Hotel industry customer relationship management.

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Customer relationship management (CRM) has unquestionably recently taken center stage in the commercial world. It is important to note that CRM is primarily founded on the conviction that forging a lasting relationship with customers is the key to securing devoted clients who are significantly more profitable to the company (Jopline, 2001). The firms will gain a lot from the effective CRM strategy implementation. Using market segmentation to increase customer sales, gaining better products, and ensuring client loyalty are some advantages of CRM (Jopline, 2001). The implications of customer relationship management (CRM) on customer satisfaction in the hotel business are therefore covered in this essay. This paper also discussing the importance of customer relationship management (CRM), and the Challenges CRM in the Hotel industry.

Effects of customer relationship management (CRM) on customer satisfaction in the hotel industry.

There are number of effects of customer relationship management (CRM) on customer satisfaction in the hotel industry. For instance, CRM will help the Hotel industry to understand customers’ expectations (Jopline, 2001). Therefore, CRM will the Hotel industry to able to understand the needs of their customers thereby supply their customers with goods and services that meet their expectations. Partnership is another effect of CRM which is created when Hotel industry work closely with customers through adding desired services to their traditional services and products (Jopline, 2001). Another effect of CRM is empowerment. Empowerment refers to as the process which the Hotel industry adapt to encourages its employees to go extra mile in helping customers to solve their problems. Personalization is another benefit of CRM on customer satisfaction in the hotel industry. Personalization is defined as act of assigning one business representative to every customer and developing unique product for a specific customer, according to Eid & Riyad (2012).

Another effect of CRM on customer satisfaction in Hotel industry is Loyalty. Loyal development encompasses building sustaining relationship with customers which result in repeated purchase of services and products over a given period of time (Hill, 2001). Loyal customers will demonstrate their loyalty by increasing the number of purchases. Loyal customers can as well choose to stay with a given the Hotel industry, according to Eid & Riyad (2012). Therefore, CRM will impact customer loyalty to cause them to get more products and services hotel industry. Interactive management is another effect of CRM on customer satisfaction in the Hotel industry. Interactive management is implemented through customer feedback (Eid, Riyad 2012).

Another effect of CRM on customer satisfaction in Hotel industry is affective commitment. CRM will enble hotel industry to attain affective commitment on their customers thereby retaining the existing customers (Hill, 2001).. However, commitment is defined as the extent to which parties involve would be willing to continue valuing the existing relationship (Nazir, Khan, Jamil & Mehmood, 2014). The main component of commitment that is important to the hotel industry is psychological attachment which is based on affiliation and loyalty of both parties who are involve in a relationship. Affective commitment of CRM will positively affect customer retention since it will greatly improve customer loyalty to the hotel industry (Colgate & Smith,2004). Affective commitment will also help the Hotel industry to improve customer share development. Relationship marketing theory posits that because effectively commitment customers believe that they are connect to the firm. As a consequence, effectively commitment customers are likely to patronize other firms. In other word, committed customers are likely to increase their customer share for the focal supplier over a period of time.

Another effect of the CRM is customers’ satisfaction. Satisfaction is the emotional state that occurs as a result of interaction of customer with the hotel industry over time (Nazir, Khan, Jamil & Mehmood, 2014). Satisfaction will also the Hotel industry to retain the existing customer. Researchers show that satisfaction affects customer retention. The underlying rationale is that customers aim to maximize the subjective utility they obtain from a particular hotel industry. However, this depend on the satisfaction level of a given customer. Therefore, customers who are more satisfied are more likely to remain loyal to Hotel industry (Colgate &Smith, 2004). Payment equity is another effect of Customer relationship management. Payment equity is defined as perceived fairness of the price paid for the products and services of Hotel industry. Payment equity is mainly determined by the pricing policy of the Hotel industry. Higher payment equity leads to greater perceived utility and customers are more likely to be retain by the Hotel industry.

Importance of customer relationship management (CRM)

Hotel industry will enjoy the following customer relationship management benefits:

Increase profitability

A CRM will help the Hotel industry to improve profitability by building and maintaining strong relationships with their existing customers. Hotel industry will therefore save money which was supposed to be used in marketing for reaching new customers. Baran & Galka (2013) assert that is more expensive to acquire new customer than to retain an existing one. Therefore, retaining an existing customer should be hotel industry’s primary goal since will be lead to a reduction in their marketing spend, which ultimately means more profit for their hotel industry (Baran & Galka, 2013).

CRM solutions will help hotel industry to maintain relationship with customers since they understand their customers’ needs when they need it. Hotel industry will get to know the needs of their customers through analyzing of data collected from relevant sources. Enquiries will also help the hotel industry to strategically target certain products and services to the prospective customers. Consequently, the industry will be to make a follow call to prospect or customers to offer those services or product. This continual follow up on prospect and customers will eventually lead increase in sale. Therefore, nurturing existing relationship with customers will lead to increase in sale and thus increase in revenue. It is also equally important to build new relationship with prospects so as to realize additional revenue.

Increase productivity

CRM will increase productivity of hotel industry through its automation components. CRM will automate manual data input and search through various files when there is a need for a specific information (Harrison , 2000). Therefore, an industry will be able acquire the information which they desire by just a click of button thus eliminating the need to manually search through various documents to find the required data needed, as it will be in one place( Harrison, 2000).. CRM will also simplify report generation across various databases thus eliminating the need of different teams to create report for themselves. CRM will therefore lead to better time utilization, which will eventually lead to increase in hotel industry productivity (Baran & Galka, 2013).

Macdonald, S (2017), 12 Amazing CRM Charts You Don’t Want To Miss,

Improve customer service

A CRM strategy will assist a sale team to follow up leads in real time, as and when they come in. A CRM is key in giving alerts when a lead or customer needs follow up thereby enabling sales team to nurture a relationship with their prospects and customers (CityAM, 2006).These reminders are vital to an organization contacting their prospects and customers at the right time without delay. Simple features like screen alerts and instant customer engagement within a CRM solution will greatly help hotel industry in improving customer service (CityAM, 2006). The sales team will be able to know who is calling, and will also able to gather relevant information require to increase customer engagement and satisfaction. Real-time customer engagement involves giving existing customer an experience as personal as possible. Therefore, keeping update information about the customer will enable hotel industry to deepen an existing relationship, and also make prospects to feel like they understand their hotel industry. Improved experiences

CRM system will assist in building good relationships hotel’s customers so that they can enjoy have good experiences when interacting with the hotel’s products. In other words, CRM will help in updating the hotel industry on the experiences that the customers are having with their products (Ang & Buttle2006). CRM will also assist hotel industry to react to these need through implementing appropriate systems. For instance, Hotel industry can use digital marketing services to ensure that both negative and positive customer experiences are handled effectively. Therefore, CRM plays a key role in nurturing experiences so as to improve customer loyalty, and ensure the reputation of hotel’s brand name and image (Nazir, Khan, Jamil & Mehmood, 2014).

New customer

Apart from nurturing the relationship with existing customers, CRM also help in gaining new customers, and converting potential customer in new and returning customers (Ang & Buttle2006). CRM system will assist the hotel industry to identify potential customers who have interest in their products. Hotel industry will therefore focus their marketing efforts on engaging with these prospects.

Reputation management

Hotel industry can build good reputation by satisfying their customer’s needs. The industry can as well manage their reputation through solving problems of their customers, and also by ensuring that their customers have a great experience about their products, according to Baran & Galka (2013).

Macdonald, S (2017), 12 Amazing CRM Charts You Don’t Want To Miss,

Challenges CRM in hotel industry

There are four main challenges which facing the hotel industry in implementing customer relationship management.

Lack of senior management sponsorship

In most Hotel industry, CRM system is solely driven by IT teams without the support of senior management. Senior management may fail to sponsor CRM due to lack of clear benefits of CRM to the Hotel industry (Ang & Buttle2006). Senior management may also lack understanding of change management which are outlined in the CRM. Therefore, CRM will fail due to lack of the senior management effort to enforce CRM adoption in their Hotel industry (Taylor & Francis, 2017).

Lack of the scope clarity and finances

Lack of the scope clarity is the major challenge facing Hotel industry. For instance, hotel industry may have no scope clarity on the amount of customers’ information to be collected and stored in CRM (Karakostas, Kardars & Papathanassiou, 2004). This may result into collecting jungle of customers’ data which may not be useful to the hotel industry. Failure to commit adequate time and budget in the CRM implementation may also pose a very big challenge. Underestimation of infrastructure, implementation and customization cost also pose a big challenge to hotel industry. Also, end-user may resist especially when there is lack of scope clarity on CRM (Nazir, Khan, Jamil & Mehmood, 2014).

Abrupt changes of the key stakeholders in the middle of the project

Hotel industry may have difficulties in implementing CRM when there are some changes in the key stakeholders in the middle of the project (Buttle, 2004). For instance, there may be arrival of new Hotel industry manager who has a different vision of CRM. There may also changes in the Hotel industry where team members are exiting from the industry or changing roles or departments (Brian, 2001). Therefore, these changes should not be tolerated in the middle of CRM implementation since they will adversely affect its implementation.

Lack of expertise of the CRM vendor

 Lack of expertise of the CRM vendor may adversely affect the CRM implementation in the Hotel industry especially where the industry has no IT professional (Buttle, 2004). This is because vendor usually do not have adequate experience with the CRM product being implemented. In addition, most vendors do not have right technology of CRM projects. Moreover, most vendors are not fully equip with challenges in CRM implementation, therefore they are ill-prepared to anticipate and deal with these challenges adequately (Taylor & Francis, 2017).

Macdonald, S (2017), 12 Amazing CRM Charts You Don’t Want To Miss,

Lack of CRM product fit

CRM usually cannot support multiple deployment options such as on premise, public cloud and on private cloud. In addition, CRM is not highly flexible for deeper customizations to enable it fit within hotel industry’s growing and changing needs (Brian, 2001). CRM is also not user-friendly, thereby hindering user adoption.

Integration-related issues

Hotel industry may have existing legacy systems which do not support modern website services which are required by CRM. Therefore, lack of support of vendors of existing systems may adversely affect the implementation of CRM system since integration of legacy system and CRM will not be possible.

Infrastructure related issues

Hotel industry may go for CRM On-Premise or CRM On-Cloud (Taylor & Francis, 2017). However, all these infrastructure options have unique challenges. For instance, when hotel industry choose FRM On-Cloud option, they will lack complete control of their data which are hosted on the cloud ( Brian, 2001). In addition, the industry may also lack accurate estimate cost of scaling up on cloud. On the other hand, there are other challenges which are related with the CRM On-Premise implementation. For example, Hotel industry will need more funds to set up high-availability and secure CRM which may just lead to cost overruns.

Impact on existing Hotel industry’ s processes

There are a number of CRM effects on the existing Hotel industry’s processes which may adversely affect the implementation of CRM in Hotel industry. For instance, lack of flexibility on ways of doing things will make impossible to adopting CRM, according to Nazir, Khan, Jamil & Mehmood (2014).

Lack of guidance

More than 60 percent of companies that have implemented CRM did not have predefined goal for their projects prior to the installation, according to the Gartner. Therefore, project manager should choose the best business case of CRM before identifying the relevant upgrading software and a vendor (Taylor & Francis, 2017). Project manager should consider automating processes that will improve user productivity and boost customer satisfaction. After deciding on a project, create a phased implementation plan

Lack of accountability

There is unwillingness in senior management to assign accountability to project managers. Since CRM success depend on the accountability, top management should therefore be willing to assign accountability to their project managers. Otherwise if accountability is not taken at the senior management level, then CRM will be likely to fail. According to Copulsky, accountability and compensation and some of forward forces for pushing CRM to succeed. Copulky also suggest that giving project ownership to one individual is the best approach for project success. Therefore, if the Hotel industry yearn for success, then they should identify a single project manager who will owns both pieces of the project, and can then drive change on the IT and business side of the industry, (Nazir, Khan, Jamil & Mehmood, 2014).


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Baran, R., Galka, J. (2013). CRM: The Foundation of Contemporary Marketing Strategy. Routledge.

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February 22, 2023

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