Relationship Marketing Effects on

Customer Retentions for Travel

Agencies
 Contents

"Introduction”.........................................................................................................................................3
Research Academic Importance..................................................................................................................5
Practical Importance....................................................................................................................................5
Research Problem.......................................................................................................................................5
Literature Review........................................................................................................................................5
Research Model...........................................................................................................................................6
Social bonding.............................................................................................................................................7
Trust............................................................................................................................................................7
Promise fulfillment......................................................................................................................................8
Empathy......................................................................................................................................................8
Good Experience.........................................................................................................................................8
Customer Satisfaction..................................................................................................................................9
Measuring customer satisfaction:...........................................................................................................9
Research Variables....................................................................................................................................10
Research design.........................................................................................................................................10
Interview with Manager of Hearty Tours..................................................................................................10
Interview with Manager of San Giovanni Tours........................................................................................12
Interview with Manager of Lucky Tours....................................................................................................14
Interview with Manager of N.E.W. Tours..................................................................................................15
Conclusion.................................................................................................................................................16
References:................................................................................................................................................18
 Relationship Marketing Effects on
Customer Retentions for Travel Agencies

Introduction
Relationship marketing is about identifying, establishing, maintaining,
enhancing & when necessary terminating relationship with customers so that
the objective of both parties ate met (British food journal Vol.105 No. 10,
2003 pp.742-750)

"RM, the process of attaching maintaining and enhancing customer

relationships (berry 1983 has profoundly influenced marketing thoughts and
practice bringing about a paradigm shift for the field
(deighton,1996;gromroos, 1996; Parvatiyar & Sheth, 2000;
Gummesson,2002). From a review of the literature, it's suggested that real
benefits can be derived by consumers through engaging in relationship.
(Parvatiyar & Sheth, 1995), including confidence, social & special treatments
benefits while it would appear that organizational advantages would include
increased sales, lower cost, free word of mouth advertising & employee
retention (Parvatiyar & Sheth, 1995; Gwinner et el 1998)”

Especially in services it's also stated at the literature that specially in service
organization loyal customer, word-of-mouth communication to potential and
existing customers of the firm can be very influential in terms of gathering
new business (Dispensa 1997; Gremler and Brown 1990; Reichheld, 1996)
and helping to attract new customers (Zeithaml & Bitner, 1996), because
satisfied customers convey positive in messages about the company service
and personal recommendations are often taken most seriously in customer
purchase decisions(Gremler and Brown 1990) (stone et al 2000) also remind
us that satisfied customers can become powerful advocates for a company
new customers attracted by the company's' reputation would be likely to
generate revenues for the company
Some have calculated the degree of profitability and it has been found that
it's between 5 & 10 times more expensive to acquire a new customer than to
retain an existing one (Dawes and Swailes, 1997)

In the ever more competitive world of leisure and tourist attractions, travel
agencies need to focus sharply on customer satisfaction. Satisfied customers
are returning customers.

Indeed there has been a significant focus on customer care. Customer

service is only one component in the total customer experience. Customer
satisfaction depends upon the total customer experience. The total customer
experience will probably be different for each customer

Egyptian annual income from Tourism Industry is 14 million, it is also

expected that inbound tourist expenditure per head will increase by about
34.02% in 2011 as compared to 2006.

Europe is the primary source of tourism for Egypt, with Russian tourists
accounting for the largest share of arrivals from a single country at 14%,
followed by Germany and UK. But in coming years UK is expected become
the 2nd largest source of tourists for Egypt. It is expected that tourist
arrivals from China will remain influential throughout the forecasted period
(2007-2011),

Youth is generally considered to be the adopter of new products and

concepts. This provides the tourism industry with the opportunity to target
the younger age group because they are potential customers. It is expected
that the population aged between 15-64 years will constitute 64.4% of the
total population by 2011.

Increasing disposable income will open several opportunities for both the
outbound and domestic tourism. It is expected that Egypt per head
disposable income will increase at a CAGR of 4.71% for the period spanning
2007 to 2011.

As per a recently published report on Egypt Tourism Sector Egypt Tourism

Industry by 2013, despite the ongoing downturn faced by the tourism
industry around the world, tourist’s arrivals in Egypt will grow by over 12%
in coming years.
Hotel industry in Egypt is also expected to see high growth in coming years
with number of international hotel chains has already declared the expansion
plans or planning to expand in Egypt. Number of Hotel rooms is expected to
reach 400,000 in coming four years.

Organizations seek benefits in order develop a relationship with the

customers so that they would be able to create a competitive advantage.

Research Academic Importance

No research had been done in Egypt to provide more information about that
issue so we will feed people interested in that field to help them in their
studies

Practical Importance
What are the indicators that show that managers are going to conduct
relationship marketing?

Research Problem
To determine if travel agencies managers relaying on RM could be efficient in
the long run

Literature Review
''In the last two decades, Practitioners and Academics have focused ever
more on how firms relate to their markets. This has resulted in the
emergence of a sub discipline of marketing referred to as Relationship
Marketing. Morgan and Hunt (1994) defined Relationship marketing as the
marketing activities directed toward establishing, developing, and
maintaining successful relational exchanges.  The separation of the
producers from the users was a natural outcome of the industrial era. On the
one hand, mass production enforced producers to sell their product &
services through middlemen, and on the other, industrial organizations, due
to specialization of corporate functions, created specialist purchasing
departments and buyer professionals, thus separating the users from the
producers. However, today's technological advancements that allow
producers to interact directly with large numbers of buyers, and because of a
variety of organizational development processes, such as empowerment and
 total quality management programs, direct interface between producers and
customers is possible  in both consumer and industrial markets.  
Relationship marketing attempts to involve and integrate customers,
suppliers and other infrastructural partners into a firm's developmental and
marketing activities (McKenna 1991; Shani and Chalasani 1991). Wilson
(1995) summarized different relationship variables that affects the
relationship of firm with different stakeholders, those variables are
Commitment, Trust, Cooperation, Performance Satisfaction, Structural
Bonds, Comparison Level of Alternatives, Adaptation, Non-retrievable
Investments, Shared Technology, and Social Bonds. Morgan and Hunt
(1994), while discussing relationship variables focused more on commitment
and trust as a major variable affecting relationship between different parties
involved in marketing transaction & exchange.”

Research Model

Social
Bonding
Trust

Empathy
Successful
Affective
Relationship
Good Customer Marketing
Experience Satisfaction

Promise
Fulfillment
Figure 1: the Research Model

Research methodology
The objective of this study is to explore and analyze the key dimensions of
relationship marketing, there for the research will attempt to address the
following dimensions:

 Social Bonding
 Trust
 Promise Fulfillment
 Empathy
 Good Experience
 Customer Satisfaction

Social bonding
The social bond is an outgrowth of personal relationships that develop
between the parties involved from both the buyer and the seller
organization. The better the "personal fit" between the parties, the stronger
the social bonds are. Wilson (1995) explains that studies that have been
done on social bonding reveal that if a strong personal relationship develops
between the buyer and the seller, both parties will be more interested in
continuing the relationship. Focus groups that were undertaken by Berry and
Parasuraman (1991) and Cann (1994) emphasize the importance of a strong
personal link between the vendor firm and the customer, and the desire that
many customers have to form close relationships with the service provider.

Trust
Trust is one of the fundamental variables in the bonding process (Berry
1995). As Wilson (1995), and Morgan and Hunt (1994) point out, trust is
intrinsic in relationship building. It is important for the salesperson to build
trust early in the service experience. When making a purchase decision of an
intangible service, trust may be one of the few criteria available to help the
customer choose an alternative service provider (Berry 1995). This is
particularly true for business to business services marketing. Competition,
cost and the critical nature of a service marketed in the business to business
sector can create more of a need for the customer to trust in the sales
representative, who is the most immediate contact that the customer has
with the service provider. Trust develops over time, but once it has been
established between the two parties, it works as a catalyst to draw the two
parties continuously closer until they reach total commitment.

Promise fulfillment
Fulfillment of promise is seen as a core constraint in the relationship
philosophy it's one of the dimensions which determines if a relationship is to
continue or to terminate For example: if the promise made by the
organization is not fulfilled the full satisfaction of the customer then the
customer may terminate the relationship. Equally or instance the customer
fails to deliver on the promise of payment to the organization, then the
organization may terminate the relationship, therefore just making promises
is not enough but delivering on them by action is also very important "
Zineldin and Jonsson (2000) state that " trust and commitment between
business companies can only be built on actions rather than promises"(British
food journal Vol.105 No. 10, 2003 pp.742-750)

Empathy
Empathy from a Relationship Marketing point of view deals with an
understanding of customer’s expectations and is essential to success. If you
do not understand your customers, you cannot serve them successfully.
Customers must be understood, nurtured, and listened to. The appeal of RM
lies in the fact that customers can express their desires and concerns and
have them fulfilled or addressed. Relationship marketers must keep an open
ear to their customer base and communicate openly and honestly with them.

Good Experience
Relationship Marketing refers to a long-term and mutually beneficial arrangement
where both the buyer and seller have an interest in providing a more satisfying
exchange. This approach attempts to transcend the simple purchase-exchange process
with a customer to make more meaningful and richer contact by providing a more
holistic, personalized purchase, and uses the experience to create stronger ties.
According to Day R L (1984) a satisfied customer will return time and time again,
ensuring that one good experience becomes a lasting relationship between the
customer and the marketer. The key to this is being able to learn from the transaction.
At the very least the marketer knows about the customer's preferences, measurements,
etc.

The next time the customer is looking for a similar product or service, he or she is able
to save time by buying from the same place. The marketer is able to improve the
customer experience with the second transaction through the learning already gained.
Thus the second experience is better or easier than the first.

This continues with each added transaction. In the longer term it makes it increasingly
difficult for a competitor to attract this customer, as it will have a significant
disadvantage in the area of customer knowledge.

In service organizations such as travel agencies, good experience creates long term
relationship, loyalty and therefore retention.

Relationship marketing is about making a customer for life not just making a sale. It's
about connecting your passion in business with your perfect clients and customers and
giving them an enjoyable experience with your company.

Customer Satisfaction
Is simply known as the degree to which the customer’s expectations of a
product or service are met or even exceeded. Corporate and individual
customers may have widely differing reasons for purchasing a product or
service and therefore any measurement of satisfaction will need to be able
to take into account such differences. The quality of after-sales service can
also be a crucial factor in influencing any purchasing decision. More and
more companies are striving, not just for customer satisfaction, but for
customer delight, that extra bit of added value that may lead to increased
customer loyalty. Any extra added value, however, will need to be carefully
casted.

Measuring customer satisfaction:

Organizations need to retain existing customers while targeting non-
customers; Measuring customer satisfaction provides an indication of how
successful the organization is at providing products and/or services to the
marketplace. Customer satisfaction is an abstract concept and the actual
manifestation of the state of satisfaction will vary from person to person and
product/service to product/service. The state of satisfaction depends on a
number of both psychological and physical variables which correlate with
satisfaction behaviors such as return and recommend rate. The level of
satisfaction can also vary depending on other factors the customer, such as
other products against which the customer can compare the organization's
products.

Research Variables
Dependant variable: customer intention in the long run

Independent variable: Relationship marketing

Research design
Qualitative research, in depth semi structured interviews

Findings
Interview with Manager of Hearty Tours

1) What do you think about your customers?

Our customers, are the most valuable asset to us, some of them are very
loyal, they trust us, and always take our word for granted; some of them are
customers who come just to ask for the prices available, in order to compare
them with other travel agencies.

2) What offers do you provide your customers?

A lot of companies and organizations, ask for organized trips, whether in low
season demand, because as you know, the travel agencies main source of
demand is seasonal, sometimes they are really high, where we provide
competitive prices, and some where the season demands is really low,
where we do provide the lowest prices available.

3) What offers do you provide, do you think are the most influential to
your customers?

Offers with the lowest prices, because mainly the Egyptian customer is
always a price oriented but always keeping in regard the quality of the
service provided.

4) Who are your loyal customers? Why do you think they are retained?

Old customers who worked with the company for years, they are familiar to
the place, and who are used to the employees to form an empathy relation

5) What are your consumer preferences?

It depends on the customer type but mainly Luxor, Aswan, Hurghada, Sharm
El-Shiekh.

6) What Type of marketing research do you perform?

No, Never before

-why?

It’s costly, so I depend on my own personal analysis to my customers

7) What things are going to retain your customers?

Keeping on personal contact with them, always providing the best services
with competitive prices

8) After 3 years how would you see your company in its relationships
with customers?
We are trying to retain our loyal customers, attracting new customers,
extend with new branches to reach all customers and always trying to have
competitive advantage over others

9) What is the best campaign you can imagine attracting your

customers?

Advertising come at the 1st place, all kind of Ad. Especially El Wasset ,
because people always look for trips in El-Wasset and keep on comparing
offers from different agencies.

Interview with Manager of San Giovanni Tours

1) Do you classify your customers?

Loyal customers: who are familiar with the system.

On and off customers, who enjoy dealing with different travel agencies
Walk in customers,

2) What offers do you provide, do you think are the most influential to
your customers?

The lowest prices available along with the most suitable quality.

3) Who are your loyal customers? Why do you think they are retained

Old customers, they have dealt with the company since it began. They are
retained because they are used to working with our staff.

4) How much do you think your loyal customers contribute to your

company?

They regularly evaluate current performance; on that basis we develop our

strategic plans.
 What is the most effective strategy you would like to use to
develop relationships with your customers?

Branding & penetrating corporate market

5) How do you think travel agencies develop their relationship with their
customers? What’s your opinion on that matter?

Everybody does it in his own way, but no one can go on without creating
relationships with customers. They can spread a good word of mouth to
other potential customers.

6) What are your consumer preferences?

It varies from a consumer to the other according to preferences, some

enjoy going to the same place every year, and some would like to vary
from a place to the other.

7) What Type of marketing research do you perform?

Customer satisfaction surveys and evaluation forms.

8) What are you aiming to provide to your customers?

My main goal is keeping them satisfied, in addition to improving our

services as per advised from the survey analysis.

9) What things are going to retain your customers?

Meeting our customer’s expectation.

10) After 3 years how would you see your company in its
relationships with customers?

To be Alexandria market leader

- So what’s your current Market Share?

Can’t tell you specifically, but I’m one of the top five.
 11) What is the best campaign you can imagine attracting your
customers?

Depend on resources but most efficient tools that could be used

effectively by any agent whatever its size is the relationship marketing

Interview with Manager of Lucky Tours

1) What offers do you provide your customers?

A lot of offers are provided; to make it easier for the customer and that
includes all types of services provided which internal trips (Sharm El Sheikh,
Hurghada, etc.) and it mainly 4 days-3 nights, in various levels of hotels
according to what the customer can spend on a vacation. .Also external trips
(Malaysia, Tunisia, Beirut, and European countries) including plane tickets
and visa (which depends in the country itself) moreover hotel reservations.
In addition to Religious trips such as Omra, and Haj with different levels of
hotels all the customer has to do is to choose what suits him the most.

2) Who are your loyal customers? Why do you think they are retained?

They enjoy working with us, and they are treated in the best way possible,
and they do know the staff really well, and they are never worried from the
services we provide, they trust us

3) How much do you think your loyal customers contribute to your

company?

They help in increasing the revenue of the company, by increasing the

number of customers that come to us, by telling their friends, relatives
about the services we provide, which to sum it up increases our customers.

4) What are your consumer preferences?

According to the consumer himself, and how much he can spend on a trip
some do prefer staying at 5-star hotels, and prefer using a plane even if it’s
an internal trip, some prefer the lowest prices possible they don’t care about
the 5 star hotels, mainly according to what the customer can really spend on
a trip.

5) How do you meet your customer expectations? And to which extent

are you meeting them?
Any customer from any category must be satisfied through serving suitable
accommodation; including hotels, transportation & the program itself which
put the customer in a relaxed mood to enjoy his vacation

6) What Type of marketing research do you perform?

I don’t perform professional marketing research, only depend on my

personal analysis

7) What things are going to retain your customers?

Fulfilling what we mentioned to the customers, always trying to provide the

most accurate information to the customer, and respect.

8) After 3 years how would you see your company in its relationships
with customers?

Increasing the customer’s database in regards to also satisfying them all

making them into loyal customers, and finally increasing the relationships
with our customers.

9) What is the most effective strategy you would like to use to develop
relationships with your customers?

Attitude and respecting the customer treating them with empathy as much
as possible, the reputation of the company is one of the most important
things to a travel agency, mainly Branding.

10) What is the best campaign you can imagine attracting your
customers?

Sales personals and El-Waseet ads. The flyers that are distributed are not
that effective rarely does it bring in customers.

Interview with Manager of N.E.W. Tours

1) What do you think about your customer?

I can't rely on my marketing activities nor can location, so building strong

relationship is the most I depend on to run my business

2) Do you classify your customers?

  Individuals: Families & youth
 Corporate

3) What offers do you provide, are the most attractive to get

your customers?
(Repeated purchases/regular purchases)
 Ticket rates
 Hotel reservation

4) How much do you think of your customers?

 50% customer database
 30% club trips, but their loyalty goes for the their club
 20% Wasset offer and others

5) How do you meet your customer expectations?

 Try to offer competitive price
 Tailor made trips

6) What Type of marketing research do you perform?

 I don't perform any marketing research

7) After 3 years how would you see your company?

 Expansion at the company size (number of employees)
 Better location
Better ROI so I can invest more at the company capital

Conclusion:
These examples explained how different travel agencies managers think about their
companies’ position among similar agencies, about their customers, and finally
about the strategy they are following to run their business.

As we noticed, they rely with a huge percentage on public relations, maintaining

long good relationship with customers, trying to satisfy their loyal customers by
providing them with the best offers they could offer and trying to attract new
customers mainly through either old loyal customers or word of mouth or offers in
local newspapers such as El-Wasseet. They all agree that people in Egypt are price
sensitive and seeking the best expected quality with the lowest possible price,
which make this industry very competitive and depends to a great extent on Trust.
Also, they all agree that advertising is costly and they prefer to rely on public
relations and personal analysis, i.e: relationship marketing which is true to some
extent because it is responsible for building strong long term relationships, social
bonding and most of all Trust. Also good experience enhances the relation and
makes the customers loyal then by maintaining this relationship, customers retain
forever.

Providing the best service quality with a low/reasonable price is a hard work, it
needs an effort to maintain stability in both edges and end up with customer
satisfaction , so it needs from the agency side to create a kind of social bonding,
empathy, which consists of developing and enhancing consumer loyalty which
results directly in feelings of affection, a sense of belonging, and seeing someone
else’s point of view, in addition to always fulfill promises and always make a
memory about good experience lasts , if you succeeded in creating this, you will
definitely be trustworthy to your customers and they will be satisfied and a satisfied
customers can be easily turned to a loyal one.

Also, mutual understanding and transparency should be there between the agency
and the customers, for example: as they said, they divide the customers into types,
each with similar preferences. There are the customers who are willing to pay
premium price to enjoy their trip to the maximum and have a 5stars stay and a
luxury surrounding, and there are the customers who prefer to enjoy an average
stay with an average price and there are the customers (specially youth) who
prefer paying the lowest possible price despite staying in a 2stars hotel for
example. So by understanding the difference between each and every customer by
knowing their preferences and try to personalize the service, we can get much
more satisfied customers and therefore loyal, these customers afterwards, can get
by the agency they had good experience with several personalized offers that
match their preferences through direct mail, e-mail or telephone which enhance
building good relations among the agency and the customers.

So basically , this industry really depends on relationship marketing to a great

extent, but to guarantee the effectiveness and efficiency of this strategy , travel
agencies manager needs to give attention to marketing research , advertising , and
more professional public relations tools , such as sponsoring events, participating in
different travel and tourism seminars…etc

Also, they should consider the ROI, which means that by investing in useful
marketing research and qualified advertisement, the return they could get will
exceed the cost they will bear.

By implementing enhanced relationship marketing, sides, the organization and the

customers will benefit. The benefits to customers are good relationships with
employees and therefore the whole entity, special treatments, greater confidence
and personalized service. As for the organization, the benefits are reduced costs in
term of marketing, more loyal customers, less threat from the competition, new
potential base of customers that can be transferred to loyal customers.

References:
(British food journal Vol.105 No. 10, 2003 pp.742-750)

SERVICES RELATIONSHIP MARKETING: SOCIAL BONDING IN THE SERVICE

ENCOUNTER

Cynthia W. Cann, University of Scranton, Delia A. Sumrall, University of Scranton

Kunal Gaurav Research Scholar Icfai Institute for Management Teachers,Hyderabad