CRM in Hotel Industry

7/22/2019 CRM in Hotel Industry

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Evolution of CRM



Why are Customer Initiatives Important ?

1 60s 1 0s 1 80s 1 0s 2000s 2010s

Reduce Costs

2

Leverage Investments

3Enhance Products & Services

4

Enhance ExecutiveDecision Making

5Reach theCustomer

6 Participatein Global Village

2020s

1

OptimizeResources &MinimizeCosts

IncreaseRevenue

Remain InBusiness

Customer

Initiatives

DecisionSupportInitiatives

OperationalInitiatives

FinancialInitiatives



Customer is the FocusStrategy

Structure

Process

People

Systems



Core and Extended Customer Service

Customer Grade

Outstanding A

Exceeds ExpectationsB

Satisfactory C

Unsatisfactory D

Failing FCore ServiceSatisfies

Caring ServiceDelights

CustomerExpectation

Perceived Value

CustomerExpectation

Perceived Value

Core Customer Service. Mechanical elements including Quality, Cost and serviceDelivery.Extended (Caring) Customer Service. Human elements including: Friendliness,Caring, Flexibility, Problem-solving, and Recovery.

Core service will never exceed a grade of C or satisfactory. Don’t spend time and money

attempting to exceed expectations here. Caring service will allow the organization toexceed customer ex ectations throu h erceived service deliver .



How is a Customer Delighted?Expectations Customerattitudes which form aframework for judgingperformance.

Quality A bundle of tangiblesand intangibles a customer takes

into account when evaluating theexperience

Value The quality of an experienceas perceived by the customer and

related to its cost

Service

TouchPoint

Experience The point at which the customerinteracts or touches the

organization.

Satisfaction The measurereflecting a customersexperience against their

expectations.

Delight A condition in which experience exceedsexpectations.

The Customer’s Perceived Value = The State in which the quality of a total

experience, perceived by the customer, exceeds its cost.



The Customer Value Package

Customers Value Package

Environmental - the physicalsetting in which the customerexperiences the delivery of theproduct.

Aesthetic - any sensory experience that

affects the perception of value (flavor, visual appeal, smell, temperature, music,sound levels).

Interpersonal - thecustomers’ experience orhuman interaction with

those who deliver theproduct or service.

Deliverable -anything of whichthe customer takescustody, eventemporarily.

Procedural - what anindividual must go throughto function as a customer

(waiting in lines, filling outforms, visiting numerous

facilities).

Informational - the information aperson needs to function as a customer

(where to go, who to contact, paymentamount, office hours).

Financial - what the customer

pays for the total experience, as well as the nature of thefinancial interaction.



The Need to Move Beyond a Single TransactionService’s Customer Understanding and Analysis

Service’s Long-Term Customer Relationship

Service’s Transactions

Customer Interactions

Customer

Channels

Channels

Transactions

Today, Emphasis is placed on the customer transaction rather than the long-term

relationship, e.g. staff are measured by how many telephone calls they can take within an

hour.



Transaction vs. Relationship

Marketing:

Transaction Relationship

One-time

Managing Brands

Mass communication

Market share

Profitability oftransaction

Brand Equity

Ongoing Managing People

Individual

communication Customer share

Profitability oflongevity

Customer share e uit



CRM Definitions Customer Relationship Management (CRM) is a business

strategy to select and manage customers to optimize long-term value.

Customer Relationship Management is a comprehensive

strategy and process of acquiring, retaining and partnering with selective customers to create superior value for thecompany and the customer.

“CRM is a complete system that: 1) provides a means and

method to enhance the experience of the individualcustomers so that they will remain customers for life, 2)provides both technological and functional means ofidentifying, capturing, and retaining customers, and 3)provides a cohesive view of the customer across theenterprise.



CRM Definitions CRM is a management approach, a model that puts a

customer at the core of a company processes and practices.

CRM leverages cutting edge technology integrated strategicplanning up-close and personal marketing techniques andOrganization development tools to build internal externalrelationships that increase profit margins and productivity within a company.

CRM requires a customer-centric business philosophy andculture to support effective marketing, sales, and serviceprocesses. CRM applications can enable effective CustomerRelationship Management, provided that an enterprise hasthe right leadership, strategy, and culture.



Importance of CRM CRM is the transformation of people, process and

technology required to become a customer-centricorganization.

CRM is not just a software that allows for the recording ofcustomer interactions, accurate histories to be kept, andknowledge to be shared across departments within acompany.

CRM is not a product. It is not even a suite of products.CRM is a business philosophy that touches upon manyindependent parts of the organization, CRM addresses theSales, Marketing, and Service activities of the organization.



Importance of CRM

CRM must be part of an overall company philosophy.

CRM is core to all businesses, essentially it is aboutselling good products or services to the right people.

CRM solutions must include not just systems, but alsopeople, process and strategy.

CRM must focus on selecting and managing customer

value and loyalty through a long-term relationship. CRM is not a single system but a comprehensive

application architecture consisting of several systems.



Need for CRM To meet the changing expectations of customer due to:

(a) social and demographic factors.

(b) economic situations.

(c) educational standards.

(d) competitors product(e) experience.

Loyal customers are the source of most profits

A relatively small percentage of customers may generate

most of the profits. Marketing cost and efforts are less for existing customers.

Dissatisfied customers tell others about their experiences, Sodo satisfied customers.

Slowing the rate of defection grows the customer base.



Need for CRM

CRM typically costs 5-10 times to acquire a newcustomer.

“Some companies can boost profits by almost 100% by

retaining just 5% more of their customers.” Most companies lose 50% of their customers in 5 years

.

70% of repeat purchases are made out of indifferenceto the seller, NOT loyalty ….

Customersatisfaction

Customercommitment

Customerretention

Profit



Why customers move away?

Perceivedindifference

69%

Productdissatisfaction

14%

Competition9%

New Associations5% Miscellaneous3%



Economics of Customer Retention

“Winning back a lost customer can cost up to 50-100

times as much as keeping a current one satisfied.”

Rob Yanker, Partner, McKinsey &Company



Goals of CRM

Provide better customer services. Cross sell product, Cross-selling is a strategy of providing

existing customers the opportunity to purchase additionalitems offered by the seller.

Cross-selling involves offering the customer items thatcomplement the original purchase in some mannermore effectively.

The telecommunications industry is a prime example of this

type of sales activity. When establishing local telephoneservice, the new subscriber is often invited to enjoy othertelecommunications options offered by the service provider.These may include long distance packages, cell phone

services, or high-speed Internet services.



Up selling involves promoting upgrades or add-ons tocustomers that are extra purchases and increase

sales. When you up sell, you offer the customer anotherproduct for purchase.

Incentives are crucial features of up selling. Incentivessuch as a discount and/or free shipping give thecustomer good reasons to purchase something extraright away.

Helps sales staff close deals faster

Increase customer revenue



Personally recognizing customers;Offering appropriate value and great service to

encourage repeat business;

Ensuring that employee and customersatisfaction continues to improve.

Beating the competition by offering a better

product, competing on the service experiencerather than price alone.



Benefits of CRMSimplify marketing & sales process

Access to customer information

With CRM, all of your customer information is inone centralized location and is constantly updatedevery time an activity happens with a prospect orcustomer.

So now you have up to the minute tracking of all your prospects and customers.



Benefits of CRM

Increase Sales Effectiveness Make sales teams more effective by automating

tedious repetitive tasks.

With CRM, sales people can automate a big chunk oftheir daily tasks such as sending out emails,generating reports, organizing leads and so on.

With CRM's Mobile access, sales people have instantaccess to customer information when they need it,

without being tethered to a computer.



Benefits of CRM

Reduce Customer Support Time

CRM enables your service agents to answer allcustomer inquiries quickly, accurately andconsistently by phone, e-mail, chat or in person.

With FAQs and the knowledge base you can help your

customers help themselves.



Benefits of CRM

Retention rate: CRM increases customer loyalty, which increase revenue per customer and frequency ofpurchases.

Referrals: CRM can turn customers into advocates.Referrals typically have higher retention rates andspending rates than other newly acquired customers.

Increased sales: CRM leads to increased cross-selling,

upgrades, or simply more products by existingcustomers.

Reduced costs: CRM can lead to more cost effectivemarketing; avoids expenses of mass marketing.



Benefits of CRMProvide better customer service

Cross sell products more effectively

Help sales staff close deals faster

Simplify marketing and sales processes

Increase customer revenues

Reduced costs, because the right things are being done Increased customer satisfaction, because they are getting exactly

what they want

Ensuring that the focus of the organisation is external

Growth in numbers of customers

Maximisation of opportunities

Increased access to a source of market and competitorinformation

Long term profitability and sustainability



Customer Life Cycle Management

Customer Need Assessment and

Acquisition

Customer

development through

Personalization and

Customization

Customer Equity

Leverage through

Cross Selling, and

Up Selling,

Customer

Retention and

Referrals for new

Customers



RFM Data in CRM

Organizations can find their most valuablecustomers through “RFM”

Recency - How recently a customer purchaseditems.

Frequency - How frequently a customer

purchased items.Monetary Value - How much a customer

spends on each purchase.



CRM evolution

Stage State CultureSatisfactionBased

Re-active Meet customer needs

Respond to complaints

Minimal evaluation of customerservice levels

PerformanceBased

Pro-Active Evaluate customer perception

Identify customer retention factors

CommitmentBased

Very Pro- Active

Evaluate multiple customer needs

Continuous inbound/outboundflow and feedback

Continuous improvement



Stages of CRM

• Collectinginformation

Stage 1

• Storinginformation

Stage 2 • Accessing

information

Stage 3

• Analyzingcustomer

behaviour

Stage 4 • Marketingmoreeffectively

Stage 5

• Enhancingthe

customerexperience

Stage 6



CRM Components

CustomerInteractionCenter

Customer Sales

Customer Marketing

Customer Field Service

Customer Service

Customer Analysis &Reporting

VariousSystems

Self-serve Channels

CustomerStaff CRM may include:

Call Center Management

Call Center Software

Contact Management Software

Customer Relationship Management

Customer Interaction Center

Customer Service

Document Production

E-Business

Electronic CommerceElectronic Purchasing

Executive Information System

Field Service Management

Help Desk Management

Marketing

Mobile Computing

Online Auctions

Portals

Sales

Sales & Marketing Systems

Sales Force Automation

Supply Chain Automation

Telemarketing / Telesales

Value Chain

Voice Over IP Web Collaboration, Chat, Email



TYPES OF CRM:

Operational

AnalyticalCollaborativeEnhanceCompany

Relationship with Customer

Front OfficeOperations (sales,marketing, service

etc)Inter-departmentcoordination



Types of CRM

OPERATIONAL CRM

Gives support to ‘Front Office’ business process (e.g. sales,marketing etc)

Any interaction with customers is stored in customers contacthistories, which the staff can retrieve as necessary.

Gives staff access to important information about the customer.

Operational CRM possesses customer data for a variety ofpurposes Managing campaigns

Enterprise Marketing Automation

Sales Force Automation

Sales Management System



Components of Operational CRMCUSTOMER SERVICE AND SUPPORT (CSS)

Is the part of a company's CRM department that interacts with a customer for their immediate benefit, includingcomponents such as the contact center.

20-25% of CRM

Provides information to support customer call centeractivity

Build customer satisfaction & loyalty

Resolve customer issues after the sales responsively It comprises two key functional areas:

Cases:- Track every interaction of customer service &support teams with each customer.

Solutions:- Maintain a centralized database of solutions tolevera e knowled e across the enter rise.



SALES FORCE AUTOMATION (SFA):

These are tools which automate the collection and

distribution of all types of sales or sales relatedinformation.

Calendar management, activity management, salesreporting and forecasting, lead distribution andtracking of sales contacts with customers are someof the capabilities offered within these solutions.



Sales Force Automation (SFA)

35-40% of all CRM activity

Sales force automation comprises of:

Account Management Contact Management

Activity Management

Revenue Forecasting Reporting & Analysis



Components of Operational CRM

Field Force Automation (FFA) Field Service or Field Force Automation (FFA), is an

attempt to optimize processes and informationneeded by companies who send technicians or staff"into the field" (or out of the office) for maintenanceand repair of equipment at the customer's location.

It involves a combination of some or all of the

following: CRM applications, work ordermanagement, dispatch, wireless technology.

3-5% of all CRM activity




Marketing Automation (MA):

Applies technology to marketing processes

Generating lists of customers to receive mailings or

telemarketing calls, scheduling automatic or manualfollow-up activities and receiving third-party lists forincorporation into the campaigns are all typical functions.

Ensures high efficiency by creating integrated, highly-

targeted campaigns and tracking results across allchannels.

Target the Best Customers.

Manage Marketing Campaigns.




Marketing Automation (MA) It comprises of two main functional areas: Campaign Management

Lead Management3-5% of CRM, but growing 5X faster than allothers.

Interacts with SFA to support field sales efforts.

Inbound and outbound e-mail managementcapabilities are also becoming popularcomponents of the marketing automation

suites.



Marketing Automation Process

Flow



2. Analytical CRM analyses the customer data for various purposes

such as design and execution of targetedmarketing campaigns to optimize marketingeffectiveness, design and execution of specificcustomer campaign,

analysis of customer behavior to aid product

and service decision making, managementdecision, prediction of probability of customerdefection.



Data mining :

Data mining tools identify patterns in data and deliver valuable new information that can increase a company'sunderstanding of itself and its customers.

The three types of data mining are:

Prediction: The use of historical data to determinefuture behaviors. Sequence: Sequential analysis identifies

combinations of activities that occur in a particularorder.

This is used to determine whether customers aredoing things in a particular order.

Association: Association analysis detects groups ofsimilar items or events.



3. Collaborative CRM covers aspects of a company'sdealings with customers that are handled by variousdepartments within a company, such as sales, technicalsupport and marketing.

Collaborative CRM's ultimate goal is to use informationcollected by all departments to improve the quality ofservices provided by the company.



Implementation of CRM To implement CRM, following factors need to be given due

consideration

Easy interaction between customers and company,

Easy access to information about company like content ofcustomization, advantages of the company, benefits tothe customers.

Abundant supply of customer information

Customers' information should be updated always

Have cordial relationship with other companies targetingthe same customer segment

Analyze human resources and ensure that everyone hasan understanding of philosophy of CRM



BE RELIABLE- consistent performance is whatcustomer wants from usBE CREDIBLE- if the customer buy the product,

he wants to safe and guaranteed.BE ATTRACTIVE- body languageBE RESPONSIVE– accessible, available and willing to help customer whenever the customer

has a problem.BE EMPATHETIC- be in customer’s shoes andgrasp his point of view



Need for e-CRM

Due to the introduction of new technologyDue to globalization

to satisfy the customers at global levelSometimes customer itself prefer to do

online purchasing.

Also, e-CRM is used for attracting &keeping economically valuable customers& eliminating less profitable ones.



Process of e-CRM



Benefits of e-CRM Convenience Improvement in overall quality of customer experience Increased profitability Low implementation Cost

Rapid Development Accessibility Instant Information Sharing Increased customer loyalty

More effective marketing.

Improved customer service and support.

Through e-CRM, right tools helps sending right orders toright customers at right time.

Greater efficiency and cost reduction.



Some Applications of Technology in CRM

Call centers These are organizations which deal directly to the

customer interactions.

These are otherwise known as "Customer CareCentre" or "Contact Centre" indicating moretechnological sophistication and multichannelsupport.

Call centre technologies entered the market place toeffectively alleviate some of the repeat work andincrease efficiencies, allowing companies to handleescalating call volumes.



Web based self-service

The customers themselves, without the help of a live person can resolve their problems or find outanswers to their queries using the web.

This model is founded on the principle of enablingcustomers, partners and employees to obtaininformation or conduct transactions directly over theinternet, avoiding time consuming and costlytraditional processes involving multiple verbal or

written interactions.

It provides control, performance, convenience and

efficiency.



Customer satisfaction measurement: Survey mails are the major way for companies to

monitor customer satisfaction.

Nowadays, these survey forms are even personalized

to specific customers or customer groups.

Responses are input into customer databases andincluded as part of individual customer profiles.

Such tracking of customer satisfaction over timeenables a company to fine tune how it communicates

with its customers according to their preferences.



Cyber agents

Cyber agents are 'life like representatives‘ normallydepicted on a company’s web site as a real person.

It is an attempt to put together the best of both

personalization and advanced technology. It is given a personality and is having facial expressions and volume.

Usually a cyber agent addresses the web visitor with his/her

first name. It can draw from the wealth of detailed information to

answer basic FAQs as well as guide a customer to theappropriate screen for a definite purpose/action.



Web site

It is the efficient and effective use of worldwide web for providing information to the customers, by acompany who had created that site, in a hassle-free

manner. The main advantage of a web site is its 24 hours

accessibility.

Usually gathering information from the site is a

simple task and is cost-effective.



Information Technology and CRM:

Examples Cookies

“ A “cookie” is a parcel of text sent by a server to a web browserand then sent back unchanged by the browser each time itaccesses that server. HTTP cookies are used forauthenticating, tracking, and maintaining specific

information about users, such as site preferences and thecontents of their electronic shopping carts”.

Illustration: The online store, Amazon, uses “cookies” toprovide a personalised service for its customers. Amazon

requires customers to register with the service when theypurchase items. When registered customers log in to Amazonat a later time, they are ‘greeted’ with a welcome message

which uses their name (for e.g. “Hello John”). In addition,their previous purchases are highlighted and a list of similar

items that the customer may wish to purchase are alsohighlighted.



CRM Limitations

Not feasible for every market andcustomers

customers don’t want to be committed toevery brand/relationshipNot feasible for low-involvement,

habitual purchasing in B2B or B2CSome markets/customers may have low

“personalization potential”.



Reasons for Failure of CRM

CRM Strategy not clear

CRM strategy and vision need to define whatcustomers experience at each touch point, and how

will they be handled at each touch point. The visionneeds to be clear to everyone.

Implementation was limited to software installation

Inadequate motivations for employees to learn,provide input, and take full advantage of theinformation systems



Technology ErrorsCustomer data is in more places than expected.Different CRM solutions are in place but do

not work well together.

People errors

Introducing CRM to hundreds of employees ata time.Changing the system, but not the people.

CRM in Hotel Industry

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