Until recent years, relationship management has been largely ignored by most industries outside the service sector. Classical marketing theory and practice has focused on customer acquisition rather than customer retention. However, due to the intrinsic nature of the service industry, customer relationships are critical to ensure customer loyalty. This is especially true of the hospitality industry, where relationships create more value for the customer than factors like price and product features, and therefore enhances the lifetime value of the customer to the organization. The leading hotel brands have always made the effort to go beyond customer satisfaction and ensure value through relationships rather than transactions, resulting in high levels of customer delight and subsequently, loyalty.
Traditionally, strategies for growth in revenue, branding, positioning and profitability have all been developed with the primary objective of increasing market share through a focus on customer acquisition rather than the consolidation of existing customer relationships. There has also been a belief among most organizations that since their organizations are not in direct contact with the eventual consumer, the customer relationship is not directly relevant to increasing market share; the equity and positioning of the brand will lead to greater market share.
While this approach has its merits, there is a realization today that customer retention is more profitable than customer acquisition.
It is also being increasingly recognized that loyal customers buy more often and more per transaction, pay premiums more willingly and are more likely to recommend the product or service to others.
These findings recognize the philosophy of the service industry, in particular, the hospitality industry, which has traditionally followed the principles of customer relationship management.
[...] Effective CRM goes beyond service; it involves implementing systems and processes to ensure that the marketing process promises, builds an environment for effective delivery, and finally delivery the promise in a manner that exceeds the customer's expectation, thus adding value and building the relationship All employees are involved in initiating and building relationships with customers: relationship building is not restricted to sales and marketing personnel. Sometimes customer contact employees may initiate the relationship The relationship goes beyond databases and customer preferences: It involves the use of this information to not only target customers with appropriate product, but also to create value for the customer through customization It is important to be consistent in both the service offering as well as the service delivery in order to build the relationship. [...]
[...] The key to CRM in the hospitality industry is the presence of satisfiers as defined earlier. The tangible elements of the hospitality product are manifested in the core benefits and hygiene factors, which are necessary conditions in order to eliminate customer dissatisfaction. But it is really the satisfiers that create value for the customer. Satisfiers are often intangible in nature and can be critical in building relationships and loyalty. The tangible elements can often be duplicated by competition, and do not sustain competitive advantage over other hotel brands. [...]
[...] Customer needs make it imperative for marketer's interest in the business of companies who are global to adopt CRM program, particularly global account management program. Global account management (GAM) is consequently similar to the national account a management programs except they have to be global in scope thus they are more complex. Managing customer relationship around the world calls for the external and internal partnering activities, including partnering across a firm's worldwide organization, in other word, a global relationship of sort. [...]
[...] In addition to this, a number of key marketing concepts can also be used to see where CRM has developed from: Satisfying needs, customer orientation. The organization needs to be arranged so that all functions contribute Profit must be the consequence of delighting customers. It is possible to draw further information from the definition of marketing and direct marketing. MARKETING “Determining the need and wants of target markets and delivering the desired satisfactions more efficiently and effectively than the competition.” DIRECT MARKETING planned recording, analysis and tracking of customers direct response behavior over time . [...]
[...] USE OF TECHNOLOGY IN CRM The application of technology is the most exciting, fastest growing, and changing the way customers get information about products and services. Technology includes all of the equipment, software, and communication links that organizations use to enable or improve their processes, including everything from simple overhead transparency projectors to laptop computers, from fax machines to e-mail, from audiocassette and videocassette players to cellular phones and voice mail. The most widely used tools are explained below. Sales force automation: These systems help in automating and optimizing sales processes to shorten the sales cycle and increase sales productivity. [...]
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