1 International Journal of Management Academy (2013), 1 (2): Received: October 2013 Accepted: November 2013 Copyright 2013 by IJOMA Original Article Investigation The Effectiveness Of Customer Relationship Management Factors In Isfahan Tourism And Travel Agencies Nazanin Taghipoor Management Department of Sheikhbahaee University, Isfahan, Iran. Abstract The aim of this study is assessing the effectiveness of Customer Relationship Management factors in Isfahan tourism and travel agencies by Structural Equation Modeling (SEM). It is practical according to the goal and it s a kind of descriptive survey in terms of methodology. Research population included all of staffs and managers at tourism and travel agencies in Isfahan in 2012 that 274 of them were selected as research sample through Cochran s formula and the return rate of questionnaires was 93%. Data analysis has been done by SPSS20 and AMOS20 softwares. Results showed that the model in this research in terms of fit model indexes, is a decent model for assessing the condition of customer relationship management in Isfahan travel and tourism agencies. Also findings showed that all factors of customer relationship management are effective. Findings lead to better understanding of behavioral mechanisms which is an acceptable fundamental for maintaining and improving customer relationship management in tourism industry. Keywords: Customer Relationship Management, Key customer focus, CRM organization, Knowledge management, Technology-based CRM. Introduction With the Improvement of communication, the evolution of the information age and the advent of new communication tools, organizations face with multitude of different clients and also customers have lots of different choices which leads to increase the power of customers decisions and market fluctuation. In such situation, management thinkers prescribe customers retention and correct ways of dealing with them as Customer Relationship Management (CRM) which leads to increase the revenue, and decrease the distribution and sales costs (Elahi and Heidari,2008). Due to the fact that customer expectations have raised recently, * Corresponding author: customer relationship management is a necessity in today s customer-oriented business conditions (Thompson et al., 2006). CRM as a customer-oriented approach is a key factor in the success of new strategies in many business environments, including the tourism industry. In tourism, the costumers use such ways as Web (Internet, web sites, selfservice web site), mobile (as suggested tour through SMS), (auto responder), digital camera (pictures of tourism places), self-service kiosks to keep their relationship with the agency. For example a tourist enters a web site and visits tourism places (in the form of pictures, maps, movies and etc) and chooses a tour based on CRM approach (Rezaiyan and monfared,2007). Despite of the widespread use of CRM in tourism industry, there is limited literature and research about capturing this context and practices
2 Figure 1. Four behavioural dimensions of CRM. in this growing field of traveling and tourism industry. Customer relationship management has not been adequately studied by researchers yet. Most of the published researches on travel and tourism focuses on destination instead of business-oriented and special implementation which CRM is intended to employ (Vogt, 2011). In this study effective factors of customer relationship management has been studied in travel and tourism agencies in Isfahan. The theoretical background has been investigated further in this article and then the methodology has been presented. In the next section, the results of data analysis has been expressed, and finally the conclusions and recommendations are discussed. Theoretical background Customer Relationship Management Customer relationship management is an important concept in the tourism industry and is a great contribution in this field which is not only for overcoming the deficiencies in the business process but also for keeping customers consented, making a good relationship with customers and change those potential customers into loyal customers and shareholders (Kazemi and Saneian, 2013; Sofi et al., 2013). Customer relationship management is the main core in business strategy that integrates internal functions and external network to create and deliver value to targeted customers, with the purpose of profitability. This strategy is based on customers high quality expectations and empowerment with the help of information technology (Buttle, 2012). CRM is a plan for organizations and companies for better performances and offers more than just former product delivery to customers. Bligh and Turk (2004), have proposed three conclusions from their findings and performances of companies which had used CRM. First, CRM should be linked to business interests, or achievements not an additional cost or effort. Second, the analysis of CRM should be focused on the interests and promote the product. In addition to the willing of customers, distribution rate should be in interest of the person who is doing the marketing job and it should be capable for pursuing in a CRM system. The last conclusion for the purpose of success is that CRM should be related to the business programing and decision making which is based on historical data, competitors performance and other affective factors in the market and assessing the future (Vogt, 2011). Factors of CRM Sin, Tse and Yim (2005), stated that CRM implementation usually involves four specific strategic activities(figure 1): 1)Focusing on key customers Key customers are those who strategically are more important for the organization and may lead to greater profitability (Ryals and Knox, 2001). Based on Sin, Tse and Yim (2005), Focusing on key customers includes consultation with customers in order to customize their demands, customization the products, assessment of customer needs and implement customers needs information. 2)Organizing around CRM Organizational structure should be flexible and if necessary, it should be capable for revitalizing customer-oriented values, support customer-focused organization and improve cross-functional teams (Assabil and Abdallah, 2011).
3 Taghipoor N / IJOMA (2013), 1 (2): )Knowledge management Knowledge management is more important than knowledge itself. Knowledge management is intended to explain the process of converting individual and organizational information into individuals and groups knowledge and skills in organizations (Davenport and Prusak, 2000). 4)Technology-based CRM With the assistance of CRM technology, enterprises are able to collect, analyze, and distribute a wide range of information (Assabil and Abdallah, 2011). Organizations can provide custom-made services with high quality and low cost by CRM software (Sin et al., 2005). Literature review Vogt (2011), has integrated CRM with the strategic marketing and investigated around the products of travel and tourism. He stated that CRM is widely used in the tourism industry, it sustains the return rate of customers by loyalty programs, and travel websites give high volume of electronic transactions. Motameni and Ja afari (2009), have researched CRM in Iran hotel industry based on Gartner s model. After data investigation, it was revealed that Iran hotel industry has major weaknesses on such these issues: considering changes in the customer s life cycle; collect and analyze information and change it into knowledge for hotel planning and employing new methods such as web-sites and etc. on the other hand it has strengths in some affective factors such as: the attention of senior management in attract and maintain customers for long-term, getting feedback from customers and etc. Dombrowski, Scandelari and Resende (2010), in an article under the title of CRM as a tool for customer loyalty in the hotel sector had emphasized that, CRM programs are essential in hotel industry in order to monitor customers preferences and maintain the relationships with them. Also they concluded that high levels of loyalty and adaptation of products and services by each customer was the result of this programs. Findings of their research are exploratory and conceptual around the theoretical and practical concepts of CRM. At the end, it was revealed that technology is a crucial tool to store and analyze information in order to a better understanding. Methodology With considering the fact that this research is intended to study current status of customer relationship management in the tourism and travel agencies in Isfahan from the perspective of staffs, this study focuses on data and information which enable the researcher to discuss the condition of variables. The researcher has no interference with the data and result. This is a descriptive study based on structural equation modelling. The research population included all of employees and managers at tourism and travel agencies in Isfahan in 2012 that included 951 people, 274 of them (including the CEO, technical managers, domestic and outside tour sellers, domestic and outside ticket sellers, accountant and other position (public relations representatives, and software engineers and...)) were selected randomly as research sample through Cochran s formula and the return rate of questionnaires was 93%. For gathering information to confirm or refute the research hypotheses, field method has been implemented. A standard questionnaire of Sin, Tse and Yim(2005) that is consisting of purposeful questions to gather information about variables that measure the comment and insight of the person who is responding, is used. This standard questionnaire has beed applied after translating and reviewing for local travel and tourism agencies by the investigator, and then approved by supervisor and consultant in its validity and reliability in order to investigate customer relationship management in travel agencies. This questionnaire has 18 questions that investigate four factors (key customer focus, CRM organization, knowledge management, technology-based CRM. In this research, Cronbach s Alpha coefficient was used to assess the reliability of questionnaire. Its value for CRM questionnaire is obtained 0.837, so the questionnaire can be evaluated reliable. In this study, hypothesis analyzing and fit model evaluating has beed done with Structural Equation Modelling (SEM), by SPSS20 98
4 Investigation The Effectiveness Of Customer Relationship Management Figure2. Structural Equation modelling of research. and Amos20 softwares. Structural Equation Modelling, On the one hand, examined data based on conceptual model to find that whether the fit of model is good or not, and on the other hand, it tested whether the relationships in the fit model are meaningful or not. Results To determine that, to what extent the model factors are acceptable for conceptual model of research, the model of all variables is analyzed. Fit general indexes of conceptual model are CMIN/Df = 1.95, GFI = 0.95, AGFI = 0.94, NFI = 0.95, CFI = 0.93 and RMSEA = According to the conceptual model of these indexes, such as CMIN with less than 3 free degrees (df), the value of RMSEA is less than 10 percent, the value of GFI, AGFI, NFI and CFI are greater than 90 percent; it can be concluded that general indexes indicate a good fit of model by data or in other words - we can say that all data support the model well. The modified model of Structural Equation Modelling with regression coefficients is presented in Figure2. After review and approve model, for testing the hypothesis, partial indicators of crisis (.C.R) and P is used. Critical value is the result of dividing estimate regression weights on standard error. Based on a significance level of 0.05, the critical value should be more than1/96. If less than this amount is concluded, the relevant parameters in the model, is not considerable. Also less than 0.05 for P-value indicates significant differences in zero regression weight with 95% confidence. The hypothesis and regression coefficients and relevant partial indicators to each hypothesis are presented in Table 1. Conclusions The aim of present study was investigating the condition of customer relationship management in Isfahan tourism and travel agencies from the perspective of employees. So, at first, external and internal researches about customer relationship management were examined and after gaining basic information about research variables, Researcher has used some relevant variables. The model of Sin 99
5 Taghipoor N / IJOMA (2013), 1 (2): Table 1. Regression coefficients (The results of testing hypotheses). Path β C.R. P Result 1 Customer Relationship Management key customer focus *** Approve 2 Customer Relationship Management organization CRM *** Approve 3 Customer Relationship Management knowledge management *** Approve 4 Customer Relationship Management technology-based CRM *** Approve ***=P<0.001 According to the results in the above table, all defined relationships are approved with 95% confidence. and others (2005), including key customer focus, CRM organization, knowledge management, technology-based CRM, was used for investigating customer relationship management. The reason why researcher has used these dimensions is that in conducted researches about CRM, all the aspects of customer relationship management has been relatively determined for researchers. Dimensions that is used in this study, measure CRM comprehensively. Data analysis about questionnaires and hypothesis testing are done by SPSS and Amos softwares. Data analysis showed that the model which is used in this study, is a decent model for evaluating customer relationship management in tourism and travel agencies of Isfahan, in terms of fit model indexes.and also, all hypotheses in this study has been approved. According to the results recommend that managers of tourism and travel agencies considere the customer relationship management in their career. It means that with the increasing focus on the key costumers and maintaining costumers, organizing the business processes around CRM, knowledge management and sharing, employing up-todate technology, CRM would also improve, and leads to satisfaction of tourists. References Assabil, E., and Abdallah, H. S Customer Relationship Management Practices. Master s Thesis. Luleå University of Technology in Sweden. Buttle, F Customer Relationship Management: concepts and technologies. Second edition. Published by Elsevier Ltd Davenport, T. H., and Pruzak, L Working knowledge: How organizations manage what they know. Harvard Business Press. Dolnicar, S., and Laesser, C Travel agency marketing strategy: insights from Switzerland. Journal of Travel Research, 46(2), Dombrowski, M. R., Scandelari, L., and Resende, L.M CRM as a tool for customer loyalty in the hotel sector. XVI International Conference on Industrial engineering and operations management, 12 to 15 October, Brazil. Elahi, S., and Heidari, B Customer Relationship Management. Second edition. Commercial printing company. 10. Erdly, M., and Kesterson-Townes, L Experience rules : a scenario for the hospitality and leisure industry circa 2010 envisions transformation. Strategy & Leadership, 31(3), Gamble, P., Chalder, M., and Stone, M Customer knowledge management in the travel industry. Journal of Vacation Marketing, 7(1), Motameni, A., and Ja afari, A Evaluation of the implementation of customer relationship management (CRM) in Iran hotel industry. Journal of Management Landscape, 30, Kazemi, A., and Saneian, Z. S., Investigating the Impact of Combining Traditional and Online Factors on Customersʼ Trust in E-Banking and E-Commitment (The Case of Customers of Mellat Bank, Shiraz Branch). International Journal of Management Academy, 1(1), Rezaiyan, S., and Monfared, M. A, The new architecture and process of technology development, customer relationship management system and its application in tourism. Journal of tomorrow management, 5(18), Ryals, L., and Knox, S Cross-functional issues in the implementation of relationship marketing through customer relationship management. European Management Journal, 19(5), Sin, L. Y., Tse, C. B., and Yim, F. H CRM: conceptualization and scale development. European Journal of Marketing, 39(11/12), Sofi, S. A., Bhat, S. M., and Rather, J. A Customer Relationship Management and Tourism Indusry, study of correlation among different elements of CRM and perceptual differences of domestic and outside tourists. International Journal of Applied Research & Studies, 385. Thompson, S. H., Teo, P. D., and Shan, L. P Towards a holistic perspective of customer relationship 100
6 Investigation The Effectiveness Of Customer Relationship Management management (CRM) implementation: A case study of the Housing and Development Board. Singapore Decision Support Systems, 42. Vogt, C. A Customer relationship management in tourism: Management needs and research applications. Journal of Travel Research, 50(4), Yim, F. H. K., Anderson, R. E., and Swaminathan, S Customer relationship management: its dimensions and effect on customer outcomes. Journal of Personal Selling and Sales Management, 24(4),