CRM TECHNOLOGY IN HOTEL INDUSTRY

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1 I n t e r n a t i o n a l J o u r n a l o f M a n a g e m e n t F o c u s 1 CRM TECHNOLOGY IN HOTEL INDUSTRY C. ARUL Ph.d.,Research Scholar in Commerce, Head of the Department, Modern Arts College, Jayamkondam Dr. K. BARANIDHARAN Research Advisor in Commerce, Associate Professor Idhaya College for Women, Kumbakonam ABSTRACT Customer Relationship Management systemsare the most popular systems among these applications these days. Because of the timeliness and relevance of data provided by CRM, many hotel industries are using CRM to improve their service quality. However, it is rare in literature for researchers to document the processes and the value of CRM applications in industry. This study proposes a CRM process model and aims to study the value of CRM applications for hotels systematically. As to the CRM benefits for various functional areas, front desk service perceives the most value of CRM. It is then suggested that room division for improvement for analytic CRM shall attract more academic and practice research for better CRM applications in hotel industry. Introduction Customer service is the essence of the hospitality industry. The importance of customer service in hospitality is stressed in professional courses as well as on-the-job training modules since aspiring hoteliers, restaurateurs and others in the industry need to be well aware of its significance and implication for successful business operations. Keeping guests satisfied is key to running a successful business. If guests are not happy, they will be more likely to spread the word about your products and services than guests who are content with your business. Once the reputation of a business deteriorates, it is very difficult to get back into a competitive stance. Thus, it is very important to keep striving to improve and maintain good guest relations. As accessibility to information systems increases and cost of computer hardware declines, the use of information systems to improve customer relationships becomes an important issue in today s hotel industry. The information systems that aim at the reshaping of customer relationships are often referred as customer relationship management systems. As a matter of facts, CRM is one of the most discussed topics in E-Commerce era. CRM is more important than ever, for service industry such as hotel industry, it is an important component of the tourism industry, providing accommodation (and associated ancillary services) to travellers while away from home. Hotels need to invest a large amount of resource to build rooms and facilities before they can provide service to customers. If a room is not rented or sold out for one night, the room vacancy cannot be stored as inventory to be sold next day as other products do. Therefore, the competition among the hotel industry emphasizes on retaining customers as much as possible. Hotels often eager to look for effective and efficient activities that can identify, select, acquire, develop, and keep increasing loyal and profitable customers. On the other hand, information technologies offer companies alternative applications of improving customer relationships. All these methodologies, software, and usually Internet capabilities that help hotels manage customer relationships in an organized way are basically CRM applications. Focus on customer will be a critical factor in the customer relationship. Despite of this trend of CRM application in hotel industry, there is little systematic research to document the processes and the value of CRM applications in hotel industry. Although all hotels declared a customercentric approach to CRM implementation, small and large hotels significantly differ in some specific motives, the CRM in large hotels is greatly driven by a need streamline and integrate fragmented, disconnected processes and guest information for enabling, improvement process and reduction of error cost; The information technology significantly affect on the profitability of front-office application, backoffice application, restaurant management office, however, only guest-related interface applications were not significant in affecting the profitability.

2 2 I S S N : O c t D e c e m b e r THEORETICAL BACKGROUND AND LITERATURE REVIEW Customer Care Focus Organizations rely on human resources to perform and thus be able to compete with others. Where human resource is poor, the performance of the organization may also be poor. To take care of customers, organizations must take care of those (staff) that take care of customers and this can be achieved by giving staff customer focused training further studies have shown that behaviour of a worker in an organization is very important. Organizations need to get persons who know their attitudes, behaviour and experience over a period of time. The person can conduct a job analysis of the organization which can enable him to isolate bad attitudes, behaviours and experiences and promote good ones that are customer focused. Some attributes tend to be repetitive through a person s life. Customer Care as a means of Customer Satisfaction Growth of business in most service industries is built up on a reputation for providing customer satisfaction through a good standard of attention and case. This is closely associated with exercising fiduciary responsibilities. Maintaining good standards of customer care is as fundamental to marketing as the development and launch of a new product or service. But unfortunately, providing a high standard of customer care cannot be qualified vary basically. As a result, it is often regarded as an operation rather than marketing function. Customer Lifetime Value Perspective The concept of customer lifetime value, which was defined as the sum of the revenues gained from company s customers over the lifetime of transactions after the deduction of the total cost of attracting, selling, and servicing customers, taking into account the time value of money. Companies with a strategic focus on establishing long-term customer relationships build databases to identify their customers, track customer transactions, and predict changes in customer purchase patterns at an individual level, they can also leverage the purchase information available in these databases in order to target and retain the right customers through customer base analysis, and predicting their lifetime and future level of transactions, considering their observed past purchase behaviour. Early research used customer life time value as a means to solve specific marketing decision problems pertaining to customer acquisition/retention decisions. Determination or calculation of customer life time valuewas done mainly by considering specific numerical examples in particular business settings, evidence also suggested that successful companies gain a superior competitive advantage and deliver superior customer value as a result of exploiting the organization s assets like brand image, marketing abilities, and organizational innovation when applied to business processes. The benefits of retaining customers have led companies to search for means of profiling their customers individually and tracking their retention and defection behaviours. Customer Life Time Valueand Customer Relationship Management Customer Life Time Valueis rapidly gaining acceptance as a metric to acquire, grow, and retain the right customers in CRM. Marketing theory and practice has become more and more customer cantered, and managers have increased their emphasis on long-term client relationships because the length of a customer s tenure is assumed to be related to long-run company revenues and profitability. CRM is organized according to the customer lifecycle because lifetime duration with a firm generally is not perpetual. Consumers may be dissatisfied and find better value elsewhere or change their lifecycle in a way that causes them to lose the need for the product. Effectively, marketers need to predict the future purchasing behaviour of customers to arrive at their Customer Lifetime Value. There have been some studies relevant to the CRM literature that deal with customer level analyses.looking forward to the value of future sales and costs fits more comfortably with the development of CRM strategies than current period profits. Customer Relationship in Hotel Industry Hotel industry participants face an increasingly competitive market. In addition, the basis of competition is changing. Location, a key driver of business, is fixed in the short and medium term and attracting and retaining customers based on facilities and amenities is becoming increasingly difficult as they have become increasingly standardized across competing brands. CRM has its roots in relationship marketing inaugurated by the influential work. Relationship's marketing rational is to enhance long-term profitability by moving from transaction-based marketing and its prominence in attracting new customers, to customer retention by means of effective management of customer relationships, successful CRM is applied technology for marketing, sales and service.the Implementation of CRM in the hotel industry, there operational CRM implementation is significantly affect on the profitability in hotel industry. As to the CRM benefits for various functional areas, the front offices service perceives the most value of CRM.

3 I n t e r n a t i o n a l J o u r n a l o f M a n a g e m e n t F o c u s 3 Research Model In CRM activities, a customer-oriented firm will integrate their service process to create their target and market strategy, CRM profitability is probably one of the most fundamental and extensively studied topics in marketing and service management, from service provide view, profitability based on customer focus of a organization, and its service process fit, considering the conceptual CRM function perspective, CRM implementation. Customer Relationship Management Profitability CRM is a technology-enabled business strategy whereby companies leverage increased customer knowledge to build profitable relationships, based on optimizing value delivered to and realized from their customers, and by automating and improving the businesses processes in the areas of sales, marketing, customer service, and support. With the ever-increasing competition for marketing dominance, many firms have utilized CRM systems to improve their business intelligence, decision making, customer relations, and quality of services and product offerings. The concept of customer-oriented management is underpinned by the identification and satisfaction of customer needs leading to improved customer retention, which is based on corporate profitability. The rapid advances in information and communication technology provide greater opportunities for today s firms to establish, nurture, and sustain long-term relationships with their customers than ever before, and CRM requires perfect alignment with the everchanging needs of customers based on integrated and reliable customer information. Previous research has indicated that CRM provides analytical, operational, and direction capabilities: the analytical capabilities aid profitability maximization from the customer relationship, the operational capabilities influence the customer value process, and the direction capabilities depend on strategic skills and reflect the efficacy of long-term cooperation and organizational values. Operational CRM consists of specifying a suitable and replicable business, and analytical CRM refers to the firm-level processes involved in analysing customers and the market.from the customer life time valueperspective, CRM has the potential to deliver substantial benefits to firms in terms of long-term profitability. The economic benefit is easily justified in terms of enhancing lifetime value; firms also enjoy noneconomic benefits such as enhanced customer trust, commitment, and cooperation. Moreover, a competitive advantage is obtained by the inability of competitors to copy successful customer relationships, in contrast to product attributes, sales promotions, and advertisement campaigns. Objectives of the study The main objective of the study is to evaluate the CRM technology in hotels. However the specific objectives are: To study the need and importance of the CRM in hotels Customer through information technology system for hotel To elicit the perceived opinion of the customers on the services and the attitudinal environment prevailing in the hotels To evaluate CRM practices adopted by the hotels To evaluate hotels perception about CRM practices adopted by hotels Hypothesis Ho 1:Customer focus is positively associated with process fit. Ho 2:Process fit after system implementation of hotel industry is positively with customer relationship management Profitability. associated Ho 3:The greater the application CRM functions of sub-business unit, the great Customer relationship management Profitability in hotel industry. Customer Focus The hotel industry was a customer orientation organization, hotels espousing a certain strategy type do better than other, but there are trade-offs. For example, hotels consider competitive strategy or service strategy. A service organization aspiring for leadership position creates an organization wide customer orientation; customer should feel that the organization genuinely cares about them and take planned efforts to reflect into its practices. Customer oriented hotels provide service as promised and continue to put customers request and interests ahead of his or her own,when employees of customer oriented hotel provide superior service as a representative of the hotel, the service image of the hotel will improve, customer focus appears to have direct relationship with process fit after system implementation. Moreover, customer requests are critical

4 4 I S S N : O c t D e c e m b e r for establishing long-term customer relationships. A guest select the hotel that he/she will stay, and make request to the hotel which he/she book; and the staff will record the guest special need to information systems during staying period, after the guest check out, the record about the guest will transfer to guest information systems; a customer focus hotel will analysis their customer request and the staff record the guest s request in reservation systems, and develop marketing and service strategy; On the next service process, that is, when the guest return to the hotel, the hotel will provide personalized service to their guest,. Process Fit Beyond environmental and organizational factors, the success of CRM depends on a customerfocused strategy that is often implemented by reengineering current customer interaction processes and sometimes designing entirely new processes. Process fit to the corporate operations is necessary in making CRM activities become familiar with the customer-oriented work process. In the customer information centric characteristic of CRM, companies should analyse customers experiences and problems, then respond and support their needs. CRM requires the perfect alignment with ever-changing customers needs based on the integrated and reliable customer information. In a customer oriented hotel, process fit was conducted employees worksheet; In hotel industry, when a guest check in, employee used guest history information to understand guest behaviour, and after guest check out, they recorded guest requestment, the process fit was made employee prepared worksheet for guest. With the personal service delivery, guest wills feedback their need to the hotel, and employee can analysis their request, or develop marketing strategy. Implementation of hotel information system helps manage all hotel activities interactions. Computerized guest-history systems for hotels are a technological alternative to the cumbersome, hand-kept method of maintaining rolodex files for personalized service, and it is contributed to enhanced performance in reservation, marketing and control areas. From the role change of information technology in hotel industry. Revenue system and yield management system will helps managers of hotel to segment their customer, and develop pricing strategy. Every interaction between the guest and the customer is an opportunity to refine knowledge about her or him and to further build a relationship. Operational and Analytical CRM Profitability All hotels declared a customer-centric approach to CRM implementation, small and large hotels significantly differ in some specific motives, which clearly indicate hotel different operational problem and managerial situation; significantly, the CRM in large hotels is greatly driven by a need streamline and integrate fragmented, disconnected processes and guest information for enabling, improvement process and reduction of error cost.there are two type of CRM, and they will provide analytical and operational capability, valuable customer insights can be derived from operational information obtained from various channels and customer touch points, such insights created by analytic processes can greatly improve future operations. The information technology significantly affect on the profitability of front-office application, back-office application, and restaurant management office. Conspicuous, functional of sub-business unit play a motivated role among customer relationship management. Sample and Data Collection The study is based on the primary and secondary data. we mailed total 4 survey questionnaires to each hotel (included Reservation, Front Office, Sales and Marketing, and Housekeeping Department for each hotel), The systems include the functions of response, reservation centre management, guest history Systems, business intelligence, personalization, sales force automation, customer profiling/segmentation and so on. The selected samplelocated at the place of Kumbakonam Thanjavur District, Hotel Raya s stands out Majestically to offer Mahamaham tank view for the guests. This is known to be the Best value for money in Kumbakonam with the atmosphere and facilities of a star hotel. Hotel Raya s combines efficiency with the Traditional culture of Kumbakonam to provide a pleasant stay for all its guests. Research conclusion From the findings, it can be concluded that Hotel Raya s has good customer care activities which include, training of employees on customer handling, after sales services like complaint handling, seeking customer opinion, avenues of customer s complaints, transport services and replacement. Employee motivation has also played a tremendous contribution towards increased number of customers at Hotel Raya s. From the competition among the hotel industry emphasizes on retaining customers as much as possible, hotels eager to look for effective and efficient activities that can identify, select, acquire, develop, and keep increasing loyal and profitable customers.

5 I n t e r n a t i o n a l J o u r n a l o f M a n a g e m e n t F o c u s 5 Our results provide empirical evidence to explain how customer focus and process fit influent CRM profitability. And our result provide analytical and operational CRM capabilities under functional implementation in hotel industry; Customer oriented hotels provide service as promised and continue to focus customers request and analysis their behaviour, Every interaction between the customers are opportunity to refine knowledge about guest to further build a relationship. Computerized guest-history systems for hotels are a technological alternative to maintain and analysis valuable operational data form guest, and hotel information system helps manage all guest service activities interactions. A manager will create a customer-oriented culture of organization, train their employee to collect and analysis guest information from reservation channel, and provide personal service via information system. And, customer-oriented employees, those who consider the customer value to be their primary work goal. For future, analytical CRM implementation enhance profitability maximization from long-term customer relationship, and operational CRM implementation enhance profitability from saving service cost; Moreover, analytical CRM profitability significantly affected on the profitability of operational CRM; by guest service process perspective, hotel managers will concentrate guest behaviour analysis and information from web-site, and few hotel do after sales service. It is different that interactive between operational and analytical CRM, as compare with finance-oriented industry, they put emphasis on analytical function CRM rather than on operational function CRM, and under conceptual, firm will segment the grade of customer in advance, and put more attention to the important or valuable customer, and then, to create customer profiles by analytical function. Contrary to finance-oriented firms, customeroriented hotels view each customer relationship is very important, that is, hotel industry force each guest request by operational function will be the premier point, analyse customer behaviour and segmentation for marketing strategy will be applied during customer service process, the result is also important for future study. Reference: 1. Ahmad, R.andButtle, F. (2002). Customer retention management: A reflection of theory and practice, Marketing Intelligence & Planning, 20(3), Berger, P. D., Eechambadi, N., George, M., and Lehmann, D. R. (2006). From Customer Lifetime Value to Shareholder Value: Theory, Empirical Evidence, and Issues for Future Research, Journal of Service Research, 9(2), Bieber, T. P. (1989), Guest-History Systems: Maximizing the Benefits, Cornell Hotel and Restaurant Administration Quarterly, 30(3), Chan, J. O. (2005), Toward a Unified View of Customer Relationship Management, Journal of American Academy of Business, 6(1), Day, G..S. (1994), The capabilities of market-driven organizations, Journal of Marketing, 58(4), Fan, Y. W. and Ku, C. S. (2007). A case study for increasing customer relationship through information system in hotel industry, Proceedings of the Sixth Conference on Enterprise Resource Planning, Taichung (ROC) 7. Fornell, C. (1992), A national employee satisfaction barometer: The Swedish experience, Journal of Marketing, 55(1), Griffin, R. K. (1995). A categorization scheme for critical success factors of lodging yield management systems. International Journal of Hospitality Management, 14(3), Gupta, S., Lehmann, D. R., and Stuart J, A. (2004). Valuing customers, Journal of Marketing Research, 41, (1), Ham, S., Kim, W. G., and Jeong, S. (2005). Effect of information technology on profitability I upscale hotels. International Journal of Hospitality Management, 24(2), N.M.Shanthi, Managing Customer Relationship, Marketing Mastermind, Jan R.S.Prasad, CRM: An opportunity or a Fad?,ICFAI Journal of services and Marketing, Dec Sudhir K Jha, Customer Relationship Marketing Yogalsheme. Feb Dr.M.Selvam, Journal of Business Management Studies, Jan June guru.com Yi Wen Fan, The Impact of Customer Service through Information Systems for Lodging Industry.