“Customer is the most important person for a business. He is not an interruption to our work but the purpose of it. He is not an outsider; he is a part of it. We are not doing him a favour; he is doing us a favour by giving us an opportunity to serve him.”
(By Mahatma Gandhi)
CRM includes all aspects of interaction a company has with its customer, whether it is, pre-sales, sales or post-sales (service related). Customer relationship management (CRM) is a strategy that can help them to build long-lasting relationships with their customers and increase their profits.
The customer needs can be categorized as:
(d) Action and
(By Raghunath & Shields 2001)
CRM can lead to cross-selling and up selling of products and services. Cross-selling means selling the right product to the right customer.
1.2 Hospitality Industry
Hospitality is all about offering warmth to someone who looks for help at a strange or unfriendly place. It refers to the process of receiving and entertaining a guest with goodwill. Hospitality in the commercial context refers to the activity of hotels, restaurants, catering, inn, resorts or clubs who make a vocation of treating tourists.
The hospitality industry is a 3.5 trillion dollar service sector within the global economy. It is an umbrella term for a broad variety of service industries including, not limited to, hotels, food service, casinos, and tourism. The hospitality industry is very diverse and global. The industry is cyclical; dictated by the fluctuations that occur with an economy every year. Today hospitality sector is one of the fastest growing sectors in India. It is expected to grow at the rate of 8% between 2009 and 2016.
1.3 Indian Hotel Industry
According to a report, Hotel Industry in India currently has supply of 110,000 rooms and there is a shortage of 150,000 rooms fuelling hotel room rates across India. According to estimates demand is going to exceed supply by at least 100% over the next 2 years. Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage. Hotel rates in India are likely to rise by 25% annually and occupancy by 80%, over the next two years. Hotel Industry in India is going to witness a boom with Delhi hosting 2010 Commonwealth Games.
2. Scope of the Study
This study aims to understand the steps taken by the hotel industry to improve their relationship with their customers.
The study would be limited to documenting the practises and programs followed by only the leading players in the hotel industry. The study would examine the steps taken by the leading players to enhance customer retention, customer satisfaction, and customer delight which leads to building the brand image in the minds of the customers and hence increased profitability.
3. Objectives of the Study
To study “Customer Relationship Management in the Hotel Industry”.
To study the programs and practices of CRM employed by the leading hotels in India.
To analyse the measures to build a better relationship between the customer and the hospitality unit.
To understand the new marketing approaches in hotel industry.
To analyse how CRM helps to retain customers.
4. Research Methodology
The study involves secondary research of the similar studies done in past, hotel tariff cards, magazines, newspapers, articles, and internet and company records. The type of data taken into consideration for this topic is the Secondary data.
This study is descriptive in nature while it seeks to identify the present scenario of the practices being followed by the leading hotels in India for enhancing customer retention, satisfaction and loyalty.
5. Limitations of the Study
· Due to the availability of only secondary data, authentication of the data is not sure.
· Since the authentication of the data is not sure, the result of the project may not be precise.
6. CRM and the Hotel Industry
Hotel Industry is a service sector where there is a major role played by relationship marketing. Several big organizations have failed to know what the customer really wants and several others, after knowing, could not really translate these requirements into deliverance. Hotels exist for no other reasons than to meet customer needs and expectations. CRM is a business strategy to select and manage the most valuable customer relationships. In hospitality, each customer relationship has value and should be managed effectively. There is opportunity for repurchase and recommendation from each past customer. The administration of the information about this past guest and the effective integration of the information into frontline guest services programs is the challenge of CRM implementation.
Two parts of CRM:
The operational CRM deals with those which make customer contacts or otherwise called as touch points.
Analytical CRM does the job of analyzing the accumulated data from the various touch points with the aid of business intelligence.
Integration of Customer Information through CRM:
The data sources may include guest history, external guest profiling systems, restaurant club programs, sales and catering system information and other data.
6.1 Customer profiling:
Demographic and Psychographic information is collected and a large percentage of the customer database is built. This is followed by the implementation of effective marketing programs to attract similar customers to build revenue.
6.2 Direct marketing:
The utilization of the integrated customer information for direct marketing is the fruit of CRM effort. Highly profitable offers can provide business during slow periods. These offers can be communicated via mail or e-mail.
6.3 Best customer/extraordinary service:
It is true that the 20% of customers contribute to 80% of revenue and thus it becomes all the more important to get the most profitable customers completely satisfied. This involves very detailed satisfaction analysis, combined with valid financial data about each customer – all appended to the customer database.
It is the integration of all the elements that hospitality has to focus on:
1. Personally recognizing customers;
2. Offering appropriate value and great service to encourage repeat business;
3. Insuring that employee and guest satisfaction continues to improve; and
4. Beating the competition by offering a better product, competing on the service experience rather than price alone.
7. Customer Relationship Management Software for the Hotel Industry
Guest Ware is a unique Customer Relationship Management System (CRMS) designed specifically for the lodging industry to provide personalized guest recognition and exceptional service quality. Leading hotel management companies use Guest Ware to improve guest satisfaction, lower operating costs, build guest loyalty, and increase revenues.Guest Ware is installed in over seven hundred hotels and resorts worldwide; including Marriott International, Hyatt Hotels, Star wood and many independent hotels and resorts.
Customer Acquisition is six times more costly than Customer Retention. The following tools are provided by Guest Ware for Customer Retention.
7.1 Improvement Analysis – Implement Process Improvement
Industry surveys show that guests are less likely to return if they experience a problem during their stay. Guest Ware’s Improvement Analysis tools provides with the information to eliminate recurring problems and keep guests coming back, so to lower operating costs and increase guest satisfaction at the same time.
(Raghunath & Shields 2001)
7.2 Comment Card Tracking – Listen to your Customers
Customer survey on restaurant or an extensive questionnaire of guests, the GuestWare Comment Card Tracking system assists to manage customer feedback. Guest Ware improves productivity in the follow-up process and provide valuable management reports to maximize the benefits of surveys.
Develop comprehensive guest profiles from reservation information and demonstrate to guests/customers that the property is in touch with their needs.
Drive guest-centric data down to the transaction level, allowing employees and guest-facing technology to deliver greater value to the guest/customers.
Generate a realistic profile on the spending and stay patterns of guests, allowing the property to create guest-centric marketing for increased loyalty and spending.
ITC Maurya Sheraton – Field selling, Loyalty programs, Reservation systems, Web & Call centers are the major sources of database development. The hotel has 35,000 members in its database. They regard this management of their database as an asset because it enables a superior customer understanding.
Figure 1 – GuestWare Enterprise Edition’s Preference entry screen.
Note Global Preferences denoted by red “G”.
The trick is to get the relevant information in front of the line employees rather than keeping it locked up in an offline analytical database or centralized system not available to hotel personnel. An essential concept in discussing guest recognition is that of preferences. Capturing, retaining and making effective use of expressed customer preferences is the essence of guest recognition. The platform stores and communicates global or universal preferences for the guest across all hotels in the company (smoking or newspaper preferences, for example). Yet it also supports the capture of local preferences, unique to the individual property, so that a preference of room away from snowmaking appears at the ski resort, but not the center city property.
7.3 Using the Database:
Product and service improvement is just one result of tapping into a database. Developing special promotions and employing direct mail to promote these campaigns is another major use of database marketing.
For example: A sales team of Mughal Sheraton, Agra had completed a review of an upcoming weekend. This review revealed that bookings to date were somewhat below forecast and that a special promotion may be done in order to speed up the business. The sales team then enveloped special promotion packing to encourage bookings for weekends. They searched their welcome break holiday package database and scratched it to identify and segment the customers who tend to:
Book on long weekends
Book on a short term basis
Respond to promotional campaigns
It is aggressive selling to the potential customers who have particular needs and wants.
7.4 Database Mining
The systems analysis tools allow users to profile their most profitable customers, analyze their buying habits, develop & assess the performance of targeted marketing campaigns. The biggest advantage of database mining is that it helps to focus the efforts and available resources into one direction which is most profitable and out-base mining helps to eliminate the non-profitable customers and hence reduces the costs and enhances the profits. The profits enhanced are not only in monetary terms but also in terms of customer loyalty and long term retention.
(Rmana & Somayajulu, 2005)
7.5 Relationship Marketing
Relationship marketing is “knowing the customer and using that information to bond with them.” Form the initial personal contact and then serve as the foundation for nurturing this brief encounter into a friendly and accommodation relationship by focusing on personal guest information. In addition to knowing the purchase habits of members (room selection, certain amenity preferences, and so forth), personal information such as spouse’s name and hobbies are added to a member database. The company uses this information to tailor special events and products to small segments of the membership.
7.6 Complaint Handling
It is estimated that 90 percent of dissatisfied customers whose problems were not solved will never do business with the retailers that sold them the product nor will they again buy the product that caused the problem. In case of hotels customer/guest is more likely to switch if the provided service is not satisfactory to their expectation.
The astonishing news is that those people who do complaint and have their problem taken care of, tend to be more loyal to the company than the people who were satisfied in the first place. World-Class companies see complaints as opportunities to improve, to impress customers and to turn complaining customers into loyal ones.
(Schneider and Bowen, 1999)
7.6 Priority Marketing
Priority Marketing focuses on what’s important to the customer. What is important to one customer however, may not be as important to another. Consider the varying demand placed on a hotel: An airline stewardess may find the 24 hour room-service extremely valuable, a retired couple may need dietary menu options, a tour wholesaler may favor low prices, and a young female executive considers a security a priority. Hotels should break down their services and ask customers what is important to them. This approach can field very valuable insight about changing customer preferences. Identifying groups of customers who have similar preferences or even similar tastes (such as sharing common perceptions of quality or states), hotels can target promotions to capitalize on known characteristics and individualize the experience.
8. Some Hotels who excel in Customer Relationship Management
8.1 ITC WELCOME GROUP HOTELS
ITC hotels stepped into the hospitality industry in 1975 and are one of the most upcoming hotel chains in its class. They started their first hotel in Chennai and now they have 66 hotels across more than 50 destinations in India. ITC collaborated with Sheraton hotels, which is a part of Starwood hotels and resorts and is a well-known global hospitality chain. They were the first ones to adopt this exclusive logo which has not been thought or taken by anyone to match this – The “Namaste-Nobody gives you India like we do”.
It is represented by four distinctive brands serving the needs of the travelers, namely: –
ITC Hotels – Super deluxe and premium hotels in strategic business location.
Welcome Hotels – Five Star first class hospitality for business and leisure travelers.
Fortune Hotels and Resorts – Full service hospitality at mid-level prices for business travelers and leisure travelers.
Welcome Heritage – Palaces, forts, havelis, resorts and homes that bring alive the history and romance of India’s heritage.
8.2 THE OBEROI GROUP OF HOTELS
The Oberoi Group of Hotel has played a leading role in the growth of the hotel industry in India. Oberoi hotels today operate the largest chain of luxury hotels with 30 hotels in 9 countries and are rapidly expanding into new destinations around the world.
In order to ensure personalized attention to all guests, anexclusive butler service has also been introduced on all floors. The Oberoi has 8 floors with even numbered rooms facing towards the Golf Course (pool side) and odd numbered rooms facing Humayun’s Tomb (monument side).
Leisure Facilities: Health club, Swimming pool, Delhi Golf Club facilities.
Special services: Bank, Barber Shop , Shoe Shine, Beauty Parlor, Laundry, Drug Store, Flower Shop, Book Shop, Mercury Travels (ticketing & car hire), Executive Center (Typing, Fax, Photostatting, Board room) etc.
Shops: Shopping Arcade located at the lobby level.
8.3 TAJ GROUP OF HOTELS
Taj group of hotels is the largest chain in India- with several Hotels abroad also. The parent Hotel-The Taj Mahal Hotel, Bombay is rated among the 10 best hotels in the world. Taj has been operating in the USA, the UK, the Maldives, Oman and Srilanka and the Taj Empire continues to expand further. Today Taj has 50 Hotels of which 48 are operational, 38 destinations and is the largest Hotel chain in the country. Only one hotel group knows India and South Asia so well, and does so with such consummate style. The uniqueness of the Taj Group lies in the sum of its parts in providing a living heritage of India, together with superb comforts and modern facilities. All of these combine to make The Taj Experience a must.
The Taj Club
It is a known fact that a business traveller is a much pampered person indulged with comforts and conveniences unheard of even a decade ago. However a yearning has undoubtedly arisen for a special privilege, an inner sanctum, an Exclusive Club. Born of desire, The Taj Group of Hotels offers the Taj club which offers unique world of facilities and privileges, both essential and extraordinary.
It offers several useful facilities 24-hrs a day, seven days a week. These include Facsimile, Internet, E-mail, Color photocopying and legal library, as well as laptops, city pagers and mobile phones on rental basis. Taj Palace Business Centre is designed to give the best to the business community who do require sophisticated communication facilities and other gadgets to stay connected to the rest of the world while at the Hotel. With no exaggeration it could be said that the guest gets the best of best services and facilities which are more than necessary for a modern business man, and also feel at home while at work. The hotel calls this concept “An office away from home”.
Other Services & Facilities:
· 24-hour room service
· Free safe deposit lockers
· Express laundry/ dry cleaning
· Purified water supply
· Full-equipped Business Centre
· 24-hour fax/ telex facilities.
· 3 Meeting rooms
· Work station availability
· Laptops on hire
· Secretarial service
· Knight Rider on-line service
· Currency Exchange
· Travel assistance
. Car hire service
· 24-hour Coffee Shop
· 6 Restaurants & Bars
· Night Club
· 8 luxurious Banquet Rooms
· Shopping arcade
· Fitness Centre
· Arrangements made for golf and tennis
9. CRM Practises at Some of the top Hotels:
9.1. ITC GROUP OF HOTELS
ITC MAURYA SHERATON DEFINES CRM AS:
“Customer Relationship Management is a process of managing customer relations in an organized way”. They aim at managing each “Moment Of Truth” that is experienced by the customer. There are various contact points where the hotel comes in direct contact with the customer which are known as ‘Touch points’ in the CRM language. These touch points are considered important as there is direct interaction with the customer and they provide valuable input to the hotel. The input provided by the customer has to be captured in such a way that it becomes information and can be used by various processes within the hotel. This can be done with the help of technology and the aim is that whenever there is a customer interface with any of those processes they are able to use that information in servicing the guest in a most efficient manner.
ITC Maurya Sheraton has been following an unstructured form of CRM with a narrow focus of serving the customer well and in a most efficient manner. The concept of Customer Relationship Management has a broader focus of not only serving the customer but also creating the customer and retaining him for measurable and substantial returns. CRM is a vast subject where the concept of one to one marketing is supported by Database Marketing. CRM process at ITC Maurya Sheraton has been divided in 2 steps:-
1. Identification of all Customer Relationship management ‘vehicles’
2. Integration of these Customer Relationship management ‘vehicles’
DATA CAPTURE VEHICLES
Maurya Sheraton has identified 5 such vehicles (from marketing point of view) which are also the touch points for the hotel in the process of managing its Customer Relationship. These vehicles are:-
9.1.1 Field Selling
When a sales group or a marketing executive of the hotel makes a sales call to a corporate, then it is called Field Selling. Field Selling includes Prospecting which means searching and seeking for new customers. Current Accounts are one of the best sources to uncover new business that is within these current accounts, as they harbor many sources of untapped business potential. They also provide Leads and referrals. Leads are potential customers with whom no contact has yet been made and learning of potential customers from current customers is called Referral.
9.1.2 Loyalty Programs
Second vehicle for CRM identified by Maurya Sheraton are the Loyalty Programs. These programs are designed to reward the loyal guests of the hotel. Every time a guest checks in the hotel at his every touch point or interface with the hotel, every time he spends on a service provided by the hotel (use of Room, Restaurant, Laundry, Telephones etc.), the transaction is recorded at each individual point and is added to the final bill presented to the guest at the end of the stay. There are certain points attached to the number of rupees spent by the guest. Therefore higher the amount of the bill, the higher will be the number of points attained by the guest. These points are credited to the account of each guest with the help of technology. These are called Loyalty points.
These accounts having the loyalty points are unique to every guest. Therefore, whenever after the first time that guest checks into the hotels, the guest history also affects the loyalty points. The higher the number of points, more loyal is the guest. The points can be redeemed by the guest for either free stays at the hotel or free gifts as listed by the hotel or free meals depending upon the number of points accumulated.
The objective of having a loyalty programme is not only to make the guest feel rewarded for his stay but also cross-sell other services which can be used by the guest like laundry, telephones, restaurants etc. and the revenue generated from these could be earned by the hotel. Therefore, instead of loss of revenue by providing free stay, they actually gain the revenue as well as certain customers for life with the help of the loyalty.
9.1.3 Distribution Points/ Central Reservation System
A customer can simply make a call at the reservation centre to make a booking with the hotel. It sounds simple but it could get complex in case he does not receive the expected or the desired response. The information regarding all guest reservations is managed through computer software, therefore, when a customer make calls to query about a reservation, all his hotel usage history pops up in the system which gives a chance to the executive at the reservations to instantly recognize the customer and address him by his name. This moment of truth is experienced by the customer with a feeling of recognition and feels it as good service at the first touch point itself. The input or instruction received from the customer at the stage is recorded in the reservation system for further reference by the hotel operations.
9.1.4 World Wide Web
ITC has an information portal which only allows the customer to request a reservation which has to be checked manually by the hotel reservations and then only the confirmations are given. This is a touch point of customer relationship because a speedy and accurate response could win you a customer. And since it is on an individual basis, it is more personalized and customized because the customer puts in his preferences when requesting a booking. Therefore, once it is entered in to the hotel’s data base the customer does not have to repeat his preference as they are automatically suggested by the reservation form on the net.
9.1.5 Call Centers
ITC Maurya has a Call center dedicated to servicing the loyalty programme members. Here the customers can call in and find out about any information related to their membership. Whether query relates to accumulation or redemption of points, it can be accessed through these centers. This facility has been outsourced by Maurya and is out of the premises of the hotel. This has been done to service the quest in a most personalized and efficient manner. Call centers can now even be accessed via e-mail as it is the most cost effective and time effective way of accessing
9.1.6 OTHER INCENTIVES TO THE CUSTOMERS BY ITC
WELCOME GROUP HOTELS
Welcome Award – Rewarding Relationships
Welcome Award has earned the distinction of being India’s premier and most powerful frequent guest programme. The Welcome Award programme recognizes customer as a business traveler and through its strategic alliances with travel partners endeavors to build a rewarding relationship customer. As a Welcome Award member customers can earn ‘Stars’ on every aspect of their business tripâ€¦hotel stays, business entertainment, Car rentals and even air travel.
Welcome Link- Bring home the rewards
Welcome Link, India’s most popular programme for key professionals offers many value-added benefits. It is designed to help members in making reservations for their company executives. For every materialized room night booked by a member at ITC-Welcome group Hotel, points are earned that can be redeemed for a wide range of rewards.
With Welcome Link, the member can look forward to many exciting promotions and prizes coming their way plus an exciting range of rewards, complimentary dining, free holidays, air tickets, car rentals and privilege shopping with Citibank Diners Gift Vouchers countrywide.
ITC’s STEPS IN THE CRM PROCESS:
The first step in CRM is for the internal customer ie the employees. At Maurya, they are trained to learn more about the guest and his background so that when he talks to the guest, he can strike a conversation that is of some interest to the guest. That may not be necessarily related to his stay at the hotel but these informal conversations with the guest can help build an excellent rapport with the guest which will lead the guest to know the employee by the name. In future interactions, it is possible that the guest may only wish that most of his work done through that employee. This is also a form of customized and personalized selling within the hotel.
The second step in CRM process is to integrate the information which is received through touch points. From a marketing point of view, it is important to get the desired input back from touch points in such a way that all the bits and pieces picked up by different touch points can be organized and used as valuable information by various other touch point to offer the right product to the right customer and that too at the right time. All this is done by creating a data base
9.2 THE OBEROI GROUP OF HOTELS
Oberoi has a very loyal patronage from its guests, which has ensured a high market share in the high-end segment of the market, which they cater to.
CRM PROCESS AT THE OBEROI GROUP OF HOTELS
According to the Oberoi the terms-Customer Relationship Management and Relationship Marketing are used interchangeably therefore they do not have a separate CRM department as the outlining functions of the CRM process are integrated in the Sales and Marketing operation. They use a variety of after sales tactics for customer bonding and loyalty. Co-operative and collaborative relationships with customers seem to be the most prudent way to keep tracks their changing expectations and appropriately influencing it. The Oberoi has ensured the above by the various ‘end user’ and ‘booker’ programs such as:
9.2.1 Top – The Oberoi Plus
This is an end-user program with an enrolment fee of Rs.575 only. It is beneficial for guests who use the services of the hotel. Each time a guest spends, he accumulates points which can be redeemed for any services of the hotel. By enrolling and rewarding customers with the help of this program, the hotel ensures that a greater bonding towards long-term customer retention. They have also tied up with the airlines for interchangeable redemption of points.
9.2.2 Connections – Bookers’ Program
Bookers are an important link in materializing an actual sale therefore they need to be kept motivated to push the hotel when the reservations are made by a corporate account. Each time a booker gives as reservation to the hotel he gets credit points for that and which can be redeemed for gifts or any hotel services.
9.2.3 Food Festivals
The Oberoi conducts various food festivals at its Restaurants. Regularly and sends invitations to its more profitable Clients.
The Oberoi invites top clients like CEO, Managing Directors and key decision makers of different companies to social evenings specially arranged to further enhance the Customer relationship management functions.
9.3 THE TAJ GROUP OF HOTELS
The Taj Group is also investing heavily on CRM systems to maintain customer databank with their profiles to give a quicker and personalized service to their loyal clientele. The Taj gives high priority to guest satisfaction. They even have an SMS service to keep track of lost/missed calls by the customers while they are away. They have employed applications like PMS, CRS and CIS to keep track of customers’ profiles which includes information such as their spending patterns and their special needs also. They employ data mining technique to get and act on data and also give credit to the employees who get compliments from the guests.
TAJ GROUP OF HOTELS TO ITS CUSTOMERS/GUESTS
1. Taj Inner Circle
Taj Inner Circle, the frequent guest programme, allows guests to earn points whenever they stay or dine at The Taj. Guests can then redeem their points for specially selected rewards like complimentary stays at Taj hotels, resorts, and palaces.
2. Taj Epicure Plan
The Taj Epicure Plan is an optional add-on dining plan to the Taj Inner Circle. Members earn Epicure points for expenditures incurred on food and beverages, at participating Taj restaurants in India.
3. About the Taj Inner Circle
The Taj Inner Circle has three membership levels – Blue, Silver and Gold. Customers/Guests join at the Blue level and start earning on their stay or dining or both expenses at all Taj properties. To qualify for the Taj Inner Circle Silver membership level, customer need to accumulate 250 points in any continuous 60-day period i.e. spend Rs.25,000 (INR), excluding taxes, in any continuous period of 60-days. Members who spend Rs.2,00,000 (INR), excluding taxes, in continuous 12-month period, will be automatically upgraded to Gold status. Gold card members enjoy enhanced privileges and accumulate points at a faster rate i.e. they earn at the rate of 1 point for every Rs.80 spent, excluding taxes. Gold and Silver card members of the Taj Inner Circle also enjoy a host of privileges like easier check-in check-out formalities, discounts and priority wait-listing.
4. About the Epicure Plan
The Epicure Plan, an optional add-on to t