1

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.

2
3
The hotel industry is experiencing globalization, liberalization,

increased competitiveness, increased customer switching rate,

increasing customer acquisition costs, less brand loyalty, 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

organization to ensure creation of customized services by an

organization to bestow a unique customer experience.

CRM can bring many benefits to hotels like increasing customer

satisfaction, loyalty, customer retention, market share, tenure of

4
customers with the organization 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.

BACKGROUND OF THE STUDY

5
Customer Relationship Management (CRM) is a technique that

innovative companies and sectors find useful in addressing

business challenges and especially in improving their interaction

with customers. The Ghanaian hotel industry stands to benefit

from the implementation of CRM as it contributes to meeting

customer expectations. Currently, the hotel industry in Ghana

shows a substantial increase in competition, requiring

companies seeking to maintain their relevance and attracting

customers to consider models such as CRM to ensure service

quality and customer satisfaction (Badu,2010). Therefore, the

study sought to analyze the use of CRM in the hotel industry in

the Kumasi Metropolis toward understanding its benefit in

meeting customer expectation.

The customer is one of the most important elements of a

successful business venture. To ensure a satisfied customer,

companies adopt different models and techniques that promote

their competitiveness and survival in the market or industry. A

working technique is CRM that refers to all the business

attributes that interact with the customer during the sales and

Service delivery (Brother Ton, 2003). These attributes contribute

to ensuring customer loyalty, excellent service delivery, and

quality management. CRM arose from the recognition that

6
customer relationship is important to the success of a business.

Through successful implementation of CRM, companies can

build a lasting relationship with their customer.

Today, customers are becoming more sensitive to prices and

their corresponding services while disregarding brand loyalty,

making it necessary to implement a model such as CRM.

However, a framework for CRM implementation is highly lacking

in many sectors especially in countries such as Ghana where

business owners are struggling with management knowledge,

managerial processes, supporting technology capabilities, and

alignment of the model with the business processes (Sigala,

2005). Therefore, implementation of CRM also requires noting

supporting factors within the company. In Ghana,

implementation of CRM is mostly non-existent in the hotel

industry as evident through literature search, though it exists in

some areas such as in financial institutions (Oduro-Senyah &

Ebo). This raises the need for understanding whether CRM

would work in a country that does not show wide

implementation and has a need to adopt such a model to

succeed in its hotel industry.

7
HOTEL INDUSTRY DEFINITION

The hotel industry is primarily a service sector with emphasis

given on the role played by relationship marketing. You are

nothing without our customers understanding that your

organization exists for no other reasons than to meet customer

needs and expectations. It is imperative to develop proactive

methods for understanding what customers like and dislike. If

you believe otherwise, just look behind you at the long queue of

competitors lined up and waiting for the opportunities to prove

you wrong.

8
CRM is a business strategy to select and manage the most

valuable customer relationships. CRM requires a customer-

centric business philosophy and culture to support effective

marketing, sales and service processes. CRM applications can

enable effective customer relationship management, provided

that an enterprise has the right leadership, strategy and culture.

In a hotel, each customer relationship has value and should be

managed effectively. There is an opportunity for repurchase and

recommendation from each past customer. The administration of

the information about this past guest and the effective

integration of the information into frontline guest services

programs is the challenge of CRM implementation.

Tactically, where does CRM start? The recommended

implementation of customer relationship management typically

looks like this. Statistically valid customer satisfaction

measurement: From the very top of the organization, there

should be a commitment to CRM including customer

satisfaction, employee satisfaction and a desire to have one voice

to the customer.

9
10
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

11
and from customer satisfaction to customer retention. CRM is a

widely accepted business approach throughout and indicates

that there is no definition, which is accepted unanimously. CRM

is a complex and holistic concept requiring appropriate business

process and integrated systems. Moreover, it also mandates

effective system integration, information sourcing, targeting,

leadership and evaluation within CRM strategies. The 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.

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

12
have defined the role and functions of each element in the

framework.

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. 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.

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.

13
The CRM organization 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.

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 use of CRM and making valued

customers, Value of customers and customer management

strategies are interlinked with each other, The value creation

process in which customers and the organisation receives value

is an interconnected process with the other linked process of

relationship management.

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. They developed various key implications

which are useful for decision makers in long term relationships.

14
Retention of customers is not only an important area, but

retention of profitable 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.

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. The prior strategic commitments consign

impressive results on the performance of CRM investment. 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.

The 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

15
endeavour to augment the customer satisfaction. The 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.

The account management and organisational structure yearn to

be addressed in customer relationship management. They

emphasised that all care should be 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. 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. The 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

16
effect of CRM applications on customer satisfaction. Customer

relationship perception and relationship marketing instruments

are very effective in customer retention and customer share

development. 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 customer

retention 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.

Relationship marketing remarked that relationship marketing

constitute a base for “establishing, developing and maintaining

successful relational exchanges”. Stressed on relationship

commitment and trust for successful relationship marketing and

argued that CRM also enlightens in terminating unprofitable

customers though analytical CRM. CRM is “a philosophically-

related offspring to relationship marketing which is neglected in

the most part of the literature.” Further, implied that “further

17
exploration 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.

Getting closer to customers and effectively responding to their

needs is a great way to boost their loyalty and encourage deeper

business relationship. The task of getting and retaining

customers requires even greater skill and effort. The business

needs to ensure that the service works as the customer actually

wants it to, and the customers want to do business in 'their'

way, not to be forced to do it in the enterprise's way. Most

companies consider them customer-focused and believe that in

being so they are servicing the customer. But eventually, being

customer focused means to have a consistent, dependable and

convenient interaction with customers in every encounter. CRM

technologies focus on managing all interactions that an

organization has with its customers, in order to leverage the data

in a variety of business applications. Where a profitable

18
relationship already exists, CRM can especially boost superior

service at a lower cost. In addition to this it helps to serve

customer's unspoken needs.

Generally speaking, the five needs of customers are:-

a. Service

b. Price

c. Quality

d. Action and

e. Appreciation.

A good CRM program will allow a business to acquire customers,

service the customer, increase the value of the customer to the

company, retain good customers, and determine which

customers can be retained or given a higher level of service. A

good CRM program can improve customer service by facilitating

communication in several ways:

 Increases the efficiency of customer interaction through all

the communication channels available.

 Facilitates the collaboration between the client and the

provider using the web, thus reducing the costs of

customer relations management.

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 Provides product information, product use information and

technical assistance on web sites that are accessible 24

hours a day, 7 days a week.

 Identifies how each individual customer defines quality,

and then designs a service strategy for each customer,

based on these individual requirements and expectations.

 Provides a fast mechanism for managing and scheduling

follow-up sales calls to assess post-purchase cognitive

dissonance, repurchase probabilities, repurchase times,

and repurchase frequencies. Provides a mechanism to

track all points of contact between a customer and the

company, and does it in an integrated way, so that all the

sources and the types of contacts are included, and all the

users of the system see the same view of the customer

(reduces confusion).

 Helps to identify potential problems quickly, before they

occur.

 Provides an user-friendly mechanism for registering

customer complaints (complaints that are not registered

20
 with the company cannot be resolved, and are a major

source of customer dissatisfaction).

 Provides a fast mechanism for handling problems and

complaints (complaints that are resolved quickly can

increase customer satisfaction).

 Provides a fast mechanism for correcting service

deficiencies (correct the problem before other customers

experience the same dissatisfaction).

 Uses internet cookies to track customer interests and

personalizes product offerings accordingly.

 Provides a fast mechanism for managing and scheduling

maintenance, repairs and on-going support (improves

efficiency and effectiveness).

21
IMPORTANCE OF CUSTOMERS

There exists a wide-spread mistaken notion that CRM is some

kind of a manifestation of technology only. Another interesting

thing is that even those who have implemented highly

technological installations for their CRM initiatives, quite often

can be seen to have forgotten the basis of this modern concept,

i.e., making profitable relationships with their customers. Such a

situation arises mainly because of the inability or reluctance of

the management to accept the importance of customers and

serving them to keep them satisfied and happy, which otherwise

may result in low sales and hence low profits. "One widely

accepted marketing rule-of-thumb claims that the average,

unhappy customer tells eight other potential customers about

his negative experience."

Some decades ago, most of the companies concentrated mainly

on higher productivity through higher levels of efficiency of

employees as well as machines, cost-reduction tactics and on

attracting more customers through the classic marketing tactics

such as TV advertisements, mass mailings, bill boards etc. But

the sudden growth and expansion of services sector proved that

22
these would not convert into profits, as was expected. Moreover,

the emergence of faster, cheaper and more efficient systems of

communication, transport and information technology has made

the business enterprises realize that the competition is just a

mouse-click away. These changed, new environment of business

unveiled the importance of keeping the existing customers loyal

so that they would not switch over to the competition, without

much thinking. This led to the increased awareness of

companies about the importance of serving the customer‘s needs

with a higher level of quality and in a way which is convenient

and beneficial to both the companies and the customers.

Customers to a business are those people or enterprises which

are benefited by the use of a service or product offered by that

particular business, certainly for something in return, generally

a price. When a customer pays a price, he expects some specific

thing with a specific quality and features. If his expectation

exceeds what he has been given, it leads to an unsatisfied

customer. If the offer exceeds his expectations for a stipulated

price, it leads to a highly satisfied customer and he is said to be

enjoying customer delight.

23
Today, the customer has more options to choose from. So it is

more likely for any customer to switch from one company to

another in search of better quality or service. But the companies

have found out that creating new demand i.e., finding out new

customers is much costly than keeping the regular demand, i.e.

existing customers for a regular inflow of cash and hence profits.

"The reports on new customer acquisition costs vary, from as low

as three times to as high as thirteen times of servicing an

existing customer.

In a customer‘s viewpoint, there is very little reason to switch

loyalties often, if things are going comfortably with the existing

vendor and the level of service is good. Switching involves

changes and disruptions in service levels that most regular

customers try to avoid. Realizing these facts in its true sense,

many companies have stuck to making long-term profitable

relationships with their prospective customers. And this has

been proved to be, in a way, mutually beneficial to both the

parties. This has resulted in managing these relationships as a

strategic tool and in the evolution of Customer Relationship

Management or most commonly known as CRM.

24
25
Customer Relationship Management (CRM) is one of those

magnificent concepts that swept the business world in the

1990‘s with the promise of forever changing the way businesses,

small and large, interacted with their customer base. In the

short term, however, it proved to be an unwieldy process that

was better in theory than in practice for a variety of reasons.

First among these was that it was simply so difficult and

expensive to track and keep the high volume of records needed

accurately and constantly update them.

In the last several years, however, newer software systems and

advanced tracking features have vastly improved CRM

capabilities and the real promise of CRM is becoming a reality.

As the price of newer, more customizable Internet solutions have

hit the marketplace, competition has driven the prices down so

that even relatively small businesses are reaping the benefits of

some custom CRM programs.

The 1980‘s saw the emergence of database marketing, which was

simply a catch phrase to define the practice of setting up

26
customer service groups to speak individually to all of a

company‘s customers.

In the case of larger key clients, it was a valuable tool for keeping

the lines of communication open and tailoring services to the

client‘s needs. In the case of smaller clients, however, it tended

to provide repetitive, survey-like information that cluttered

databases and didn‘t provide much insight. As companies began

tracking database information, they realized that the bare bones

were all that was needed in most cases: what they buy regularly,

what they spend, what they do.

In the 1990‘s, companies began to improve on Customer

Relationship Management by making it more of a two-way street.

Instead of simply gathering data for their own use, they began

giving back to their customers not only in terms of the obvious

goal of improved customer service, but in incentives, gifts and

other perks for customer loyalty.

This was the beginning of the now familiar frequent flyer

programs, bonus points on credit cards and a host of other

resources that are based on CRM tracking of customer activity

and spending patterns. CRM was now being used as a way to

27
increase sales passively as well as through active improvement of

customer service.

PURPOSES OF CUSTOMER RELATIONSHIP MANAGEMENT

Enhanced customer satisfaction and retention lead to increased

customer loyalty, occupancy rates and revenue per available

customer. Yet the collection and use of customer information are

frequently intermittent, delayed, and fragmented. In some cases,

especially in small and medium-sized hotels, data are still kept

by hand and recorded on index cards or a simple database of

guests is built, which allows basic analyses to be carried out.

Even where an introduction and management system is

implemented, very few hotel organizations have a formal

customer-oriented e-business strategy.

The strategic use of technology in marketing is one of the most

significant opportunities the hospitality industry has at this

moment. The implementation of targeted sales and marketing

plan and the development of a customer relationship

28
management (CRM) policy require a deep knowledge of

customers‘ needs, behaviour, and preferences, and new

technologies are one of the major drivers of change in this

context. Creating automated guest histories helps hotel

managers to build database of guests which allows basic

analyses to be carried out. where an information and

management system is implemented, very few hotel

organizations have a formal customer-oriented e-business

strategy. Most of them focus actions and research primarily on

transaction-centric solutions, to improve the efficiency of

internal operations and administrative procedures [property

management systems (PMS)], the core being the delivery of the

guest folio. In some cases, guest services are also enhanced, but

this is an indirect added benefit and not a primary goal. The

setting up of a customer information system (CIS) that

automates information search and processing and provides a

consistent view of the customer across every point of interaction,

bringing together a wide array of data into actionable formats

that support management decisions, is the challenge for the

29
future. The system, based on a data warehouse with an

accessible and user-friendly interface, will integrate different

operational systems and databases (PMS, Central Reservation

System, etc.) and will be able to store multiple profiles for the

same customer, depending on his/her behaviour and nature of

travel. Promoting Customer Loyalty and Retention: From

Traditional to Knowledge-Based Marketing, Customer Loyalty

Versus Satisfaction Managing customer value by creating quality

and service that customers can see now is considered a critical

component of companies‘ strategic marketing. Customer value is

what builds loyalty‖. Orientation to customer retention, continual

customer contact, and high commitment to meeting customer

expectations are the new strategic rules of relationship

marketing, which are based on factors other than pure economic

assessment and product attributes.

Loyalty usually implies satisfaction, but satisfaction is not

loyalty. In a hotel, a guest may be satisfied by his/her stay

because the services purchased have met his/her expectations,

but this does not imply that he/she will repeat the experience

and/or recommend it to friends and relatives. Apart from

transient travellers, who do not generally return to the area

30
where the property is located, some people choose different

hotels according to the purpose of trip (e.g., whether they travel

on business or with their family), others look for novelty and like

to sample different properties in the same area, others are price

sensitive and shop for the best deal. Finally, some guests do not

develop loyalty simply because they are not encouraged to

return. Although keeping guests satisfied is important, loyal

customers bring more value than satisfied customers.

CUSTOMER RELATIONSHIP MANAGEMENT IN THE LODGING

INDUSTRY

Given the promised benefits of CRM in such a customer service

oriented industry, why then have lodging companies to date not

embrace the philosophy? A key question is which of the players

involved in operating a hotel should implement a CRM strategy -

the owner, the franchiser or the management company?

CRM IMPLEMENTATION STRATEGIES

31
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

32
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 can turn 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

relationships with customers; transaction approach to marketing

boosts the customer loyalty as it involves a sense of

transparency and consistency while dealing with customers.

Successful CRM implementation mandates full support and

commitment of top management. CRM goals are met when the

corporate goal for ICT (Information, Communication and

33
Technology) are put together with a focus on CRM applications.

She has also germinated several 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 automation of business, involving

middle level management in process and monitoring

continuously over ICT implementation. 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. 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.

Qualitative analysis of his study, i.e. guest profile management,

campaign management and security, referred the appointment of

34
external consultants or CRM software companies to alter the

business culture of the hotel company as customer focus

mandates change in business procedures. 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.

CRM is an influential strategy to gain competitive advantage in

current market scenario. CRM is an imperative strategy for

attracting and magnifying the guest patronage in the hotel

industry.

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

35
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.

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

36
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 focusing key 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

37
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 implementations 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 transaction is not enough but the style of

guests’ interaction matters. Employees should be expert to deal

38
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.

39
40
Based on the comprehensive literature review, a model of CRM

implementation especially for hotel industry is proposed, which

is depicted as figure 1.

Description of Proposed CRM Implementation Model

41
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 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

42
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 system etc.

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 the information 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.

43
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 be

proficient 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’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.

44
45
CRM is defined as the management approach that involves

identifying, attracting , developing and maintaining successful

customer relations over time in order to increase retention of

profitable customers ( Bradshaw and Brash 2001; Massey et al

2001). Fjermestad and Romano (2003) suggest that successful

CRM requires attracting and keeping economically valuable

customers whilst repelling and illuminating economically

invaluable ones. Relationship marketing emphasises building

46
relationship transactional marketing, in which making a one-

time, immediate sale to the customer is the primary goal.

According to Reichheld (1996), a study has shown that a small

increase in retention (5 percent) can yield a 95 percent increase

on the net present value delivered by customers. CRM

implementation is heavily dependent and driven by ICT tools and

advances. As CRM is CRM practices conducted over a

companies‘ web site, it is a combination of hardware, software,

processes, applications, and management commitment. (Sigala,

2005a; Bradshaw and Brash 2001), Implementing CRM is a non-

negotiable in today‘s business environment. Whether your

customers are internal or external, consumers or businesses,

whether they connect with you electronically or face to face, from

across the globe or across towns, CRM is your ticket to success.

CRM Components in Hotel Industry Sales functionality: Contact

management profiles and history, account management

including activities, order entry, proposal generation

 Sales management functionality: pipeline analysis

(forecasting, sales cycle analysis, temporary alignment and

assignment, roll up and drill down reporting).

47
 Telemarketing/Telesales functionality: call list assembly,

auto- dialing, scripting, order- taking.

 Time management functionality: single user and group

calendar/scheduling, e-mail

 Customer service and support functionality: incident

assignment, escalation, tracking/reporting, problem

management/resolution, order management/promising,

warranty/contract management

 Marketing functionality: campaign management,

opportunity management, web-based encyclopaedia,

configuration, market segmentation, lead

generations/enhancement/tracking.

 Executive information functionality: extensive and easy-to-

use reporting.

BUILDING CUSTOMER VALUE IN THE HOTEL INDUSTRY

Relationship orientation implies business intelligence, that is,

the capacity to understand customers‘ needs, behaviour,

preferences and expectations to identify key customer segments

and then maximize the profits derived from each of them (KPMG,

2001; Nykamp Consulting Group, 1999). Understanding the

customer is among the top five most troubling problems for

48
hotel managers (Enz, 2001). Obtaining precise customer

information is crucial to define the hotel attributes that fulfill

their requirements, to foster innovative and tailor-made services,

and develop targeted marketing strategies, the final goal being to

acquire and retain valuable customers. Each interaction with the

customer either builds or erodes value in the relationship and

then impacts future contacts, depending on the information and

behavioural insight hotel organizations gain during the process

and the ability to translate it into a coherent response. The

functional and interpersonal aspects of services (e.g.,

customization, personal recognition, speed, check in and check-

out efficiency, etc.) are among the top 10 attributes that make

the greatest contribution to customer value in two key phases: at

the point of purchase and during the guest‘s stay (Dubé &

Renaghan, 2000). To be successful, hotel companies must first

adopt a customer-centered cultural mindset, which implies a

change in cultural norms, organizational structures, and the

way the performance of employees is measured and rewarded.

Secondly, they have to develop a cross-functional integration

between different functions and information systems (booking,

marketing, sales, administration, etc.) to accelerate processes

and facilitate customer information sharing. Finally, they should

49
have a strategic view of investment in properly managed IT and

adopt an enterprise-wide approach to the use and integration of

IT systems (Ryals & Knox, 2001).

SOME APPLICATIONS OF TECHNOLOGY IN CRM

1. Call centres: These are organizations which deal directly with

customer interactions. These are otherwise known as "Customer

Care Centre" or "Contact Centre" indicating more technological

sophistication and multichannel support. Call centre

technologies entered the marketplace to effectively alleviate some

of the repeat work and increase efficiencies, allowing companies

to handle escalating call volumes. Customer Service

Representatives (CSRs) could look up similar calls and

resolutions while a customer was on the phone, without having

to repeat research. The software tools being used in the call-

centres also provide forecasting of call volumes to ensure

adequate call centre staffing (Lemon, et al, 2002).

2. Web based self-service: The customers themselves, without

the help of a live person can resolve their problems or find out

answers to their queries using the web. This model is founded on

the principle of enabling customers, partners and employees to

50
obtain information or conduct transactions directly over the

internet, avoiding time- consuming and costly traditional

processes involving multiple verbal or written interactions. It

provides control, performance, convenience and efficiency

(Chaudhuri & Shainesh 2001).

3. Customer satisfaction measurement: Survey mails are the

major way for companies to monitor customer satisfaction.

Nowadays, these survey forms are even personalized to specific

customers or customer groups. Responses are input into

customer databases and included as part of individual customer

profiles. Such tracking of customer satisfaction over time

enables a company to fine-tune how it communicates with its

customers according to their preferences. (Mohan Babu, 2003)

Now, the paper-based surveys are giving way to electronic

surveys.

4. Call-scripting: Automatic scripts generated for customer

service representatives, based on an individual customer's

segment and/or customer profile contents. Scripts remove the

guess work from determining how to respond to a customer

query or complaint, guiding representatives through a dialogue

with the customer and thus optimizing discrete customer

interactions.

51
5. Cyber agents: This is a kind of an improved or modified form

of the concept of self-service. Cyber agents are 'lifelike

representatives' normally depicted on a company‘s web site as a

real person. This is an attempt to pull together the best of both

personalization and advanced technology. It is given a

personality and is having facial expressions and volume. Usually

a cyber agent addresses the web visitor with his/her first name.

It can draw from the wealth of detailed information to answer

basic FAQs as well as guide a customer to the appropriate screen

for a definite purpose/action (Raghunath & Shields 2001).

6. Web site: It is the efficient and effective use of the worldwide

web for providing information to the customers, by a company

who had created that site, in a hassle-free manner. The main

advantage of a web site is its 24 hours accessibility. Usually

gathering information from the site is a simple task and is cost-

effective. In the US and in the developed countries web is

extensively used. In the case of monetary transactions, if it is a

high involvement activity most of the customers prefer the offline

mode mainly due to their concern over security problems in

monetary transactions, through the net (Key Note, 2003).

52
53
Rama (2005) suggests that frequent customer programs and

database marketing efforts contribute to a more comprehensive

approach to satisfying customers called relationship marketing.

Relationship marketing depends on the goodwill generated by

frequent-buying programs as well as on the information provided

from database marketing efforts, goes beyond simple short term

awards and involves all the elements of a firm‘s and services to

encourage a personal relationship with each customer.

Relationship marketing is ―knowing the customer and using

that information to bond with them.‖ Form the initial personal

contact and then serve as the foundation for nurturing this brief

encounter into a friendly and accommodation relationship by

focusing on personal guest information. In addition to knowing

the purchase habits of members selecting certain amenity

preferences, and so forth, personal information such as spouse‘s

name and hobbies are added to a member database (see

previous section on database marketing) (Swift, 2001). The

company uses this information to tailor special events and

products to small segments of the membership.

54
COMPLAINT HANDLING

Few companies, use or pay attention to complaints. Who wants

to hear what they are doing wrong, especially if the criticism is

well founded. It is estimated that 90 percent of dissatisfied

customers whose problems were not solved will never do

business with the retailers that sold them the product nor will

they again buy the product that caused the problem. In the case

of hotels, customer/guest is more likely to switch if the provided

service is not satisfactory to their expectation.

On a personal level we all know what our faults are but we get

defensive when they are pointed out. We are also aware of

weaknesses in our job performance, problems in our

organizations and imperfections in its products and services. But

reacting to criticism is difficult. We tend to respond in a guarded

and defensive way, which may avoid squarely confronting the

real problem. Likewise, companies tend to let themselves off the

hook too easily: ―We never could have satisfied that customer.

The astonishing news is that those people who do complain and

have their problem taken care of, tend to be more loyal to the

company than the people who were satisfied on the first

instance. World-Class companies see complaints as

55
opportunities to improve, to impress customers and to turn

complaining customers into loyal ones.

PRIORITY MARKETING

Priority Marketing focuses on what is important to the customer.

What is important to one customer however, may not be as

important to another. Consider the varying demands placed on a

hotel: An airline stewardess may find the 24 hour room-service

extremely valuable, a retired couple may need dietary menu

options, a tour wholesaler may favour low prices, and a young

female executive considers security a priority. Hotels should

break down their services and ask customers what is important

to them. This approach can be very valuable in changing

customer preferences.

Identifying groups of customers who have similar preferences or

even similar tastes (such as sharing common perceptions of

quality or tastes), hotels can target promotions to capitalize on

known characteristics and individualize the presentation (Rmana

& Somayajulu, 2005).

56
CUSTOMER RELATIOSHIP MANAGEMENT SUCCESS

Seeing CRM initiatives take hold and begin to pay off is often a

waiting game. It‘s not a ―flip-the- switch‖ product that

automatically spits out results or something that will take affect

overnight and cause profits to skyrocket while you sleep. The

puzzle must be completed and time must play its part before

true success will be seen. However, through dedicated and smart

planning, businesses should see markedly increased profits, as

satisfied customers will continually re-visit them. Gradually, as

businesses get to know their customers, their customers get to

know them, and a closely aligned partnership is formed. This

one-to-one relationship is the catalyst that sparks both lifetime

customer loyalty and revenue increase.

It is important that hotels involve their guests and stay in touch

with customer perceptions of current services.

In the true spirit of thinking outside of the box, experts at the

Gartner Group believe ―the most successful organizations will

be those who, through innovation and focus on business

effectiveness rather than merely efficiency, manage to break the

mould of traditional business thinking‖. Being effective is

paramount. The end goal of better serving customers and

57
enabling a high percentage of customer retention cannot be met

without creative thinking and effective planning and actions. The

task of perfecting the relationship between business and

customer is always on-going and requires special dedication and

innovation as the commerce markets continually change and

fluctuate. And over time, customers change, as does their

behaviour and needs, and businesses must be able to respond to

that. Being on the top of the industry and always having a hand

on the pulse of the customer is the key for success. As the CRM

initiative begins to take hold, key players will soon see patterns

emerge among customers, will discover what a productive

strategy is and what is not. This is the essence of a successful

CRM project: being able to really know what will work for your

customers, what satisfies them, and what keeps them loyal. The

ability to get an accurate gut feeling about the marketing

campaigns, new products, and the type of policies customers will

respond to is invaluable. This kind of customer knowledge only

comes from really digging in and being savvy about how you

understand the people that you hope will continuously call on

the services and products of your business. The ROI in this case

would be compelling indeed.

58
59
Information and Communication Technologies (ICT) crucially

impact on travellers’ knowledge, attitudes and behaviours. The

increased online price and product transparency and the new

business models (e.g. online auctions) enhance tourists’ power,

who are becoming more price sensitive, less brand loyal and

more sophisticated (Gilmore & Pine 1997). The hotel industry is

also experiencing increased globalisation, competition, higher

customer turnover, growing customer acquisition costs and

rising customer expectations, meaning that hotels’ performance

and competitiveness is significantly dependent on their ability to

satisfy customers efficiently and effectively (e.g. Olsen &

Connolly 2000, Gilmore & Pine 1997). To enhance profitability

and guest loyalty, hotels must focus on developing Customer

Relationship Management (CRM) that aims to seek, gather and

store the right information, validate and share it throughout the

entire organisation and then use it throughout all organisational

levels for creating personalised, unique guests experiences.

ICT has been recognised as one of the major catalyst factors for

developing one-to-one experiences and implementing CRM

strategies. However, CRM in the hospitality industry has been

60
defined by the myriad of ICT suppliers that are overstating the

role of ICT. However, CRM is not a technology problem but a

business problem that requires ICT tools.

Functionality to be aligned, designed and effectively co-ordinated

along with business operations and strategy. In the lack of a

common accepted framework to achieve the latter, this paper

aims to develop a model for managing and integrating ICT

capabilities into CRM strategies and operations. To that end the

concept, aims and crucial factors for implementing CRM in

general as well as in the hotel industry are analysed and

summarised into a model that integrates three crucial

managerial areas: knowledge, relationships and ICT

management. The model’s usefulness and applicability in hotels

61
62
CRM has its roots in relationship marketing inaugurated by the

influential work by Berry (1983) and Christopher, Payne and

Ballantyne (1991). Relationship’s marketing rational is to

enhance long term profitability by moving from transaction-

based marketing and its prominence in attracting new

customers, to customer retention by means of effective

management of customer relationships (Christopher et al. 1991).

Literature on CRM highlights the diffusion of relationship

marketing practices for identifying, knowing and customising

services to individual customers into organisation wide

operations and customer touch points. Kalakota and Robinson

(2000) defined CRM as an integrated sales, marketing and

service strategy that prevents “lone showmanship” and relies on

coordinated actions, while Couldwell (1998) defined CRM as a

combination of business processes and technology.

Overall, CRM implementation entails the following tactical steps

(Winer 2000, Kalakota & Robinson 2000, Loftness 2001):

creation and data mining of a database of customer activity;

given the analysis, decisions about which customers to target,

how to target, contact and build relationships with them;

development of personalised customer experiences; channel

management for enabling efficient share of guest knowledge

63
across the organisation, so that guests can get personalised and

consistent service at anytime, anyplace, anywhere, any platform;

management of privacy issues; and metrics for measuring the

success of CRM.

To achieve these, businesses may need to undertake major

organisational changes and transformations at a higher level,

whose identification has generated wide interest and debates.

Wells, William and Choobineh (1999) identified four key elements

for CRM implementation: business process analysis; integration

and redesign of customer data; ICT enabled customer

interaction; accessibility/transmission of organisational

information. Hart (1995) highlighted the importance of building a

great organisational and operational flexibility and a process

technology that will enable product/service customisation as

well as the need of a marketing department that would support

the identification and analysis of customer needs. To achieve

this, Gronroos (1994) emphasised that businesses should be

managed from a process rather than a functionalistic

perspective. Mok, Stutts and Wong (2000) stressed the

importance of ICT. However, participants in a Tourism Society’s

seminar on CRM concluded that CRM refers to a strategy that

gets together a combination of ICT tools, processes and services,

64
Se.g. automated call centre, customer data warehouses and data

mining, customised content, targeted banner advertising and

targeted e-mail delivery. Stone’s findings (Alford 2001) also

revealed that people, customer management and detailed

measurement are the most critical elements for successful CRM,

while ICT was found to act as an enabler only when the previous

elements were in place. Loftness (2001) highlighted the

development of measurement processes and organisational

culture around of customer satisfaction. Tiwana’s (2001)

comprehensive process for implementing knowledge based CRM

strategies also stresses the complementary role of ICT, while also

integrating many of the previous identified key elements of CRM

implementation. Overall, Tiwana’s CRM model debates the co-

ordinated management and alignment of: strategic and

operational (e)-business, ICT, leadership, change, cultural and

measurement strategies.

65
66
Although a huge debate has been initiated regarding the

identification and the importance of different elements of CRM,

there is still no agreed framework as to how CRM can be best

applied and adopted within organisations. However, previous

debates have clearly identified the major issues for implementing

CRM, which coupled with more arguments as identified in the

following literature review, lead to the development of an

integrated model for CRM implementation. The proposed model

has both a strategic and operational value, as: a) it identifies the

major managerial areas whereby strategy development and/or

organisational change are required; and b) it depicts the tactical

actions that the development of a strategy in each managerial

area might entail. A co-ordinated and aligned approach among

the following three managerial areas is yet required.

KNOWLEDGE MANAGEMENT

The success of relationship marketing heavily depends on the

collection and analysis of customer information for developing

highly-personalised offerings. Buttle (1996) pointed out that

marketing problems are by nature information handling

problems. However, information should not be confused with

knowledge. Knowledge is produced when information is analysed

67
and used to enable and leverage strategic actions. Sigala (2002)

argued that this confusion has led several businesses to make

huge investments on ICT projects which have yielded marginal

results. To overcome the ICT productivity paradox, hotel

management needs to embed ICT generated information into

decision-making processes. The latter involves three broad

phases that run in parallel (Tiwana 2001): acquisition; sharing;

utilisation. Development and creation of insights, skills, and

relationships (knowledge acquisition), when disseminated and

shared (knowledge sharing) are followed by integration of

learning, insights and experiential knowledge and bringing it to

bear upon current decisions (knowledge utilisation).

Davenport and Prusak (1988) identified the critical success

factors for knowledge management: ICT and organisational

infrastructure; knowledge friendly culture; change in

motivational practices for encouraging and rewarding staff when

information is collected, shared and used; knowledge

management culture; and open organisational structure.

Malhotra (1998, p.58) stressed the link between ICT and

knowledge management: “…ICT embodies organisational

processes that seek synergistic combination of data and

information processing capacity of information technologies, and

68
the creative and innovative capacity of human beings”. Several

other authors (Earl & Scott 1999, Zack 1999) have also

highlighted the importance of a customer knowledge

management strategy and the crucial leadership role that

visionary knowledge officers should play for bringing together all

CRM stakeholders (e.g. frontline, finance, ICT and other staff) to

share a common platform of beliefs, expectations and

commitment. Tiwana (2001) also stressed that a knowledge

based CRM strategy requires the development of boundary

spanning communities of practice whose members are

empowered and inspired by a culture of trust that in turn fosters

cross-functional collaboration, sharing of expertise and creation

of new knowledge. Indeed, building trust and driving out fear of

knowledge management are crucial issues, as it means that an

employee is confident that taking risks based on new

information, customer insights and knowledge will be rewarded,

not penalised. This is because cultures that do not drive out fear

have two side effects: they force employees to focus on short

term at the cost of long-term performance; they encourage

employees to focus on the individual rather than the collective

organisation.

69
However, Dev and Olsen (2000) reported that although hotels

capture considerable amount of customer data, those data are

rarely assembled to create useful knowledge about customers.

Cline and Warner (1999) also found that the collection and use

of customer information are frequently intermittent, delayed and

fragmented. Lack of ICT applications integration and legacy

systems designed along functional lines that create fragmented

guests’ profile have been reported as the major reason of

duplication, inconsistencies, incompleteness and inaccuracies of

customer data in hotels (Sigala 2003). Thus, knowledge based

CRM requires:

• a hotel culture whereby every customer interaction is perceived

as a learning experience and each customer contact as a

knowledge-building opportunity and a chance to collect new

information about hotels’ guest (Olsen & Connolly 2000);

• incentives and rewards to staff’s efforts to capture, use and

share knowledge for personalising customer

interactions/experiences (Siguaz & Enz 1999);

• redesign of customer data across the organisation and

customer-centric ICT integration and infrastructure (Sigala

2003);

70
• understanding of guests’ value drivers and requirements as

well as of the ways in which hotels contribute or fail to create

customer value (Dube & Renaghan 2000).

RELATIONSHIP MARKETING (INTERNAL AND EXTERNAL)

Within this new paradigm, interacting with customers and

satisfying customer needs are vital important. Relationships with

the customers are not built and sustained with direct (e)-mail

themselves but rather the types of programmes that are available

for which e-mail may be a delivery mechanism. Winer (2001)

argued that a comprehensive CRM is a collection of integrated

components such as customer service (0800 numbers,

faxback/customer comments cards, e-mail, FAQ), frequency,

loyalty and reward programmes, customisation and community

building (e.g. virtual communities). The aim of these integrated

customer communication channels is to support the customer

cycle (i.e. acquisition, enhancement / cross-up-selling and

retention) by identifying profitable customers, differentiating the

services/products offered to different markets of ones, interact

with individual customers in a integrated way across channels

and customise/personalise customers’ experiences.

71
CRM also largely depends on staff attitudes, commitment and

performance and so, success on the external marketplace

requires initial success internally in motivating and getting

employees’ commitment (Gronroos 1994). Apart from developing

the four Ps of the marketing mix, a host of other resources and

activities are also needed (e.g. handling guests’ complaints and

requirements) (Bitner 1995). Although most of the people

involved in such activities are not part of the marketing

department, their attitudes towards customers and their ways of

executing their tasks are imperative. According to Gummesson

(1990), these employees must be trained to become part-time

marketers.

While the idea of maximising transactions is nothing new, what

is different is that this style of guest interaction will demand

substantial conceptual skills from every employee. Because it

might be impossible to create ideal guest experiences solely

through expert systems, organisations might have to create

intelligent-response teams comprising of employees with broad

knowledge bases that cut across traditional organisations

functions. For dealing with guests’ experience-related desires,

employees will be required to have advanced social skills such as

understanding of role conflict, role theory, communications and

72
personality identification (Olsen & Connolly 2000). Employees

will need to be content experts who do not only know how to

work with and exploit technology, but also can manage the

information exchange and match guests to experiences.

Moreover, as such knowledge-based work may take place

electronically, staff should be able and know how to work

collaborative and electronically irrespective of their spatial, time

and cultural differences. CRM calls for new job descriptions,

organisational structures, motivational thinking and reward

systems.

ICT MANAGEMENT

Data warehouses and data mining are the most popular and

highly needed systems for providing CRM capabilities or else for

defining, developing and managing “the segment of one”. This is

because they are necessary and valuable tools for trying to

determine customer demographics, buying patterns, market

segments, contribution margins, customer lifetime etc., as they

help to wade through volumes of information and decipher

meaning, patterns and relationships from many seemingly

unrelated bits of data. ICT is also instrumental for gathering and

storing customer data (e.g. EPOS systems, website analysis),

providing ways for one-to-one interactions, e.g. website, call

73
centre, kiosks etc, as well as identifying ways for disseminating

and accessing information across the organisation. However, to

achieve the latter, a new ICT infrastructure is required that

would enable the creation of consolidated customer databases

and overcome limitations created by functional “field-doms”.

The supporting role of ICT for fostering business process

reengineering and restructuring processes around the customer

is widely argued and does not stop at the organisational

boundaries. The alignment of ICT and organisational

infrastructure is critical so that the numerous systems at the

customer touch points (e.g. Internet, PMS, EPOS, CRS etc) do

not become “islands” of useless information. Within the hotel

sector, Sigala et al. (2001) argued the need to integrate yield

management, customer databases, corporate and distribution

systems for implementing yield management on a one-to-one,

distribution channel or hotel location basis. Wells et al. (1999)

described how electronic networks allow the distribution and

share of guest databases across Ritz-Carlton hotel properties

allowing staff to accommodate and treat individual customers

based on preferences from previous visits.

74
75
The study seeks to analyze CRM techniques in Ghana within the

hotel industry and how they can contribute to meeting customer

expectations.

The specific objectives of the study are as follows:

1. To identify hotels that practice CRM.

2. To identify the challenges facing hotels in their

implementation of CRM practices.

3. To find out the relationship between CRM practices and

Customer loyalty.

76
77
INTRODUCTION

This chapter described the study area and detailed method

followed to collect the data for the study. In addition the list of

hotels from which data was collected were also presented.

STUDY AREA

Gorakhpur Region

LIST OF HOTELS

 Clark Awadh

 Part Regency

 Bobina

 President

 Shivoy

 Avantika

 Hotel Yark

 San plaza

78
RESEARCH PLAN

PRELIMINARY INVESTIGATION

In which data on the situation surrounding the problems shall

be gathered to arrive at

 The correct definition of the problem.

 An understanding of its environment.

EXPLORATORY STUDY

To determine the approximate area where the problem lies.

RESEARCH DESIGN

Research was initiated by examining the secondary data to gain

insight into the problem. By analyzing the secondary data, the study

aim is to explore the short comings of the present system and primary

data will help to validate the analysis of secondary data besides on

unrevealing the areas which calls for improvement.

DEVELOPING THE RESEARCH PLAN

The data for this research project has been collected through

self Administration. Due to time limitation and other constraints

direct personal interview method is used. A structured questionnaire

was framed as it is less time consuming, generates specific and to the

point information, easier to tabulate and interpret. Moreover

respondents prefer to give direct answers. In questionnaires open

ended and closed ended, both the types of questions has been used.

79
COLLECTION OF DATA

SECONDARY DATA

It was collected from internal sources. The secondary data was

collected on the basis of organizational file, official records, news

papers ,magazines, management

books, preserved information in the company’s database and website

of the company.

80
81
Knowledge and practices of Customer Relationship

Management

The analysis of the study revealed that 6 of the 24 respondents

representing 25% have not heard of customer relationship

management whilst the remaining 18 representing 75% have

good knowledge of it. The results therefore imply that a good

number of hotel managers have heard and therefore know

something about CRM which when they practice, they will be

able to gain the benefits associated thereof. Moreover, the results

also highlighted the need for increased awareness about the

concept of customer relationship management as nearly 25% of

them said they have not heard it before. All the 18 respondents

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who indicated that they are aware of the concept also pointed

out that they believe in it.

It is said that knowing one thing is another and doing it is also

another thing. When a follow up question was posed, 66.7% of

the respondent said they practice CRM whilst 8.3% do not

practice it therefore enquired whether the managers practiced

CRM or otherwise. From the results, 16 respondents indicated

that they practiced CRM whilst 2 of them did not practice it at

all. As stated earlier, 25% who have not heard of CRM did not

answer the question as they neither had heard nor believed in it.

For the managers who do not practice CRM, data is kept usually

by hand (25%) and simple database (33.3%)

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CRM TOOLS

It came out that marketing information system is the commonest

CRM tool used by the managers. This is because as many as

41.7% of the respondents indicated that they used this method.

The second commonest CRM tool used was the database

marketing which about 25% of the respondents used.

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TOP MANAGEMENT INVOLVEMENTS

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LACK OF PERSONNEL

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EXCELLENT IT

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MEDIUM OF COMMUNICATION

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HOW MANAGERS RELATE TO CUSTOMERS AFTER THE

FIRST AND SUBSEQUENT VISITS

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DOES CRM LEAD TO CUSTOMER LOYALTY ?

Respondents consist of a representative sample of the

Gorakhpur sector, as: the majority of the hotels are

independently managed; respondents being part of hotel chains

usually represent 5 star hotels; small size hotels (less than 60

rooms) concentrate on the 3 star category, while larger-scale

hotels on the 5 star.

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The study indicated that the hotel industry is saddled with the

problem of non-availability of personnel, lack of qualified

personnel, lack of management commitment and experienced

personnel to manage the hotels effectively.

Even though 75% of the hotels have good knowledge about

customer relationship management and portray that they believe

in it and practice CRM, 25% of them still use manual forms of

recording information which does not auger well for the industry.

When the question of whether they have excellent IT came up,

58.3% said yes and 41.7% said they do not have. The study

therefore indicated that most hotels in Kumasi have excellent IT.

The non- existence of IT and inadequate accessibility to ICT

creates a gap in hotel management. According to the data

obtained, 25% said lack of ICT makes easy access to information

about customers in the hotel difficult. 8.3% stated that IT is not

flexible enough. Also, 8.3% stated that hotels do not provide

internet facilities. Majority of respondents made up of 58.3%

declined and said not applicable.

The study shows that that marketing information system and

database marketing are the commonest CRM tools used mostly

by the managers.

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Financial institutions are not willing to give loans to the hotels

since the study revealed that 12.5% stated that financial

institutions are prepared to give loans. On the other hand 70.8%

stated that financial institutions are not prepared to give loans.

The remaining 16.7% declined and stated that it is not

applicable.

It would be inappropriate for the banks not to give loans to the

hotels since they are at the heart of the tourism industry and

also since the tourism industry has observed a tremendous

growth of about 7.2% of the economy. This will deny the

Government the needed revenue generated as tax and also that

which investors and visitors bring in.

The study proves that even though the industry has ICT

facilities, using it to access information about their clients was

difficult indicating that most of the staff do not know how to use

the ICT facilities and hence need training.

Even though 66.7% of respondents profess to practice CRM, it

was realised that they were only using aspects of CRM and not

the comprehensive, integrated form via a software that is

distributed through a centralised server.

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Contrary to the fear of the Minister of Tourism, the study found

out from respondents that customers continue visiting hotels

after their first visit. The results showed that all respondents

representing 100% stated that customers continue visiting hotels

after their first visit. This implies that after the first visit,

customers are usually satisfied with the services provided and

therefore are motivated to continue visiting.

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Within the limitation of the study, certain findings were made

which is concerned with the objectives of the study.

1. The Association of Gorakhpur Hotels should take a bold

step to salvage the industry from unqualified personnel.

2. The industry should ensure that persons seeking to be

employed in the management of any hotel must be trained

in hotel management and obtain the requisite qualification.

4. It is recommended also that the banking sector avail

themselves to granting loan facilities to the hotels by

looking at the financials at hand of the hotels together with

a five year plan at the least in comparison with a growth

plan in order to release moneys to them as against results

recorded quarterly.

5. To give credence to the notion that the hotel industry is

central to and a resource for everyday business life, the

Hoteliers Association of Gorakhpur should make it

obligatory for hotels to practice Customer Relationship

Management using a comprehensive IT facility via a

software which will enhance comfort for all clients or

visitors and create some uniformity in service practices in

line with that of major cities across the world in order to

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attract more visitors. And also, since the data gathered showed

75% of respondents agreeing to CRM practices leading to

customer loyalty, it goes to show that CRM assures

hoteliers of good business continually.

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The present study has the following limitations:
 The time bound period is the major limitation in research
projects.
 Due to the financial and time constraints a cluster analysis of
the population so as to get better results was not feasible.
 Compilation of data on competitor analysis was difficult due to
no availability of correct information.
 The figures have been taken as approximations
 We are bound to study that segments which is trapped by Hotel
of Gorakhpur.
 Data which is used in report is collected by personal interview &
some data provided by Different Hotel of Gorakhpur.

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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

centric approach, 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

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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 clients and making sure that they remain

in business terms with organisation for life time. Hoteliers must

understand their each guest’s personal characteristics to serve

them foremost. Hoteliers expected to spend time for studying the

guest’s 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 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.

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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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
 Starkov, Max (2006) e-CRM Strategy in Hospitality,
fromhttp://www.hospitalityebusiness.com/hr/hr102104121407.htmlCRM: How to
keep your travel customers? From http://www.hotelmarketing.com
/index.php/content/article/ 061101_crm_how_to _keep_your_travel_customersThe
Loyalty Momentum Effect from http://www.crm2day.com/
library/EpApuEAFEEiQzpQOUf.php Robin Trehan (2005) e-CRM and e-
Business: How it Can Be Synergized in theHospitality Industry
fromhttp://www.hotel-online.com/News/PR2005_3rd/Sep05_eCRM.htmlBerry,
L.L. (1983), ‘Relationship Marketing’
 in L.L. Berry, G.L. Shostack and G.Opah (eds) Emerging Perspectives on
Services Marketing pp 25-28Bob Thompson (2004) -
 What is CRM? ,from www.frontline.comChristopher Lovelock (2005) -Services
Marketing; A European Perspective.
 Claycomb, C. and Martin, C. L. (2002), ‘Building Customer
Relationships; AnInventory Of Service Providers Objectives
And Practices’, Journal Of ServicesMarketing, Volume 16, Number 7, p 615-
635Hart, Susan, Hogg, Gillian and Banerjee, Madhumita (2002), “an
Examination of Primary stakeholders’ opinions in CRM: Convergence and
Divergence?” Journal of Customer Behaviour, 1, pp. 215-240.

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