A Model of the Global CRM System Aimed at the Improvement of the Tourism Offer within the Republic of Croatia

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1 A Model of the Global CRM System Aimed at the Improvement of the Tourism Offer within the Republic of Croatia Branimir Duki 1, Mirela Mihi 2, and Stojanka Duki 3 1 Josip Juraj Strossmayer University, Osijek, Faculty of Economics in Osijek, Gajev trg 7, Osijek, Croatia 2 University of Split, Faculty of Economics in Split, Matice hrvatske 31, Split, Croatia 3 Josip Juraj Strossmayer University, Osijek, Faculty of Economics in Osijek, Gajev trg 7, Osijek, Croatia bdukic@efos.hr, mirela.mihic@efst.hr, dux-mission@os.t-com.hr Abstract. The low level of competitiveness of the Croatian economy on a global scale suggests tourism as an export potential of the Republic of Croatia. Summer tourism is especially important at today s level of development. In view of the utilization level of the summer tourism, public attitudes stating that the summer season should be extended can be heard, thus increasing the benefits from the summer tourism season. However, the possibilities of the better utilization of the existing potentials within the existing summer tourism season must also not be neglected. To that purpose it is necessary to better utilize the potential of the current guests, and an effort should also be made to try to retain these guests and transform them from consumers to clients. This can be achieved by applying Customer Relationship Management (CRM). The application of this concept itself requires the use of modern digital technology. In order to ensure the aggregate effect of customer relationship management on the overall tourism product of the Republic of Croatia, this concept should be raised from an individual level to the aggregate level of Croatian tourism. This research focuses on the model of the integral global CRM system aimed at improving the tourism offer within the Republic of Croatia. Keywords. Croatian tourism product, CRM, Web, information system. 1. Introduction The modern guest increasingly travels independently or as part of a smaller group. He or she chooses the vacation destination at the last moment, often changing the destination several times over the period of the stay, like a nomad. This results in changing accommodation facilities, consuming a larger number of services, especially those related to extra services. Bearing in mind the growing complexity of guest behaviour and the growing volume of their needs as well as the multiple changes of accommodation, a disorganized, manual, or even the electronic gathering of guest (consumer) data is of little use, not only for an individual or a destination, but also for the overall tourism community of the Republic of Croatia. In order to satisfy the needs of the consumer in the best possible way and to offer them differentiated and dynamic services, it is necessary to develop a global system of guest information exchange in the form of a global CRM system, preferably at the level of overall tourism offer, i.e. the Croatian National Tourist Board. In addition to classic records of stays, such a system should offer additional information about the behaviour of the guest, their needs, affinities, habits, and so on. Such information should be transparent among all generators of the aggregate tourism product, tourist destinations, parts of the economic system that are directly or indirectly related to the tourism offer as well as individual tourism providers. In addition to operational importance as a transaction system for generating operational information, such a system might provide huge analytical potential, and through this represent the global business intelligence system aimed at the formation of both the individual and the overall tourism product. Taking the above as the starting point, it can be concluded that the Republic of Croatia should develop an integral information concept at a global level to ensure customer relationship management with guests, in other words, the consumers. The potential offered by information and communication technology will be used to find the optimum model for improvement in the placement of the tourism product. This piece of 453 Proceedings of the ITI nd Int. Conf. on Information Technology Interfaces, June 21-24, 2010, Cavtat, Croatia

2 research is focused on solving the problem segment, and it refers to the development of the model of the CRM information system to provide information about the users of Croatian tourism through the Web. 2. Research methodology Tourism as an aggregate product is currently the basis and the most important item in the Croatia s foreign trade balance. Considering the relatively limited spatial and time dimension, it is necessary to make an effort to better utilize the existing potentials of Croatian tourism. This also includes the implementation of the customer relationship management concept, not however, at the elementary level, as is usual, but at the aggregate level, so that everyone participating in the process of creating the aggregate product would benefit from the customer relationship management. In practical terms, this means developing a sort of a global information system which works as customer relationship management, and whose task is to provide management information to everyone participating in the process of creating the aggregate tourism product. The implementation of such a system would ensure better utilization of the potentials of particular guests consumers or groups of consumers, focusing on those consumers who provide larger profits, and on retaining the consumers, i.e. their transformation into clients by providing supplements to the offered content during the stay of each individual guest. In line with the above, the following thesis is formed: It is possible to develop a good global model of information about guests by means of the CRM concept and Web technology, thus providing management marketing information to Croatian tourism. Considering the set length of the paper, only a part of this complex piece of research will be presented in this article. The research has been carried out within a project entitled The Development of Slavonia & Baranja Tourism Cluster with the aim of finding the best model for informing the aggregators of the tourism offer as to the needs of the guest, in order to increase the marketing potential of the Croatian tourism product. The model is generalized accordingly. Technologies on whose principles the model has been created are presented in this paper as well as the basic information scope related to the development of a successful system of information about the customers of the Croatian tourism product through the potentials offered by Web technology. The paper is globally deductive, because it starts from the hypothesis that is being proven on a specific descriptive model. In addition to the deduction method, some other scientific methods were used, for example: system analysis, descriptive model, induction, analogy, synthesis, generalization, etc. 3. Research results For years, The Republic of Croatia has based its attitude towards tourism on the inherited concept of mass tourism. In terms of market segmentation, mass tourism targeted less prosperous guests from Western or Eastern Europe. Price was one of the key assets of the competitiveness of the Croatian tourism product, and, in addition to the sun and sea as the key characteristics of summer tourism, guests were perhaps offered some cultural and gastronomic heritage. The majority of such guests used to come with a family or within a larger group, but they had a tendency to spend as little money as possible during their vacation, very often bringing food and other items with them. On the other hand, in such conditions in terms of consumption, a good guest could not be recognized. Considering the mass approach to tourism, a good guest could not have had a good stay nor were his or her consumer potentials utilized. This is certainly one of the important reasons why all of the potential for Croatian tourism is not better utilized. According to this, the increased volume of contribution of Croatian tourism to the total foreign trade lies not only in the extended season, but also in the better utilization of the potential offered by a particular guest. The problem is much bigger because the Republic of Croatia, as well as the overall western economy, is still in recession. Since foreign travel is one of the first things that a less well-off guest will give up in a recession, it is necessary to make a shift in Croatian tourism and focus on more profitable guests who will still want to satisfy their needs for vacation in spite of the recession. Of course this also implies a certain strategic progress in the attitude towards tourism overall, because a rich guest requires appropriate activities, which means an adequate aggregate tourism product should be offered. We live in an age when marketing orientation and information superiority are the key factors of 454

3 competitiveness. Initial and permanent market research as an element of marketing superiority definitely has its place in the planning of the tourism product, but nowadays, when a guest makes a decision about the destination and itinerary at the last moment, when he or she travels individually and tends to visit several places, permanent market research, which can be provided through a good customer relationship management (CRM) system, is implemented as a good solution. Not only that, nowadays, due to business volume, it is impossible to organize a CRM system without information technology support, but technology is also, owing to its information and communication potentials, capable of ensuring information superiority. Where the CRM system is concerned, this means having the information about the consumer s needs before others. As a result of this it is possible to give to the consumer the right information at the right time according to their own preferences, and, owing to the potentials of artificial intelligence it is possible to suggest to the consumer what activities might be interesting to him or her and to create an appropriate itinerary just in time. Customer relationship management represents a complex business philosophy which integrates a marketing concept, management and information technology. It is mostly implemented within the theory as an element of the management process of a particular economic operator. In pragmatic conditions it is very often an upgrade to the existing enterprise resources planning (ERP) system. Where Croatian tourism is concerned, which actually represents an aggregate of some of the economic activities of the Republic of Croatia, there would be almost no benefit from individual CRM systems because it would refer to the creation of the competitive position within the national Croatian market among aggregators of the tourism product. Considering its limited potentials, both in terms of economy and tourism, the Republic of Croatia must not allow sharp competition among aggregators of the tourism product, and it should make efforts to create competitiveness of the Croatian tourism product as a whole. In such circumstances it is necessary to build an integral CRM system that will be available to Croatian tourism product suppliers with the aim of efficiently satisfying the needs of guests/consumers, with the ultimate goal of increasing the competitiveness of Croatian tourism as a whole. In relation to this, it is necessary to examine the way in which an integral CRM system can be created, and how it can successfully provide information superiority, and what data volume this system should have. This piece of research was started for that purpose, and the research should result in the first phase in a conceptual model of the CRM system of Croatian tourism. In principle, creating a conceptual model of CRM in the Croatian tourism industry refers to identifying common data needed to ensure information superiority based on the information from the CRM system and, through this, to secure the individual competitive ability of the Croatian tourism product. The importance of information superiority as the basis for competitiveness has received special attention over the past decade, which has seen the evolution of Customer Relationship Management in response to the need of retaining market positions (see Figure 1). In line with the business philosophy of CRM, the retaining of market positions can be achieved through continuous concern for the customer, who, under pragmatic conditions, is transformed and evolves into a client. Figure 1. CRM evolution over the past decade To ensure the transformation of customers into clients, it is necessary to set up the systematic monitoring of customer behaviour by continuously gathering data regarding customer habits and desires. For data to be collected on a comprehensive and continuous basis, the CRM system must be considered, from a broader aspect, as a component part of the integral information system of an enterprise. The structure of a conceptual model of CRM, which could be applied in the Croatian tourism industry, involves layered architecture, encompassing three organizational units: 455

4 Collaborative CRM, to secure customer interaction, Operational CRM, with the task of ensuring the optimal functioning of CRM, and Analytical CRM, which has the task of analysing data gathered and creating management information. Monitoring customer behaviour through the interaction of collaborative CRM with the business environment ensures a feedback-loop database that can provide the tools for wellinformed business decision-making in the way the enterprise interacts with each individual customer or group of customers. In facilitating decision-making, a well-designed database will commonly gather the following groups of data: Customer Profiling: Customer demographics & preferences Customer segmentation Logging customer communications Service : Logging Service requests Tracking your inventory base and serial numbers Warranties & Contracts Repairs Sales: Product database / price lists / configurator Logging of sales leads / opportunities Sales team workflow and calendaring Quotation and Ordering Telemarketing Marketing: Doing campaigns (SMS, , letter, phone) with Operations: a structured follow up Timesheet management Process workflow By specialising these information groups into concrete entities and attributes, a highly complex database is created for the conceptual model of CRM in the Croatian tourism industry. As this database is an essential start-up factor in defining the pragmatic conceptual CRM model for Croatia s tourism industry, and considering how various database models differ in accordance to concrete demands, Figure 2 features a small segment of a possible solution for the relational database model. Due to the limited length of this paper, it is not possible to present the entire data model. One should bear in mind, that ironically, a certain number of basic data about a guest is registered at local police departments (which belong hierarchically to the Ministry of the Interior). Namely, every guest, whether foreign or domestic, has to be registered by means of the so-called Guest Application Form, thus pragmatically creating a database of guests who have visited a particular destination in the Republic of Croatia Even this elementary information is a great source of information, because it allows for monitoring the behaviour of the guests, i.e. tracing their movements through the tourism season, monitoring their appearance in a longer time period as well as connecting guests to their accommodation type, travel habits (in groups, individually) and more. Taking into consideration that a primitive CRM system pragmatically exists, but that it is not used in an analytical sense, a conclusion can be made about the size of information losses in view of creating information superiority of the Croatian tourism product. Figure 2. Initial relational model of a CRM transaction database According to this, setting up a CRM system would actually not only rationalize the application procedure, but it would also result in creating a profile of every single consumer by supplementing the information basis, thus generating analytical potentials of the CRM system to facilitate the improvement of the tourism offer and the utilization of the capacities of the Republic of Croatia. Of course the system can be extremely complex, but in the initial phase it is envisaged, as can be seen in Figure 2, that, in addition to basic data related to every guest, also their consumer habits are recorded, which previously used to be an integral part of the so-called Guest Diary. This document provided records of the total consumption per particular guest, which nowadays would generate knowledge about the consumption habits of guests. In addition to detailed records and those resulting from the Guest diary it is possible to add various other pieces of optional information 456

5 that users would not be obliged to fill in, but they would do so if they happened to obtain such data in the normal course of business. This includes, for example, data on various guest preferences ( if they smoke, consume alcohol, if this person is a vegetarian, etc.). The question arises regarding when, by whom and to what extent the information should be recorded about guests. Accommodation facility staff are obliged to register each guest s stay through the registration application system. At a more primitive level, in addition to gathering data from personal documents (passport or an identity card), accommodation staff can record the services that the guest uses there. However, outside of this system the question regarding how to connect a guest with the basic CRM records emerges. One of the ways would be to issue a sort of a card for a guest, with which they could collect points, ultimately resulting in particular discounts and/or gifts, so that the guest would be motivated to use the card in other areas of consumption, which would provide records within the CRM system. In the more advanced phase it will be possible to identify guests by means of biometric methods instead of cards, which even in today s conditions, owing to modern technology, is a relatively cheap and simple solution (for example, face identification by means of a camera). It is not only the identification system that could be very simple in pragmatic conditions, regardless of whether identification is carried out by means of a card or by means of the biometric method, but in principle so can the computer system supporting CRM. As is shown in Figure 3, the initial phase will require only one server and an adequate Web application and an adequate database where the data related to consumer habits of the guest will be stored. In principle, Web application must be simple ergonomic, i.e. it must ensure minimum requirements in relation to the time necessary to record the spending habits of the guest. To ensure a wide use of such CRM application, it is also possible to add to the existing model the option of mobile access to entering the data via SMS (Simple Message Service). The design of the system that will allow the data about the behaviour of the guest consumer to be recorded via SMS is still in its research phase. The system for monitoring the behaviour of consumers of the Croatian tourism product can be based in one of its parts, on the obligation to register guests in accommodation facilities, i.e. to be in line with the required registration of stay for the Ministry of the Interior of the Republic of Croatia. As opposed to this mandatory registration, the other part is optional both for aggregators of the tourism offer catering enterprises and for guests, because both sides will make a decision as to whether they will participate in the building and functioning of the CRM system in pragmatic conditions. Although the Republic of Croatia may use positive statutory provisions to introduce the obligatory participation in gathering data related to the behaviour of the consumers of the Croatian tourism products, until then, it is necessary to develop a good system to motivate consumers for guests to identify themselves when using the aggregate of the Croatian tourism product. The motivation system for the consumers of the Croatian tourism product guests is also in the research and development phase. Figure 3. Model of the CRM system aimed at improvement of the tourism offer based on the Web technology If the legislator in the Republic of Croatia recognizes the importance of creating an integral system and uses positive statutory provisions to introduce obligatory participation in monitoring consumer behaviour for the aggregators of the tourism offer, it would be useful to entrust the realization and running of the project to the Croatian Tourist Board, which is an umbrella organization that integrates the Croatian tourism offer. However, even without any state involvement in the realization of this project, it can be expected that, due to its importance, the suppliers of the Croatian tourism product will in due time recognize the importance of the management of information offered by a potential CRM system, and that they will 457

6 recognize its analytical potentials in terms of improvement of the Croatian tourism offer, and also that they will organize themselves with the aim of creating and utilizing such an integral CRM system. 4. Conclusion The Republic of Croatia has been in deep recession for a year. We have witnessed an increasing number of people losing their jobs, a growing dependence on imports and decreasing export potentials within the Croatian economy. Considering the overall macroeconomic circumstances and events in the past fifty years, it is unrealistic to expect that the Republic of Croatia will solve all its problems in the short term and become a globally competitive economy in terms of industry. Among important competitiveness factors, the Republic of Croatia lacks the globally required quality, competitive prices as well as the required quantity for most of its products in the primary and secondary sector. On the other hand, the Republic of Croatia has an excellent geographic position and an especially attractive coastal area. Owing to this, summer tourism has developed in the Republic of Croatia over the past forty years. A good side of tourism is that it virtually creates an export market on a country s own territory and in this way gives an opportunity to the Croatian economy to market also those products which are not competitive on a global scale. However, even in this case it is not enough to expect that the problems will be solved of their own accord. The process of aggregation of the Croatian tourism product requires management. Since information offers the rational component of management, efforts should be made to provide information required to run such a complex global process like aggregation of the tourism product of a country. Today, marketing orientation is the key factor of success, so taking care of the consumer as the starting point of every marketing process is the backbone of a successful business, both at microand macroeconomic level. Since its beginning in the 1950s, marketing has gone through different phases until some fifteen years ago when it eventually reached the level of establishing an individual relationship with a consumer in the form of the so-called relationship marketing. An individual relationship with a consumer implies the systematic and permanent care of the consumer, which is realized by means of the customer relationship management (CRM) concept. Although the CRM concept is primarily developed with individual business operators, its significance may also be important for the functioning of the global economy, especially if its resources are organized on some kind of corporate basis. This is the case with Croatian tourism, which partially is, and partially will become a pronounced aggregator of the products of the Croatian economy. It is logical to expect that in such conditions it will be necessary to apply the model of the global CRM system aimed at improving the tourism offer of the Republic of Croatia. The research has shown that it is possible to develop such a model, and that it is best to base it on the potentials of Web technology. 9. References [1] Bani ek, D.: PHP/MySQL razvoj dinami kih web stranica. Varaždin: PRO-MIL; 2004 [2] Duki, B., Meler, M.: Creating information infrastructure in tourism industry cluster development. In: Galeti, L., avlek, N., editors. Proceedings of the 4 th International Conference: An Enterprise Odyssey: Tourism - Governance and Entrepreneurship; 2008 June 11-14; Cavtat, Croatia. Zagreb: Faculty of Economics & Business, University of Zagreb; p [3] Duki, B., Meler, M., Mesari, J.: Conceptual Model for Promotion of Croatian Tourist Product Based on Integration of CRM and Web Technologies. In: Luzer-Stiffler, V., Dobic Hljuz, V., Beki, Z., editors. Proceedings of the 31 st International Conference on Information Technology Interfaces; 2009 June 22-24; Cavtat/Dubrovnik, Croatia. Zagreb: SRCE University Computing Centre, University of Zagreb; p [4] Meler, M., Duki, B.: Upravljanje odnosima od potroša a do klijenta (CRM). Osijek: Sveu ilište J. J. Strossmayera - Ekonomski fakultet u Osijeku; [5] Müller, J., Sri a, V.: Upravljanje odnosima s klijentima Primjenom CRM poslovne strategije do pove anja konkurentnosti. Zagreb: Delfin - razvoj managementa; [6] Sri a, V., Spremi, M.: Informacijskom tehnologijom do poslovnog uspjeha, Zagreb: Sinergija; [7] Strahonja, V., Varga, M., Pavli, M.: Projektiranje informacijskih sustava. Zagreb: ZIDRH i INA- INFO; [8] Welling, L., Thomson, L.: PHP i MySQL Razvoj aplikacija za Web, Beograd: Mikro knjiga;