Client Resource Management in Hospitality Management - Article Example

?The importance of CRM in hospitality management. The ancient philosophy of the marketing and business predominantly relies on satisfying the buyers of the products. In recent business environment the customers have become the main factor to be taken very seriously. Customer relation and customer loyalty programs have become a great marketing and promotional tools in the hospitality business. Among the seven Ps of service marketing mix, the Physical evidence (one of the seven Ps) of the service is very important. This particular paper will discuss all the important factors in the hospitality industry for a strong and sustainable customer relationship management. Introduction: The legendary question in the history of the business management is how to satisfy the customers. It is very obvious to understand that customer is the king in any business as the customers are the vital factor in the business that generates the revenue for the company. The customer’s perception and attitude towards the services provided by the hospitality industry are the vital factors. The customer loyalty programs are very much vital for this industry mainly for the hotels, in most of the hotels the loyalty programs run as these hotels want their customer to be happy and the lingering effect of the loyalty programs will get back the customers in the hotel in the near future. Part A: The correlation between the CRM and hospitality management: It is very important to understand that customer relationship management and the hospitality industry are closely related to each other and they are the supplementary factors for each other for a successful business environment. It very important to understanding that service products are not the tangible product it is strictly intangible product. People don’t get the feeling of the product while they are buying the product they get the actual feelings of the product while they pursue the service and that is the reason the presales customer relation management is very much important for the hospitality industry. All the major hotels in the world follow the strict regulations of the long term customer relationship management. The loyalty is a factor which enables the customer to buy a product in repeated manner. There are some factors are related in this context to support the power of loyalty and they are trustworthiness, dependability, allegiance, devotion and excellence. The loyalty programs are the reason for the Starbucks to pull the same old customer for repeated time. The hospitality industry is surviving on these loyalty programs as the cost of acquiring new customer is high so retention of a customer would lower down many recurring costs. The hotel industry works with three main functional entities and they are the owner of the hotel, the management team and the brand itself. The proper alignment of the interest towards the betterment of the service is the main motto of all of these three parties. Most of the time these parties don’t want to share the customer data related to their own department and that leads toward the malfunctioning of the whole system. Most of the big hotels use CRM software to maintain the customer database. Mainly for the hotels who are having multiple locations, they use centralized CRM which is been used from the head office. Monitoring the existing customer database in very much important for the further improvement of the system. CRM is the cross functional management philosophy that focuses on reconfiguration of the activities of the firms towards their customers. The CRM and marketing management are different in many aspects. The marketing activity can be a small time promotional activity but, the customer relation management is a long term process to satisfy the existing customer. CRM focuses on maximizing revenues where marketing focuses on brand building and other activities for the future sales. The betterment of the business relies on a strong interpersonal relationship with the customers. The proper CRM (Customer Relation Management) should be practiced within the organization. The best customer relation can be maintained with the help of trust and commitment. To maintain a lingering relation with the customer some value addition is required only selling of product does not fetch the loyalty of the customers. There are some points to be remembered as the most important facts and they are details of the transactions made by the customer. That is, the history of the purchase details. Customer contact should be recorded and filed properly and the customer care department should be in touch with the clients. Customer preferences should be given a great importance. The proper customer database would give the better picture towards the improvement of the marketing approaches towards the better customer relation. There are many CRM software are available in the market to practice proper customer relation. The CRM (Customer Relation Management) is basically the processes through which a business of an organization can analyzes its prospective customers and their needs and makes changes accordingly to the marketing strategy to upgrade the sales and the customer satisfaction as mentioned by Shanmugasundaram (2008). These software would help the company to run the customer based campaigns to strengthen the customer relation. The greetings and newsletters are the best and proper way to provoke the customers to get attracted towards the services and new products. Pampering the existing customer should be the best way to win the minds of the customers. The hospitality industry must have the CRM software which can identify the frequent customers and send the greeting on their birthday, anniversaries, and in any other seasonal occasions automatically. These approaches will make the customers happy and the reminder effect about the service would stimulate them to buy the service again. The CRM and the Information Technology: Customer relation management is a great virtue towards the betterment of the business process. However, without a proper information technology and the proper applications of the software the improvements are merely impossible. The realization of the infrastructure which enables the customers and the management team or the organization to have effective communication has become a great priority for the hospitality industry. The CRM department and the organizations are privileged with the advancement of the information technology related to the hospitality industry. Most of the cases the IT department is an in-house department in the big hotels or in big restaurant chains. Marketing and CRM: Marketing is the presales activity that generates sales. However, marketing is a vast subject and there are many factors involved in the marketing process. Specifically for the hospitality industry the products are strictly service based. And the marketing activities are basically focused on customer satisfaction. The loyalty programs definitely differs in different service based market but in the recent time some successful loyalty programs which were used in some other sector in the past are getting used in the other sector. Most of the interactive marketing activities must be focused on few interactive approaches and they are stated bellow Brand equity: brand equity is an intangible value of the brand in the customers mind. The specific company of the hospitality industry must understand the value of the brands in the customers mind. The value of the brand equity must be in the higher side in the customer’s mind. So that he or she can choose the specific brand undoubtedly. Physical evidence of the products: the service is an intangible product while they are getting sold off. The physical evidence of the product must be created wisely while the product is getting sold off. The primary approach towards the customers must be very soothing so the customer would feel confidant to buy the product. Post sales services: it is very important to infuse the lingering effect of the services in the customer’s mind for the future sales and that is the reason the post sales services are very much important. Most of the hotels and restaurants must record the database of the customers to provide post sales services like sending greetings or small gifts on the specific occasions to the customers. Value added services: value added services are very much important. if the extra value is added with the service as a compliment to the customers then the customers feels the extra services and with these value added services the customers can discriminate the specific company in the preferable position. Some of the value added services would be complimentary restaurant voucher. Complimentary spa packages etc. most of the airlines company can provide the complimentary spa packages as after the long journey if the customers get one executive massage free, it would make the customer the ultimate satisfied buyer. Part B: Methodologies: Marketing initiatives toward proper CRM: The customer relation is the core area in the hospitality industry. Marketing initiatives are very much important. There are many kinds of tools in the marketing management which can be used to satisfy the existing customers and to provoke the new customers to get attracted towards the services. According to Ed (2008) the information technology is pretty much high on the agenda of most of the companies for the betterment of the customer relationship management. According to Rutherford and O’Fallon (2007) the hotel industry works with three main parties and they are the owner of the hotel, the management team and the brand itself. As per Brink & Berndt (2009) the customer database should be maintained to get a proper customer relation for a longer time. According to Kincaid (2003) the information technology and the software are the integrated factors attached with the CRM within the organization. Few of the effective tools for proper marketing initiatives are described below. Strong customer service: Customer service is one of the main functions in the service oriented industry. Without a proper customer service the growth in this competitive market is impossible. Soft spoken customer executives have become the voice of the industry. According to Zemke (1999) the customer service not just handling the transactions properly it is about creating a positive bond with the customers who are very much essential for the business. Customer service can be managed by emails, phones and fax. Most of the cases the telephonic customer service is the main functional communication process. The customer executive of any hospitality industry should be trained as such that they pick up the customer’s call within the first three rings. And the listening power of the executive should be very good. The query solving ability must be there within the behavioral traits of the executive. The main motto must the ultimate satisfaction of the customer’s query. As mentioned by Schafer (2007) maintaining a strong relation with the prospective clients is very important for the betterment of the business. Facility Cards: One of the most important questions in the industry is how to retain the existing customers. Many companies have tried many options. However, the facility card is one of the most appreciated initiatives taken by many service based companies in UK and in the other part of the world. These facility cards are sometimes developed by some third party organizations that develop the bonding between many companies to provide facility to the customers. As mentioned in the book of Buttle (2008) Nectar is an example of the facility card. It is basically a loyalty card where a customer will get many offers and discounts in many top grade service stations like Debenhams, Sainsbury’s, and many other hotels and restaurants. Shoppers need to register with the specific schemes to get the facility in many hotels, spas, restaurants and in many other retail stores. As per this facility card the customer accumulates points every time he or she pursue the services from the specific hotels or restaurants, and these Nectar points can be converted to many offers and discounts. These cards provoke the customers to spend more towards the specific products. And the associated brands and company get competitive advantages over the other competitors for providing some value added services to their customers. Loyalty card: Loyalty programs are basically to stimulate the frequent buying habit of the customers. The loyalty cards are basically the cards which generate sales with ultimate customer satisfaction. Most of the Airlines Company and other companies in the hospitality industry use loyalty card for their frequent buyers. However, sometimes loyalty cards does not work to generate new customers as some of the customers are very much loyal to their existing brands and they don’t look for any discounts but the best quality and services. As mentioned by Labm et al (2008) a research conducted by Gartner found more than seventy five percent of the consumers having loyalty cards in US. On top of this US companies spend more than $ 1.2 billion towards the loyalty programs every year and it is expected to get increased in the near future. The main objective of the loyalty programs is to retain the customers and to build a long term relation with the customers. The firms are getting more and more affectionate with these loyalty programs and at the same time firms are increasingly segregating customers based on their status and level of commitment. There are many classes of loyalty cards are there in today’s market and they are platinum class, gold class, silver class etc. All of these segmentations are created to segregate the customer’s status. This is very important to create the well-defined classes to run a proper loyalty program. The benefits of these loyalty programs are mainly tangible as well as intangible. According to Gilbert, Giesler and Morris (1995) the status matters as the need to compare one’s self with others is very much pervasive and mostly occurs whether or not individuals intend to do so. According to Brooks, (2010) trustworthiness, dependability, allegiance, devotion and excellence are the factors which are deeply associated with the loyalty programs. According the to the study of P.C. Verhoef on effects of the customer relationship marketing instruments (RMIS) on customer retention and consumer share development over the time there are two kinds of loyalty programs one is the loyalty program which provide money incentives such as rewards and price discounts to the customers and other one is the loyalty programs which provide personal touch by providing social benefits. Verhoef found loyalty programs are beneficial in two ways. Firstly they lengthen the customer relation and second they enhance the customer share. Verhoef also checked that the loyalty programs related to the financial or economic discounts are more effective in case of customer retention; these have been mentioned in the book of Baran, Galka & Strunk (2007). It is been proven that loyal customers buy more than the other customers and the hospitality industry gets most of the profits from these loyal customers who buy the services or the service oriented products repeatedly from the same company. It is very much easy to understand that the repeating customers generate more profit. According to Van Bennekom, (2002) the loyal customers are the real buyers of the products in the long term basis. Once upon a time exclusive loyalty programs like status programs used to run in airlines now exists in hotel chains for an example Starwood, in casinos like Harrah’s, cruise lines like regent, spas like Spa Chakra etc (Feeling Superior: The Impact of Loyalty Program Structure on Consumers’Perceptions of Status Nd). These loyalty programs are supported by the effective customer relation management system. Without the proper database management system these loyalty programs cannot be executed properly. Co-branding and cross promotions: According to Prideaux, Moscardo and Laws (2006) co-branding in the hospitality industry has a great future. Due to the increasing cost for advertising and marketing many brands are coming together to satisfy their customers mutually. The cross promotional activities help the companies to increase the fool falls and to increase the consumer awareness for high volume of sales. According to Prideaux, Moscardo and Laws (2006) the co-branding stimulated the enthusiasms of the consumers for frequent purchase and the result of this was more than 400 units of Co-branding in USA. The future of the Customer Relation marketing in Hospitality industry: It has been understood by most of the companies in the hospitality industry that customer is the king. The customers need to get satisfied to generate more sales. The word of mouth promotion is the best way to win the trust of the customers and for that the customer relation management must be taken seriously in the near future in most of the hotels, restaurants and in most of the airlines companies. According to Kanki, Helmreich and Anca (2010) the barrier for the proper CRM is the proper funding for the suitable programs related to the customer relationship. If the CRM is not taken seriously then the hospitality industry would get a bad punch from the market. Conclusion: From this study it has been cleared that in today’s business scenario mainly in the service industry, the customer relation has become a great virtue. The loyalty programs are far more effective than that of expensive marketing and advertising campaigns. Most of the hotels, cafe and restaurants are giving loyalty cards to the customers so that they come back again. And these loyalty cards act like a reminder effect to the customer while they are away from the hotel or the restaurant. However, some loyalty programs did not work so well and mainly those loyalty programs which did not have any financial discounts. But the overall effect of the loyalty programs is pretty much positive and long lasting. The customer will always feel good to get some value added with the services to feel the extra privilege given by the service provider. However, the proper investment and proper tools should be used to get the ultimate result in the term of profit and brand building. References: Baran Roger J, Galka Roger J & Strunk Daniel P. (2007) “The principle of customer relationship management”. Stamford: Cengage Learning Brink A & Berndt A. 2009. “Relationship Marketing and Customer Relationship Management”. Claremont: Juta and Company Ltd Brooks R L. 2010. “The Power of Loyalty: 10 Essential Steps to Build a Successful Customer Loyalty Strategy”. New York: Entrepreneur Press. Buttle F. 2008. “Customer Relationship Management”. Massachusetts: Butterworth-Heinemann. Ed P. 2008. “Customer Relationship Management”. New Delhi: Pearson Education India. Gilbert, Daniel T., R. Brian Giesler, and Kathryn A. Morris (1995), “When Comparisons Arise,”Journal of Personality and Social Psychology, 69 (2), 227-36. Kanki B G, Helmreich R L and Anca J. 2010. “Crew Resource Management”. Missouri: Academic Press. 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