CRM in Hotel Industry

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Evolution of CRM

Why are Customer Initiatives Important ?
6 Remain In Business 5 Participate in Global Village Customer Reach the Initiatives Customer

Increase Revenue 3 Optimize Resources & Minimize Costs

4

Decision Enhance Executive Support Initiatives Decision Making Operational Initiatives Financial Initiatives 2000s 2010s 2020s

Enhance Products & Services
2 1 Leverage Investments Reduce Costs 1970s 1980s 1990s

1960s

Customer is the Focus
Strategy Structure

People

Process

Systems

Core and Extended Customer Service
Core Customer Service. Mechanical elements including Quality, Cost and service Delivery. Extended (Caring) Customer Service. Human elements including: Friendliness, Caring, Flexibility, Problem-solving, and Recovery.
Customer Grade Outstanding A Perceived Value

Exceeds Expectations B

Satisfactory C

Customer Expectation

Perceived Value

Customer Expectation

Unsatisfactory D

Failing F Core Service Satisfies Caring Service Delights

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 to exceed customer expectations through perceived service delivery.

The Customer’s Perceived Value = The State in which the quality of a total experience, perceived by the customer, exceeds its cost.

How is a Customer Delighted?
Expectations Customer attitudes which form a framework for judging performance. Delight A condition in which experience exceeds expectations.

Service

Touch Point

Experience The point at which the customer interacts or touches the organization.

Satisfaction The measure reflecting a customers experience against their expectations.

Quality A bundle of tangibles and intangibles a customer takes into account when evaluating the experience

Value The quality of an experience as perceived by the customer and related to its cost

Customers Value Package
Environmental - the physical setting in which the customer experiences the delivery of the product. Aesthetic - any sensory experience that affects the perception of value (flavor, visual appeal, smell, temperature, music, sound levels).

Procedural - what an individual must go through to function as a customer (waiting in lines, filling out forms, visiting numerous facilities).

The Customer Value Package

Interpersonal - the customers’ experience or human interaction with those who deliver the product or service.

Deliverable anything of which the customer takes custody, even temporarily.

Financial - what the customer pays for the total experience, as well as the nature of the financial interaction.

Informational - the information a person needs to function as a customer (where to go, who to contact, payment amount, office hours).

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.

The Need to Move Beyond a Single Transaction
Service’s Long-Term Customer Relationship Service’s Transactions Customer Interactions Channels Customer Channels
Transactions

Service’s Customer Understanding and Analysis

Transaction vs. Relationship Marketing:
Transaction
 One-time

Relationship
 Ongoing

 Managing Brands
 Mass communication  Market share

 Managing People
 Individual communication

 Profitability of transaction
 Brand Equity

 Customer share
 Profitability of longevity

 Customer share equity

CRM Definitions
 Customer Relationship Management (CRM) is a business

strategy to select and manage customers to optimize longterm value.  Customer Relationship Management is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer.  “CRM is a complete system that: 1) provides a means and method to enhance the experience of the individual customers so that they will remain customers for life, 2) provides both technological and functional means of identifying, capturing, and retaining customers, and 3) provides a cohesive view of the customer across the enterprise.

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 strategic

planning up-close and personal marketing techniques and Organization development tools to build internal external relationships that increase profit margins and productivity within a company.
 CRM requires a customer-centric business philosophy and

culture to support effective marketing, sales, and service processes. CRM applications can enable effective Customer Relationship Management, provided that an enterprise has the right leadership, strategy, and culture.

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

technology required to become a customer-centric organization.  CRM is not just a software that allows for the recording of customer interactions, accurate histories to be kept, and knowledge to be shared across departments within a company.  CRM is not a product. It is not even a suite of products. CRM is a business philosophy that touches upon many independent parts of the organization, CRM addresses the Sales, 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 about selling good products or services to the right people.  CRM solutions must include not just systems, but also people, 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, So do satisfied customers.  Slowing the rate of defection grows the customer base.

Need for CRM
 CRM typically costs 5-10 times to acquire a new

customer.  “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 indifference to the seller, NOT loyalty….
Customer satisfaction Customer commitment Customer retention Profit

New Associations 5% Competition 9%

Why customers move away?
Miscellaneous 3%

Product dissatisfaction 14%

Perceived indifference 69%

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 additional items offered by the seller.  Cross-selling involves offering the customer items that complement the original purchase in some manner more effectively.  The telecommunications industry is a prime example of this type of sales activity. When establishing local telephone service, the new subscriber is often invited to enjoy other telecommunications 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 to customers that are extra purchases and increase sales. When you up sell, you offer the customer another product for purchase. Incentives are crucial features of up selling. Incentives such as a discount and/or free shipping give the customer good reasons to purchase something extra right 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 customer satisfaction continues to improve.  Beating the competition by offering a better product, competing on the service experience rather than price alone.

Benefits of CRM
 Simplify marketing & sales process
 Access to customer information
 With CRM, all of your customer information is in

one centralized location and is constantly updated every time an activity happens with a prospect or customer.  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 of

their daily tasks such as sending out emails, generating reports, organizing leads and so on.
 With CRM's Mobile access, sales people have instant

access 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 all

customer inquiries quickly, accurately and consistently 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 of purchases.  Referrals: CRM can turn customers into advocates.

Referrals typically have higher retention rates and spending rates than other newly acquired customers.  Increased sales: CRM leads to increased cross-selling, upgrades, or simply more products by existing customers.  Reduced costs: CRM can lead to more cost effective marketing; avoids expenses of mass marketing.

Benefits of CRM  Provide 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 competitor information  Long term profitability and sustainability

Customer Life Cycle Management
Customer Need Assessment and Acquisition

Customer Retention and Referrals for new Customers

Customer development through Personalization and Customization

Customer Equity Leverage through Cross Selling, and Up Selling,

RFM Data in CRM
customers through “RFM”  Recency - How recently a customer purchased items.  Frequency - How frequently a customer purchased items.  Monetary Value - How much a customer spends on each purchase.

 Organizations can find their most valuable

CRM evolution
Stage State

Satisfaction Based

Re-active

Culture Meet customer needs Respond to complaints Minimal evaluation of customer service levels

Performance Based

Pro-Active

Evaluate customer perception Identify customer retention factors

Commitment Very ProBased Active

Evaluate multiple customer needs
Continuous inbound/outbound flow and feedback Continuous improvement

Stages of CRM

• Collecting information

Stage 2
• Storing information

• Accessing information

Stage 4
• Analyzing customer behaviour

• Marketing more effectively

Stage 6
• Enhancing the customer experience

Stage 1

Stage 3

Stage 5

CRM Components
Staff Customer

Customer Interaction Center
Self-serve Channels

Customer Sales Customer Marketing Customer Field Service Customer Service Customer Analysis & Reporting Various Systems

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 Commerce Electronic 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
Interdepartment coordination Front Office Operations (sales, marketing, service etc)

Collaborative

Analytical
Enhance Company Relationship with Customer

Types of CRM
 Gives support to ‘Front Office’ business process (e.g. sales,

 OPERATIONAL CRM

marketing etc)  Any interaction with customers is stored in customers contact histories, which the staff can retrieve as necessary.  Gives staff access to important information about the customer.  Operational CRM possesses customer data for a variety of purposes  Managing campaigns  Enterprise Marketing Automation  Sales Force Automation  Sales Management System

CUSTOMER SERVICE AND SUPPORT (CSS)  Is the part of a company's CRM department that interacts with a customer for their immediate benefit, including components such as the contact center.  20-25% of CRM  Provides information to support customer call center activity  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 to leverage knowledge across the enterprise.

Components of Operational CRM

SALES FORCE AUTOMATION (SFA):
 These are tools which automate the collection and

distribution of all types of sales or sales related information.  Calendar management, activity management, sales reporting and forecasting, lead distribution and tracking of sales contacts with customers are some of 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 Service or Field Force Automation (FFA), is an

 Field Force Automation (FFA)

attempt to optimize processes and information needed by companies who send technicians or staff "into the field" (or out of the office) for maintenance and repair of equipment at the customer's location.  It involves a combination of some or all of the following: CRM applications, work order management, dispatch, wireless technology.  3-5% of all CRM activity

Components of Operational CRM
 Applies technology to marketing processes
 Generating lists of customers to receive mailings or

 Marketing Automation (MA):

telemarketing calls, scheduling automatic or manual follow-up activities and receiving third-party lists for incorporation into the campaigns are all typical functions.  Ensures high efficiency by creating integrated, highlytargeted campaigns and tracking results across all channels.  Target the Best Customers.  Manage Marketing Campaigns.

Components of Operational CRM
 Marketing Automation (MA)
 It comprises of two main functional areas:

Campaign Management  Lead Management  3-5% of CRM, but growing 5X faster than all others.  Interacts with SFA to support field sales efforts.  Inbound and outbound e-mail management capabilities are also becoming popular components 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 targeted marketing campaigns to optimize marketing effectiveness, design and execution of specific customer campaign,  analysis of customer behavior to aid product and service decision making, management decision, prediction of probability of customer defection.


Components of Analytical CRM
 One of the most popular type of decision-support

 OLAP (Online Analytical Processing)

analysis, allowing the average business person to explore data online with the aim of focusing on detailed data at a lower.  More often, this means generating an online report, analyzing the results and submitting a detailed query in order to understand the result data.

 Data mining :  Data mining tools identify patterns in data and deliver

valuable new information that can increase a company's understanding of itself and its customers.  The three types of data mining are:

 Prediction: The use of historical data to determine

future behaviors.  Sequence: Sequential analysis identifies combinations of activities that occur in a particular order.  This is used to determine whether customers are doing things in a particular order.  Association: Association analysis detects groups of similar items or events.

 3. Collaborative CRM covers aspects of a company's

dealings with customers that are handled by various departments within a company, such as sales, technical support and marketing.
 Collaborative CRM's ultimate goal is to use information collected by all departments to improve the quality of services 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 of customization, advantages of the company, benefits to the customers.  Abundant supply of customer information  Customers' information should be updated always  Have cordial relationship with other companies targeting the same customer segment  Analyze human resources and ensure that everyone has an understanding of philosophy of CRM

 BE RELIABLE- consistent performance is what

customer wants from us  BE CREDIBLE- if the customer buy the product, he wants to safe and guaranteed.  BE ATTRACTIVE- body language  BE RESPONSIVE– accessible, available and willing to help customer whenever the customer has a problem.  BE EMPATHETIC- be in customer’s shoes and grasp his point of view

Need for e-CRM
 Due to the introduction of new technology  Due to globalization
 to satisfy the customers at global level

 Sometimes 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 to right customers at right time.  Greater efficiency and cost reduction.

Some Applications of Technology in CRM
 These are organizations which deal directly to the

 Call centers

customer interactions.  These are otherwise known as "Customer Care Centre" or "Contact Centre" indicating more technological sophistication and multichannel support.  Call centre technologies entered the market place to effectively alleviate some of the repeat work and increase efficiencies, allowing companies to handle escalating call volumes.

 Web based self-service
 The customers themselves, without the help of a

live person can resolve their problems or find out answers to their queries using the web.  This model is founded on the principle of enabling customers, partners and employees to obtain information or conduct transactions directly over the internet, avoiding time consuming and costly traditional 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 and included as part of individual customer profiles.  Such tracking of customer satisfaction over time enables a company to fine tune how it communicates with its customers according to their preferences.

 Cyber agents
 Cyber agents are 'life like representatives‘ normally

depicted 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 the appropriate 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 a company 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 browser

and then sent back unchanged by the browser each time it accesses that server. HTTP cookies are used for authenticating, tracking, and maintaining specific information about users, such as site preferences and the contents of their electronic shopping carts”.

 Illustration: The online store, Amazon, uses “cookies” to

provide a personalised service for its customers. Amazon requires customers to register with the service when they purchase items. When registered customers log in to Amazon at 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 also highlighted.

CRM Limitations
 Not

feasible for every market and customers  customers don’t want to be committed to every brand/relationship  Not feasible for low-involvement, habitual purchasing in B2B or B2C  Some markets/customers may have low “personalization potential”.

Reasons for Failure of CRM
 CRM strategy and vision need to define what

 CRM Strategy not clear

customers experience at each touch point, and how will they be handled at each touch point. The vision needs to be clear to everyone.  Implementation was limited to software installation  Inadequate motivations for employees to learn, provide input, and take full advantage of the information systems

Technology Errors Customer 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 at a time. Changing the system, but not the people.

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