You are on page 1of 10

How building quality relationships can increase sales, lower costs and build business value in the Hotel

understanding your customers’ buying processes that impact customer loyalty, se rvice delivery and quality management. Customer Relationship Management, or “CRM”, is one of the most important topics in the world of business. Its effects and dimensions simply cannot be denied. Without proper customer relationship management, there is no way to attract and retain customers to the business and therefore to be profitable. The application of CRM brings a company a large number of benefits according to Sir Henry Ford. A business absolutely devoted to Customer Service Excellence will have only one worry about profits. They will be embarrassingly large.

What is Customer Relationship Management?
CRM is nothing new your greatgrandmother’s milkman certainly used it— the piece of paper in his wagon that listed who bought what each day was an early predecessor to the cloud-based CRM applications of today. While the technology surrounding customer relationship management may have changed, the goal of making a sale and keeping a customer has not.

habits and preferences so that you can place yourself squarely at the point of sale—and about supporting those same customers after the sales transaction is complete. The 21st century is the era in which all organizations should consider the customer as the king; because of this the need of Customer relationship management has increased dramatically. CRM is all about making a suspect to a prospector Customer Relationship Management

At its core, CRM is all about merging marketing efforts with business processes to be able to identify, pursue and manage valuable customer relationships. It’s about knowing and

entails all aspects of interaction a company has with its customer, whether it is sales or service related. It even uses technology to streamlined

However even with all these advantages there are a number of problems existing. for this is the booming hotel industry in the country. which are unfortunately passed on to the consumer. The hotel industry is facing an increasingly competitive market that pushes the hotels to have a greater need to differentiate for their customers. they need create an exceptional experience adjusted to their customers’ needs to maintain the company’s long-term success. . Hence. but with the credit crunch in 2008. Since Tourism is a fast growing industry. through increased air ticket prices. Hotels need to have a deep knowledge of their customers’ needs. due to the high costs. The purpose is to create value and therefore. Incorporating the diverse culture of the country and also the wildlife parks such as the Yala national park and the various Tourist Establishments here offer visitors a unique. hotels and spas have opened. many beautiful resorts. stimulate customer retention and loyalty. CRM is crucial.Today. In other words. consumers are forced into reconsidering travelling during the peak seasons and for leisure purposes. and preferences to be aware of the ways in which their hospitality services will be delivered. tourist figures have dropped as people have less money to spend and companies are unable to expand as rapidly. Over the years. Also the Fluctuating oil prices have resulted in the airline industry imposing further fuel Hospitality Industry in Sri Lanka According to a survey conducted by the British Airways Sri Lanka has been identified as the best place to visit in the world and that has been the main reason charges to cover high costs. yet memorable experience that will never be forgotten. behavior. especially in the Hotel/Hospitality industry.

maps.People are also becoming more aware of their carbon footprint and may want to decrease this by taking fewer flights. The answer to all these problems faced by the hospitality industry is Customer Relationship management. contact details) Small and medium size Hotels  Providing affordable value for money meal packages through own restaurants.    focus on providing basic requirements for their customers Flexible rates as well as flexible checking and checkout schedules Providing value for money services such as on request city tour arrangements and providing on request details( locations. These are the hotels which are mainly favored by low cost budget travellers as well as transit passengers also low budget holiday seekers. Since this industry requires a human touch and deals with different humans with different perceptions. However since different customers have different needs this task is extremely difficult. The customers satisfaction level should be maximized to grab the customer and retain the customer without letting him/she go to a competitor. In other words the aim of the company should be to turn a suspect into a prospect. When a customer walks into a budget hotel there are certain things he/she expects some of them are that the hotel should be affordable and should give a service that was value for money and should also allow the customer a certain level of flexibility when it comes to booking and checking in and out of the hotel . That is where a proper customer relationship management systems need comes into place. Small and medium sized hotels have a number of characteristics that separate them from top end hotels such as. In this category our focus is solely on hotels which do not fall into star hotel category.

In other words Guests like to see that they are . Achieving these 3 objectives in themselves is a benefit for any organization. In fact. provided that an enterprise has the right leadership. CRM has 3 main objectives they are is to Improve Revenue. according to the customer’s value proposition it’s about satisfying their needs. In this sector you are nothing without the customers understanding what your organization exists for which is no other reasons than to meet customer needs and expectations. CRM requires customer-centric business philosophy and CRM applications can enable effective cust omer relationship management. high quality and time. strategy and culture. sales and service processes. According to Jon Anton In hospitality.CRM in Hospitality Industry culture to support effective marketing. a terrific personalized service. Benefits of CRM in the hotel industry The hotel industry is primarily a service sector where emphasis is given on the role played by relationship marketing. There is opportunity for repurchase and recommendation from each past customer. you should just look behind you at the long queue off competitors lined up and waiting for the opportunities to prove you wrong. 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. When it comes to stressed business travelers and leisure travelers the main thing they value is a luxurious environment. Lower the business cost and add/build long term values of the business. If you believe otherwise. each customer relationship has value and should be managed effectively. CRM is a business strategy to select and manage the most valuable customer relationships. Therefore it is simply imperative to develop proactive methods for underst anding what customers like and dislike. Most companies in the hospitality industry understand that while each of their property provides customers with a unique experience it does not mean that the success of the company is guaranteed.

For this to be successful firstly they should select the right people. and since there was a lack of empirical evidence demonstrating positive effects of loyalty programs and a lack of strategic focus and measurable outcomes associated with such programs. in terms of actual spending. could be a waste of marketing time and expense. which generates little perroom profit. which increases customer satisfaction and retention that leads to higher sales. but also who the most valuable customers are.getting what they paying for. According to Mike McCall a researcher from Cornell University School of Hotel Administration It's not enough to determine who the frequent customers are. according to him the CRM lesson is clear. . How is CRM Implemented Hospitality providers need to enhance their CRM programs to take advantage of the technology tools that can help them differentiate among customers and aim their programs at those who are more valuable -. and some are much more valuable than others in terms of profitability. Anytime a guest encounters anything less than what they had expected. They should hire for attitude. rather than skills all hotels in the industry should strive to treat employees like customers this will in turn lead to increases in employee efficiency.and more profitable. Providing a discount to a customer who is a frequent guest but who regularly books a modestly priced room in smaller cities. Not all frequent guests are alike. One of the benefits in CRM is the development of a culture of service through the inculcation of the golden rule where the golden rule stands for aiming to treat others as we would want to be treated ourselves. Another benefit of CRM is that it should be able to retain the customer to stay loyal to the company in the long term if not the firm turns into a leaky bucket where even though water is poured in to the bucket water pours out from the holes and never fills though how much you pour. staff members in the hotel should quickly fix the mistake and most likely compensate the guest to win back their trust.

enabling staff to quickly get to the heart of a customer's needs and solve their problems.  Increased each guest’s spend through strategic channel usage and cross-selling and up-selling techniques.The use of technology can be the best way of implementing CRM in a firm because technology allows for easier. from kitchen staff to cleaner all have the necessary training and information to provide a seamless. For example. more natural. The people element becomes apparent when individual members of staff fail to show commitment to the processes designed. consistent and individualized service to their customers.  Improved service by serving guests from various channels with consistent. and less intimidating relationships.  Captured ongoing guest information to personalize their CRM and its implementation on budget hotels The success of a CRM implementation is not dependent on the size of the hotel. It is redefining the standards for customer service and brand management. quality information about their needs. ensuring that each moment-of-truth interaction enthralls the guest. CRM makes everything easier for the consumer. having a well-executed program will even allow a small hotel the opportunity to take advantage of various benefits. This will help the firm to collect information about individual customer’s preferences and this data that has been collected can offer loyalty packages to profitable customers. Commitment can be encouraged by other processes that enable staff to feel valued and rewarded. . CRM programs can give ready access to information on the customer's previous contacts and purchases. including: experience and make it  truly memorable. Technology in the firm can be used to develop sophisticated websites that allow potential customers to view their facilities and also enable them to make online bookings. For CRM implementation to be successful Processes have to be in place to ensure that all staff from manager to receptionist.  Increased revenue by identifying the most profitable guests and directing superior service their way.  Enhanced decision-making by better understanding and reacting to guest behaviors through analytics and measuring performance at all touch points. In fact.

They are Core product. as their example is followed throughout the organization. Understanding this concept will be helpful to the manager to gain a strategic advantage through their product. The most important step in the process is to identify whether CRM program will benefit the customer and also to determine how the CRM program will benefit the organization The Marketing audit will provide valuable guidance to the particular small hotels in concern since the research information of the market will enable the hotel to carry out necessary action plans to expand their market position or reposition them in the market as an example if the marketing research indicates that the trend for hourly basis stay then the hotel/organization needs to capitalize on such a trend. experiences. The primary benefit to marketers is the ability to disaggregate the total product – then examine each of the product components and determine the product qualities that customers will value. ideas. and goods. Budget Hotels as a total product A total product consists of six components which are classified as services. After the CRM champion is appointed the hotel should conduct a marketing audit to determine the present position the company is currently in and also the desired position they which to be in this will help to formalize the organizational expectation where organization expectations is the satisfaction of their customers. For the CRM program to be successfully implemented the top management must be committed to the relationship. The total product mainly consists of three sections. The . people.There are several Areas that budget hotels should focus on when they are going to implement CRM to their respective hotels Firstly the hotel should appoint a CRM champion. Expected Product and Augmented product. places. This will lead to an alignment of the CRM program with the organizations vision. When it comes to the budget hotel as a product it mainly deals with the experiences that are a value for money and the ideas making the core product a service. the CRM champion should be appointed from the senior management of the company and should be well respected he/she should be given the authority to head the implementation program.

hot water shower. The core product in this case is the experience the customer achieves by spending time in the hotel. this is a another form of important element which can have great impact on customer base people who turn into a small hotel sometimes can be transit passengers and these type of . As an example if we take the service offered by a small hotel we can disaggregate it in following manner 1) Room facilities 2) Restaurants and related services 3) Quality of the service offering by the staff 4) Flexibility of the services If I further elaborate the above mentioned factsRoom facilities simply mean the size of the room. this can be identified as crucial elements of the total product because whatever the facilities provided can be outplayed by any failure’s in this particular area because this is a people related service and attitudes can make big impact on customer perception. interior decorations.) when evaluating the room facilities we will be able to find out in which areas we were able to satisfy the customer and which areas we have failed in. this will enable us to focus on strengths and maintain and improve it further also critically take steps to meet the required standards in failed areas. The knowledge gained through this process provides vital information to the Marketers which enable them to realign each product component reconstruct the total Product offering and also help to differentiate each product offering in more meaningful ways. functioning of electrical equipment’s (Air conditioner. Heaters. Apart from that the manager should be able to develop the product in a way it will suit the future customers’ experiences. etc. Flexibility of services. evaluating this will enable us to identify whether this service adds value to the hotel or not. Restaurants and related services. If value addition is less the hotel can consider can removing such areas and focusing on areas which may provide positive results to the hotel. Therefore these facts clearly indicate that understanding the total product concept is very import to be success in the market. For this the manager might have to decide whether he is going to develop another product or whether to penetrate the market using other strategies. Quality of service offered by staff. cleanness.manager should be able to make his product and make it available to the market in a proper manner.

4. Employing effective CRM software to improve guest satisfaction. 3. club surveys. meal preferences. 9. Maintaining suggestion boxes at every touch point/point of interaction with the customers. special requests. and increase revenues. For example some of the five star hotels in Singapore and Malaysia the checking time is from 12-2 pm. Surveys: Conducting monthly guest/customer surveys. toll free guest processes’ efficiency by the management. 1. Recommended programs that can be implemented On the basis of the article. lower operating costs. assistance centers can help in getting customer feedback and to improve in the areas where there is a lag as suggested by the feedback. sending birthday cards to the loyal guests and even their spouses and giving them a hasslefree check-in procedure-like sending them pick-up and drop facilities. I would like to recommend some suggestions which could be implemented profitably by the budget hotels in this industry. the employees.keeping a databank of customer profiles along with such details as room preferences. to impress the customers and to turn complaining customers into loyal ones.. room comment cards. Taking feedback not only from external customers but also the internal customers i. The passenger tourist from another country arriving in the morning have to wait some extra hours or have to pay an extra fee to check in the morning time. Proper check on the hotel staff’s and 7. 10. 2. 5.passengers expect greater flexibility In checking and checkout such achievement of flexibility can make the hotel brand name favorable among tourists compared to its competitors.Having Guest History programs. say by employing Mystery Customers. wallet services. Keeping regular track of the sales data for further leads and follow-up 6.e. Giving the customers a more personalized and empathic services as building good rapport with the customers goes a long way in having satisfied and return customers. amenities preferred. . 8. build guest loyalty. Giving recognition awards to attract old customers. Employing an efficient system of complaints handling as complaints are the opportunities to improve.

They should remember that CRM is about how the business is run. . must focus on which is that implementing an effective CRM solution is not complex.Conclusion It is not recommend for small hotels to shy away from implementing a CRM program. stakeholder involvement and mistake avoidance will ensure that the CRM initiative gets off the ground easily In the long turn. and work in an atmosphere of mutuality and trust. effective communication. As the product is becoming generic in nature. In this era of globalization where ‘Customer is the King’. Customer Relationship Management is one of the key tools to fight this cutthroat competition and stand out as a superior brand. the hotel industry can no longer rely on the traditional marketing strategies to retain the customers. Adequate planning. customer expectations are going up which is making the situation more and more competitive. the hotel and the customer. profitable relationships can be built when both. and will help to rise above the 'transaction' approach. The bottom line is what every good hotelier. large and small.