Impact of Customer Relationship Management in Hospitality and Tourism - Essay Example

? The Impact of the Relationship Management in the Hospitality and Tourism Lecturer: Introduction In recent times, companies have embraced several ways of retaining the existing clients as well as sourcing for new business. Due to competition among the service providers in the tourism and hospitality industries, companies seem to focus on establishing a good relationship with the existing customers to ensure repeat business. Customer relationship management (CRM) helps to maintain this relationship with the existing customers by developing tailor made products. According to Meyer and Kolbe (2005, p. 175), CRM is one of the ways to ensure that the company is profitable. Mohammed and Rashid (2012, p. 221) stated that CRM has many definitions depending on different people and their industry and in most cases it is also referred to as relationship marketing. CRM can be defined as a marketing method that allows a company or an organization to use its available resources to establish a lasting relationship with customers, thus gaining a competitive advantage compared to its competitors (Mohammed & Rashid 2012, p.221). It can also be defined as a method of retaining clients using after sales strategies. CRM, if properly implemented, can be suitable for the hospitality and tourism industry considering that hotels and other industry players get lots of information regarding their clients. An effective CRM programme should ensure that the customers get the best experience, decrease management cost, source new customers and increase profitability (Sotoudeh 2006, p.1). This paper will critically look at the impact of the customer relationship management in the hospitality and tourism. Advantages Marketing CRM is an activity that helps to source for customers and retaining them (Ku 2010, p. 1085). CRM focuses more on retaining existing customers for repurchase than recruiting new customers as well as increasing client base through referrals from the existing clients. In most cases, companies use the available resources such as the employees, technologies and their databases to set up this system. These methods are cheaper than advertising and marketing to new customers. It ensures that the company grows their customer from the existing customer base. CRM can also help to indentify the lost customers or those that are almost moving out, to ensure they are won back. Long lasting relationship also helps to minimize the effects of the competition through word of mouth by their customers. They benefit financially due to a lower marketing cost. Ensuring Customer Satisfaction Customers should get value for their money from the services paid for. Repeat customers feel attached to the service providers and thus are able to bond with companies’ employees. The existing database can be analysed by the company to improve the services offered. In the hospitality sector, there is direct interaction between the company or its employees and the customers as they deliver their services. Proper interaction helps service providers understand their customers and thus help them develop proper plans that suit the customer’s needs. Having a direct interaction helps to develop trust between the involved parties. According to the study by Hashem (2012, p. 132) in Jordan, most hotels that use CRM has higher customer satisfaction. Relationship marketing together with CRM translates to repeat customers and customer loyalty (Shirazi & Som 2011, p. 82). Increase in Revenue Well designed CRM should help a firm reduce cost and increase revenue by enhancing client loyalty. It helps to put together information from within and without the organization. This information can be used by the company to understand the market trends and specific customers’ needs. CRM helps to ensure customer satisfaction and, therefore, long term relationship. Company’s personnel interact directly with the consumers and their actions impact directly the customers (Kattara et al. 2008, p. 310). Good service by the employees leads to customer satisfaction and a company can get referral business from the existing customers. The hospitality industry mostly provides homely services away from home and thus well served customers can stay longer than planned, leading to more revenues for the company. Understanding the Market An effective system helps the company to understand the market demands. In relation to tourism, for example, a hotel may be able to know the peak and off-peak seasons, thus planning in advance. Tourism is a seasonal business and this can cause a greater challenge in staff retention, usage of the resources and accessibity of tourist attraction sites, so the available data can assist in proper planning. Through guest information hotels can come up with different tourism activities, team buildings, and low cost packages for off-peak seasons. Disadvantages Cost To be able to implement and maintain a good CRM requires a lot of investment. This is in case the company requires maintaining a comprehensive customer database. This investment comes in form of computer hardware, software, interactive websites and experts (Amoako et al. 2012, p. 20). For this approach to be effective, other stakeholders such as suppliers and agents are also involved, making the process more complicated. According to Slobodan et al. (2011, p. 63), implementation of CRM requires qualified personnel and software that links the CRM system and the existing database. Loss of Business Most companies adapt this method to improve their revenue through increased sales. However, in the current world of the Internet and social media this might not be always the case if negative information about an institution is spread out to the service buyers by the unsatisfied clients. As a way of keeping in touch with the customer, a company may also portray a bad image to some customers, for example by sending mass emails that may annoy some customers. During a low season, a company may overdo things such as sending promotional material to customers for products they may not need. Customer’s Needs Customers have different needs. A company may use the information they have to predetermine what services to offer to a repeat customer, but a customer may not always require those services. Therefore, a company should always encourage its staff to focus more on what the client requires currently. Most companies also have a standard way of obtaining information from their customers. This information can be misleading in decision making because customers have different backgrounds. Conclusion Tourism and hospitality firms need to have a relationship with their customers to counter the ever increasing competition. This can only be achieved if the already existing clients are satisfied with their services. CRM is an effective method to achieve this goal; however, a company should adopt a compressive CRM as well as offering customer focused service. This will ensure that a company does not lose the same customers that are trying to protect. References Amoako, G, Arthur, E, Bandoh, C & Katah, R 2012, ‘The impact of effective customer relationship management (CRM) on repurchase: a case study of (golden tulip) hotel (accra-ghana)’, African Journal of Marketing Management, vol. 4, no. 1, pp. 17-29. Hashem, TN 2012, 'The Impact of customer relationship marketing on costumers' image for Jordanian five star hotels', International Journal of Business & Social Science, vol. 3, no. 2, pp. 129-134. Kattara, H, Weheba, D & El-Said, O 2008, 'The impact of employee behaviour on customers' service quality perceptions and overall satisfaction', Tourism & Hospitality Research, vol. 8, no. 4, pp. 309-323. Ku, ES 2010, 'The impact of customer relationship management through implementation of information systems', Total Quality Management & Business Excellence, vol. 21, no. 11, pp. 1085-1102. Meyer, M & Kolbe, L 2005, ‘Integration of customer relationship management: status quo and implications for research and practice’, Journal of Strategic Marketing, vol. 13, pp. 175–198. Mohammed, A & Rashid, B 2012, ‘Customer relationship management (CRM) in hotel industry: a framework proposal on the relationship among CRM dimensions, marketing capabilities and hotel performance’, International Review of Management and Marketing, vol. 2, no. 4, pp.220–230. Parvatiyar, A & Sheth, J 2002, ‘Customer relationship management: emerging practice, process, and discipline’, Journal of Economic and Social Research, vol. 3, 2002 preliminary issue, pp. 1-34 Shirazi, S & Som, A 2011, 'Destination management and relationship marketing: two major factors to achieve competitive advantage', Journal of Relationship Marketing, vol. 10, no. 2, pp. 76-87. Slobodan, I et al. 2011, CRM development in hospitality companies for the purpose of increasing the competitiveness in the tourist market’, Journal of Economics, vol. 2, no. 1, pp. 59–68. Sotoudeh, M 2006, ‘Customer relationship management in the tourism industry of Iran’. Read More