Customer Relationship Management to Customer Loyalty in the Hotel Industry in the United Kingdom - Essay Example

Introduction In the modern business world, finding an edge over other competitors is basically one of the most important and elusive things for any organisation. Theories on how to accomplish this objective have practically sprung out focusing on every aspect of the operations. For example, there were theories focusing on quality and efficiency of the output. In the same way, there are models focusing on motivating the employees to build up production and in the long run improvement in the overall performance of the firm. On the other hand, recent theories indicate that focus on the external environment allows the organisation to be more flexibility. Focusing on the customers in particular is perceived to be a sure way of keeping the firm afloat the market and provides the company a competitive edge in the market (Berry 2006). This theory is called Customer Relationship Management (CRM). This paper will discuss this relatively new model and examine its effects on the operations of a company. Specifically, the paper will investigate the integration of CRM in Marriott, Hilton and Novotel hotel chains. With the purpose of providing a clear discussion on the subject, the definition of Customer Relations Management has been provided. Afterwards, the integration of CRM has been taken into consideration including the overall implications of customer loyalty to the organisation. The observations and arguments have been backed up by past and existing literature on CRM. What is CRM? CRM is the short form for Customer Relationship Management. It is the efficient communication between customers and a company at every contact point. Whether this communication is done by phone, website or e-mail, the important thing is that the customer counts on getting an experience from doing business with the company (Berry 2006). CRM systems are what attempt to ensure a good experience. It is a vast system of information or a database of customers and their buying habits, e-mail address, residential address, personal information such as birthday and so on. This information is then retrievable by any department whose need it to better the company. For example, the sales force can use this information to gain customer’s trust and loyalty. The system provides sales reps with the software tools and company data sources they need to support and manage their sales activities and optimize cross-selling and up-selling. It also gives them access to their customer’s profile, describing the customer’s history with the company before they place the call. Let’s say there is a salesperson who just sold a product to a new customer. That salesperson then enters all the profile data they have about the customer and what they bought. Now when a salesperson tries to sell again to that customer they have detailed, valuable, impressive information at their fingertips. Not only that, the customer is automatically added to the mail listing that features upgrades and new products. So, a good CRM system that creates loyal customers is priceless. Before this system, customer profiles were entered at a company site computer where others could access it. This process was time consuming and inefficient because the salesperson had to travel to the site and attempt to remember all the details of the visit with the customer. With a CRM system, they just access the company’s website or intranet during or after the customer visit/call and enter the data. It is real-time and efficient (Jayachandran 2005, pp. 177-192). The Importance of CRM Customer Relationship Management is a new innovation in customer service today. CRM helps the customer service staff and management cope with customer issues and concerns. CRM entails gathering a great deal of data about the customer. The data is then used in facilitating customer service transactions by availing the information needed to resolve the concern or issue to those dealing with the customers (Lemon, White & Winer 2002, pp. 1-14). In the end there are more satisfied customers, more resources available to the support staff and a more profitable business. In addition, CRM systems are a great deal of help to the management as they decide on the future course of the company. For the CRM system to work much data needed. These fields of data that need to be filled include the customer’s name, date of transactions, address, account information, status of order, pending and finished transactions, issues and complaints, demographic data, shipping and fulfilment dates and many more. The importance of this information is that it provides the customer with the answer that he or she requires in resolving the issue without the need to go to several departments and without waiting for a long time. For example, a customer support representative can track the location of the customers order or package with just a few mouse clicks. This is much better than the previous cumbersome process of tracking shipments. Moreover, the customer service representative is in a position to see the previous concerns of the customer. This is a great deal of help particularly if the customer is calling about the same issue or concern since he or she will not have to undergo the process of telling the story all over again. Less time is spent in resolving the issue and as a result the support staff members have higher productivity. CRM systems are important to the top management because they provide crucial data like efficiency of service by staff and customer satisfaction. CRM software is also capable of generating the needed reports for new concepts or product development. Moreover, this CRM system will also be a great deal of help for the top management in making decisions and determining the course of action for the companys future. Top management can use CRM systems in making adjustments to one of the products sold or deciding whether one of the products on the shelves will be phased out. CRM systems generate reports that are also invaluable to the company’s marketing and advertising planners, as they will be able to identify which ideas work and which do not (Newell 2009). CRM systems are the reason why a company will be able to plan marketing campaigns or release advertisements that are more in tune with the company’s target market. This will also lead to a more effective marketing campaign and more responses to the advertisement. The successful integration of a CRM system in a company might not be as easy as it seems. There are several reasons why CRM systems fail in some companies. One reason is that most companies fail to prepare for the CRM systems. This means that most companies fail in the process of integrating all the departments that ought to share the information. Moreover, having CRM units distributed all over the companys departments is usually more effective than just creating one big CRM department. Doing this will ensure that all departments will get the data and information that they need. A CRM system will also help a company in expanding its business. CRM systems will significantly help a company in coping with the increased numbers of data and customers because CRM systems are capable of handling vast amounts of data (Reinartz, Krafft & Hoyer 2005, pp. 293-305). With an installed and properly utilized CRM system, a company can be sure that all data is made the most of and used to ensure that the business will be successful and the customers a lot more satisfied than before. The Definition and Importance of Customer Loyalty Customer loyalty describes the behaviour of repeat customers and those who offer good testimonials, reviews and ratings. Some customers do a company a great service when they offer complimentary word of mouth publicity regarding a product by telling friends and family and thereby adding them to the number of loyal customers. Still, customer loyalty includes much more than compliments. It is a program or a group of programs and processes that are aimed at keeping a client happy so that he or she continues providing business. In some cases, customer loyalty can be achieved by offering a quality product with a company guarantee. Customer loyalty can also be achieved through low interest rates on financing, coupons, free offers, rebates, extended warranties, high value trade-ins, and other incentive and rewards programs (Brown 2006). The basic goal of customer loyalty programs is ensuring that a company has happy customers who will keep returning to purchase again and influence others to use that companys services and products. This equates to success of the company and happy stakeholders. Customer loyalty can either be a one-time incentive or program, or an ongoing group of programs intended at enticing the consumers. Popular programs include buy-one-get-one-free and the purchases that come with rebates and free gifts. Another good incentive used in achieving customer loyalty is offering a free trial period for a product or service. These incentives are also known as brand name loyalty and are aimed at ensuring that customers will keep returning to buy the same product again and again and try other products or services offered by the company as well (Verhoef 2005, pp. 30-45). Gaining customer loyalty also requires excellent customer service. If a customer has a problem, the company must do whatever it takes to arrive at a solution. If a product is defective, that product should either be replaced or customers money could be refunded. Any reputable business should make this a standard procedure, while those companies that wish to develop customer loyalty on an extensive basis ought to go above and beyond the standard. These companies may give even more by offering free discounts or gifts that appease the customer. If a certain customer trusts or is satisfied by a product or service, that customer is loyal and will keep purchasing the product or service. In other words, both big and small businesses depend on the loyalty of their customers. Customer satisfaction is one of the major elements in the ISO9001 standard. ISO is an acronym for International Standardization for Organization. The ISO9001 standard is a benchmark that is used among all business organizations globally. When a company is certified with ISO9001 standard, it portrays an image of a good quality management system (Boulding et al 2005, pp. 155-166). The primary importance of this standard is either to attract customers or to expand the business. It is therefore expected for customer satisfaction to be given a great deal of focus. More customer loyalty results from more satisfied customers. Customers who are please with the company’s product or service would most probably talk about the product or service to their friends, family, associates and colleagues. Some small companies have grown into big businesses by word-of-mouth advertisement from one customer to another. That is how powerful customer satisfaction is. Customer satisfaction usually entails product design, technology, quality of product, customer service, cost and delivery. High-quality products and services that are affordable are bound to attract many customers. The Importance of Customer Loyalty Research One of the most important aspects of a business is ensuring that customers continue to purchase the company’s products or services over those of the competitors. Therefore, a customer loyalty research is essential to any business because it helps the company in developing better ways to market and sell its products and services. The company can place itself in a position to understand what the market wants and needs once the results of the research are implemented. The customer loyalty research will help the company to provide its customers with the excellent service that they deserve. However, a customer loyalty research does not help by only retaining a company’s customers. The research also helps to increase the value of a company’s products or services and offers the company ways to optimize its costs. By understanding the company’s products and services and customer loyalty concepts or knowing the impression the customers have of the products and service the company provides them with, the company can now create ways to keep its customers satisfied or customer loyalty solutions. It is widely known that an unsatisfied customer will tell several other people just how unhappy he or she is with the product or service. It is therefore very important for a company to know its customer loyalty concepts. In addition, it is just as important for a company to know who its loyal customers are since they will be the company’s building blocks in promoting the business (Ryals & Knox 2006, pp. 534-542). Loyal customers are any business’s goldmine and it is imperative for the company to treat its customers well. By conducting a customer loyalty research, the company can create customer loyalty solutions that will drive the designing of the company’s products and/or services, the sales and marketing strategies and the kind of training the company needs to give its staff. Therefore, the company’s customer loyalty solutions are fuelled by the feedback given by customers. This will subsequently help the company to resolve its customer’s concerns and issues and will encourage them to buy more from the company. The most important result from a customer loyalty research is that is that the customer loyalty solutions will encourage trust to be built between the company and the customers. Customer Loyalty in the Hospitality Industry Marriott International Marriott International uses a CRM system that supports interactions with customers across multiple communication channels. This enables Marriott International to seamlessly interact with group customers over the Web, by telephone and in person. Marriott International is one of the most successful hospitality companies in the United Kingdom. It has over 370000 rooms in its over 2000 properties that are situated in 58 countries (Payne & Frow 2005, pp. 167-176). Marriott International measures its success by hotel occupancy rates. To realize higher revenue per customer, Marriott International implemented a CRM system that offers customers with a highly personalized experience that is based on a rich profile of information, established a unified set of customer data that can be accessed by all employees who face customers and managed customer touch points across all channels. By using a CRM system, Marriott is in a position to embrace its group customers in new ways. For instance, in the past the company used to wait for its large corporate customers to call to reserve rooms and did not do much to proactively drive sales. After implementing a CRM system, Marriott International nowadays collects and consolidates information on all of its corporate accounts, records opportunities and leads as well as manages contacts. Marriott’s CRM system also helps the company build customer loyalty and awareness across its thirteen lodging brands. Before implementing CRM systems, Marriott’s sales force used to log information in different databases that were based on the hotels to which they were assigned. If a guest required a room at a hotel that was full, the salespeople at Marriott had no way of knowing whether another there was an available room in another Marriott hotel in the same city. Currently, a CRM system in place, Marriott’s salespeople have access to information on rooms inventory at various Marriott properties and can simply book a customer in a different Marriott property. Hilton Hotels Despite the rough patch that the hotel industry is going through, consumers are still looking for an occasional getaway. Hilton Hotels came up with a Double Points loyalty program that allows its customers to get twice the number of base points if they stayed at the over 2400 hotels that are located globally. The Hilton Double Points customer loyalty program promotion was kicked off because customer awareness and utilization of hotel programs has increased significantly. Hilton hotels found that customers were increasingly realizing the tremendous value in the Hilton Honours program and the ease of earning and redeeming the points. The Hilton hotels are weathering the recession by encompassing everything from focus service brands all the way through to luxury brands. Irrespective of the customers’ price point and hotel needs, they can always find a product that meets their needs. Hilton Hotels considers both the distribution of its hotels and the quality of their brands to be important. The double base points program in the Hilton hotels has worked very well historically. In the current economy, much of the reason why the hotel has the program is because they want to make sure people have every reason to want to stay with them. Novotel Hotels Less than ten years ago the Novotel London West hotel was known for its low morale, poor customer service levels and a staff that had little pride in both the hotel and their jobs. Nowadays, the hotel has undergone an incredible turnaround that has seen the hotel providing unbeatable levels of customer service. Staff satisfaction has increased, profits are high and customers entering the hotel now feel the passion of the staff who strives to deliver award-winning level of service. This turnaround of Novotel London West hotel was a direct result of the Service Extraordinaire program. This Service Extraordinaire program is based on four standards. The first standard is that the staffs have to look and act professional. This standard aims at making the staff look trustworthy in the eyes of the customers. The second standard is that the staff has to greet every guest and colleague. By greeting the customers, they would feel valued and welcomed. The third standard is looking after the hotel by looking at the hotel from the customers’ viewpoint. The last standard is that the staffs always have to be positive with guests and colleagues by choosing correct attitude, being passionate and enthusiastic and looking for solutions rather than problems. How to build customer loyalty with CRM For a CRM system to succeed, a company has to make it an important part of their corporate strategy and philosophy. It is not enough to just view CRM as being another technological invention. CRM is a paradigm and a means by which business should be done to foster a strong relationship between the company and its customers (Chen & Popovich 2005, pp. 672 – 688). The best approach that a company can take to build strong relationships with its customers is to build customer loyalty. In order for this to be done, a company has to develop a CRM strategy that is operational. The purpose of a customer strategy is to discover the needs of the customers. The company must then give the customers what they want as soon as possible. This may sound like an easy concept but many companies have failed in following it. Once a company is dedicated to giving its customers exactly what they want, the loyalty of the customers will be guaranteed. Loyal customers will be reluctant to switch to competitors since they may not have the products that the customers are looking for. as long as the company maintains its loyalty, customers will be loyal to the company their entire lives. Customers are the life blood of corporations and once the sales come to an end, the company will fail. Customer Relationship Management is a necessity for both large corporations and small businesses. The company fails to understand the power of CRM is likely to fail in todays competitive market. Conclusion The effects of CRM systems in the hospitality industry are presented in the discussions above. Generally, implementing the CRM systems in the hotels indicate an intention to create more value for them. With the combination of other organisational theories, the modern customer-centred company is bound to be at the top of the markets. As seen in the case of Marriott International, Hilton Hotels and Novotel Hotels, CRM systems have made significant improvements in terms of output and efficiency. Furthermore, the reputation of the company is influenced positively by putting the welfare of the customer first in their priorities. The discussions above have proven the fact that CRM principles can seamlessly help companies in enhancing their overall efficiency and simultaneously reduce the total cost of their sales because they know exactly what their customers want. References Berry, M 2006, Mastering data mining: The art and science of customer relationship management, John Wiley & Sons, Inc. Boulding, W, Staelin, R, Ehret, W & Michael, W 2005, ‘A customer relationship management roadmap: What is known, potential pitfalls, and where to go’, The Journal of Marketing, vol. 69, no. 4, pp. 155-166. Brown, S 2006, Customer relationship management: A strategic imperative in the world of e-business, John Wiley & Sons, Inc. Chen, J & Popovich, K 2005, ‘Understanding customer relationship management (CRM): People, process and technology’, Business Process Management Journal, vol. 9, no. 5, pp. 672 – 688. 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Ryals, L & Knox, S 2006, ‘Cross-functional issues in the implementation of relationship marketing through customer relationship management’, European Management Journal, vol. 19, no. 5, pp. 534-542. Verhoef, P 2005, ‘Understanding the effect of customer relationship management efforts on customer retention and customer share development’, The Journal of Marketing, vol. 67, no. 4, pp. 30-45. Read More