a single platform to foster CRM implementation a

success in the hotel industry. Critical success factors for CRM implementation has also been


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elicited in this study. Critical success factors and CRM implementation model can be very

instrumental in strategic, analytical and operational issues not only in the hotel industry but

also in other industry practicing relation based marketing to retain their customers. The study

also proposes some influential implications for practicing managers in a competitive business

environment.

This study has revealed several key factors for successful implementation of CRM in the

hotel industry, which consign an opportunity to investigate empirically the relationship of

CRM implementation for retaining guests. Research in the area of CRM implementation will

further add some insights in relational marketing aspects. There is also a need to test

empirically the CRM implementation model proposed in this study.

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