How Irish Tour Operators Build Customer Relationships

An investigation into how Irish companies operating in
the tourism industry build relationships to enhance
customer retention, with specific focus placed on Dublin-
based tour operators
by
Armando Settimi, BA (Business Administration)
Student Number: 1054487
A Thesis submitted in fulfilment of the requirements for the degree of
MASTER OF BUSINESS STUDIES
Under the supervision of
Ms. Martina Hutton
DUBLIN BUSINESS SCHOOL
September 2004

Abstract
This study reviewed the literature in the area of customer service to
Identify its perceived benefits and to establish which factors are seen to be important in
improving customer service in Dublin-based tour operators.
Customer service has been shown to have a powerful impact on tour operator’s efficiency
and effectiveness and the literature highlights at least five major areas of action that can
be taken as a means of securing these benefits. These are: strategy; culture; the role of the
manger; systems and communication. There is, however, another area which is receiving
substantial additional attention recently, namely the nature of relationships between a tour
operator and its customers. As the customer service literature focuses mainly on large
American-based service companies and little research has been conducted in Ireland on
customer care and its impact on organisational effectiveness, a primary objective of this
research was to establish whether these findings from the wider literature are borne out in
Ireland. A particular focus of the research was on the core relationship aspect. A final
objective was to explore how Dublin based tour operators actually build customer
relationships, how they select who they build these relationships with, and which
relationship-building strategies they found most successful.
Following a review of the literature, a questionnaire which encompassed questions
eliciting both qualitative and quantitative data was developed and sent by post to
marketing and customer service managers of a sample of Dublin based tour operators.
Data was collected from twenty-five tour operators in all.
The survey confirmed that Dublin based tour operators do understand the benefits of a
strong customer care policy, that customer retention has a strong profit impact compared
to acquiring new customers and that building customer relationships is important to
retaining customers in the long term. They carefully discriminate between those
customers who have potential to be profitable and those who have not and are careful to
channel their energies into the former group. However, when asked what methods they
2

used to build relationships it was found that very few of the tour operators surveyed has
structured plans in place. This would indicate that although they feel that building
relationships with customers is crucial, there is a gap between their espoused beliefs and
the amount of well-structured effort which they put into increasingly important area.
There are some questions which remain outstanding following this study which may form
the basis of further investigations.
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Table of Contents
Part I
1. Introduction……………………………………………………………………………1
2. Customer Relationship Management forces within Dublin-based tour operators…….5
3. Tour operator performance…………………………………………………………..11
3.1 The impact of service quality on Tour Operator Performance…………………..11
3.2 Customer retention……………………………………………………………….13
3.3 The increasing importance of customer care…………………………………….16
3.4 Definitions……………………………………………………………………….18
4 The Essentials of Excellence Customer Care……………………………………...21
4.1Service Strategy………………………………………………………………26
4.2Organisation Culture………………………………………………………….29
4.3Systems……………………………………………………………………….32
4.3.1Marketing……………………………………………………………….33
4.3.1.1 Marketing Research………………………………………………34
4.3.3Human Resource Practices……………………………………………..37
4.3.3.1 Recruitment……………………………………………………...37
4.3.3.2 Training………………………………………………………….38
4.3.3.3 Rewards………………………………………………………….39
4.4 The role of the manager or Team Leader…………………………………..41
4.5 Communication…………………………………………………………….43
.
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Part II
5. Relationships with Customers……………………………………………..47
6. Research Methodology……………………………………………………55
6.1 The choice of Research Methodology for this study………………...57
6.1.1Approach to Research……………………………………………58
6. 1.2Research Strategy………………………………………………..59
6.1.3 Research Design and Creditability of Research Findings……….59
6.2Construction of the Questionnaire…………………………………...60
6.3Piloting the Questionnaire……………………………………………63
6.4Population and Sample………………………………………………65
6.4.1 Limits………………………………………………………….67
6.5Collection and analysis of Data………………………………………67
7. Findings of the Irish Research…………………………………………….69
7.1Profile of Respondents…………………………………… ………..70
7.2Customer Contact…………………………………………………...73
7.3Reasons for Customer Loyalty………………………………………75
7.4Acquiring new Customers………..………………………………….78
7.5Should you keep all customers?..........................................................85
7.6Most profitable customers…………………………………………...89
7.7Relationship Building……………………………………………….91
8. Data analysis and discussions…………………………………………..103
9. Conclusions……………………………………………………………..107
10. Recommendations……………………………………………………...115
References…………………………………………………………………123
Appendices
Appendix I (Reflections on Learning and Skills Development)………….140
Appendix II (Questionnaire)……………………………………………...157
Appendix III (SPSS Data Matrix)..……………………………………….172
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List of Figures
Figure Page
1 Hypothesis testing and the Research Process………………………………..XII
(Cooper and Schindler, 2003)
2 A political map of Ireland showing roads, ferry ports and airports…………...7
(Source: Guiney, 2002)
3 Graph of overseas tourists visiting Ireland…………………………………....8
4 Graph of tourist growth………………………………………………………..9.
5 Profits impact of a 5% retention rate increase on customer value……………14
(Dawkins and Reichheld, 1990)
6 Conceptual Model of Service Quality………………………………………...22
(Parasuraman, Zeithaml and Berry, 1990)
7 Marketing Concept versus Selling Concept…………………………………..34
(Kotler, 2003)
8 The Research Process………………………………………………………...55
9 Nomothetic methods versus ideographic methods……………………………56
(Gill and Johnson, 2002)
6

10 Understanding Validity and Reliability……………………………………….60
11 Sampling Design within the Research Process……….……………………….65
12 Data Analysis in the Research Process……………………………………….103
13 Experimental Learning Sequence…………………………………………….142
(Caple and Martin, 1994)
14 A learning cycle incorporating experience………..…………………………..143
(Caple and Martin , 1994)
15 Kolb’s learning model Positivist approach versus Phenomenology……..…..146
Approach (Sheehan and Kearns, 1995)
16 Kolb’s learning model Quantitative approach versus Qualitative…………...148
Approach (Sheehan and Kearns, 1995)
17 Kolb’s learning model Deductive Reasoning versus Inductive……………..152
Reasoning (Sheehan and Kearns, 1995)
18 A Gantt Chart of the Mind Writer Project…………………………………..154
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List of Charts
Chart Page
1 Profile of respondents by number of employees…………………………71
2 Profile of respondents by number of customers………………………….72
3 Why customers leave……………………………………………………..76
4 Why customers stay………………………………………………………77
5 Methods of getting customers…………………………………………….80
6 Most contact with new customers………………………………………...83
7 Most contact with existing customers…………………………………….83
8 Why some customers are not worth keeping……………………………..86
9 When do you decide to get rid of customers?.............................................87
10 Which customers do you work harder with?..............................................88
11 Why work harder with some customers?...................................................89
12 Why do you believe that long/short-term customers more profitable?......91
13 Why are relationships important?...............................................................93
14 Methods for building customer relationship (unprompted)……………...94
15 Methods for building customer relationship (prompted)………………...95
16 Which methods most effective?.................................................................97
17 How do you know these methods are effective?.......................................98
18 Why some relationship building methods better for different customers?99
19 How methods put into place?...................................................................100
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20 Other effects of efforts to build relationship……………………………101
Acknowledgements
I would like to express my appreciation and gratitude to the following people who
contributed to the preparation of this thesis.
Martina Hutton, my supervisor, for her valuable advice and assistance.
The DBS Library staff who worked tirelessly to find the relevant material.
Professor Vittorangelo Orati and Professor Alessandro Ruggieri, of the School of
Business Studies, Tuscia State University, for their wisdom and encouragement.
Alan Mooney for his help and advice with the various computer packages which I had
problems with along the way and for his wonderful graphics.
Killian Geraghty who edited the final draft and made it legible.
To all Tour Operators who took part in the survey and therefore made this piece of work
possible.
9

Statement of dissertation
In marketing arena, customer service has been shown to have a powerful impact on
both profitability and competitiveness within organisations. (Kotler, 2003)
The literature in the area of customer service identifies its perceived benefits and
establishes which factors are seen to be important to improve customer service in
companies and consequently in tour operators.
As the customer service literature focuses mainly on large American –based service
companies little research has been conducted in Ireland about this specific topic, and
indeed into how Dublin-based tour operators build relationship to enhance customer
retention.
Because of this, it is absolutely critical to investigate as to whether Irish managers
hold the same beliefs as those reported in the literature, that a strong customer care
policy and a systematic programme for building relationships with customers are seen
as a means of increasing loyalty and advocacy.
As a result, a study has been conducted into this area identifying the gap in existing
literature and discovering a justification for this dissertation.
Moreover, in order to test the hypothesis mentioned above the following research
questions have been formulated applying the management- research question
hierarchy process (Cooper and Schindler, 2003):
• Do Irish managers understand the benefits generated from the link
between customer care/relationships and customer retention? If so,
does this link ultimately affect organizational goals and objectives?
• Does a balanced, integrated CRM corporate strategy effectively
enhance customer loyalty?
• Which are the most effective methods to use in building relationships
and do these vary for different customers?
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In the next pages, the exact approach that will be implemented during this
investigation will be shown. Furthermore, an exact justification, supported by
appropriate literature, of each of the decisions adopted will be put forward. In fact, as
pointed out by Brannik and Roche (1997) “research methodology is a decision
making process. Each decision made is affected by, and in turn influences every other
decision. It is a system of decisions, all of which are interrelated”. According to this
concept Cooper and Schindler (2003) recommend that the research process is a key
instrument which researchers have to keep in mind for ensuring that all aspects of the
project are consistent with one other.(See appendix Graphic below) Consequently,
this is the research strategy that will be used during this thesis.
11

Hypothesis testing and the Research Process
. [Cooper and Schindler, 2003]
12

Part I
A study of the Literature on customer Service
14

1. Introduction
Recently, world-wide, the field of customer care has been gaining more attention. The
many reasons for this include the increasing body of evidence which demonstrates
that by improving customer care a company, and indeed a tour operator can increase
its long term profitability. Customer retention is just one of the arguments put forward
to achieve this grater profitability as it has been shown that long-term customers are
more profitable than short-term customers. This is a convincing argument for many
tour operators to expand their concentration on and investment in this area.
The literature abounds with ways in which a tour operator can improve the quality of
service it offers to its customers. Some are very simplistic prescriptions such as
investing in the training of front line staff, using technology to help collect and retain
better customer information, recruiting customer-handling staff in a more systematic
way, communicating selectively with customers in order to manage their expectations
better. Others are more complex and involve long-term organisational changes such
as a tour operator having a separate customer service strategy, moving the
organisation towards a customer service culture or empowering staff at all levels to
look after customers as they see fit.
The literature in the area of customer care focuses mainly on large American based
service-companies. Little research has been conducted in Ireland on customer care
and its impact on organisational effectiveness and profitability. A primary
consideration in conducting this exploratory study in Ireland was to establish if the
findings of the wider literature on customer care, retention and relationships are born
out of Ireland.
15

Within the literature there is an emerging body of thought which suggests that one
aspect of customer care, the relationship between the tour operator and its customer,
is paramount. It is a common observation that Ireland as a culture is one in which
relationships are highly valued.
Visitors to Ireland frequently comment on the friendliness and hospitality of its
people. One manifestation of this could be described as the “pub culture” in Ireland
where everything, including business matters are discussed, sometimes in a very
formal manner. It is a mundane observation that such cultural context could have a
great effect on the buying decision of customers. It might seem, therefore, that
relationships might be more important in Ireland than elsewhere in the context of
customer care. If this observation has substance, then it lends weight to the second
objective of this research which was to establish the perceived importance of
customer relationship to Irish Dublin based tour operators. A final objective was to
explore how Irish Dublin-based tour operators actually build customer relationships,
who they build these relationships with and why, and which relationship building
strategies they found most successful.
The objectives of this study were achieved through data collection, using a
questionnaire, from a targeted sample of Irish Dublin based tour operators.
This study is presented in two parts. Part 1 (Chapters 3 and 4) reviews the literature
synthesising the disparate ideas. Chapter 3 draws together the evidence that excellent
customer care does, among other factors, impact upon the growth and profitability of
a tour operator. Chapter 4 explores the whole issue of customer care and draws out
five key area upon which most of the literature is based. This can be represented by a
diagram which illustrates the elements of the discussion and which will be used
throughout the study. Chapters 3 and 4 could be represented diagrammatically as
follows:
16

In part II, Chapter 5 focuses upon the available literature on the specific issue of customer
relationships. The diagram could now be expanded to incorporate the dimension
‘relationships’, a main theme emerging in the customer care literature.
17

Chapter 6 describes the study carried out among managers in Dublin based tour
operators and the research methods used while Chapter 7 presents the findings,
analysis and interpretation. Whilst conclusions are drawn in Chapter 9
recommendations are located in chapter 10.
In summary, this exploratory study sets out to establish how tour operators compare
with the findings presented in the literature on customer care; to establish the
perceived importance of customer relationships to Dublin-based tour operators and
finally how these tour operators attempt to build and sustain customer relationships.
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2. Customer Relationship Management forces within
Dublin-based tour operators
A tour operator can be defined as “an agency engaged in selling and arranging
personal transportation, accommodation and tourist services for travellers, also called
travel bureau” (Encyclopaedia Britannica, 2002)
However, one useful approach is to identify what tour operators do as a means of
establishing their characteristics and form. In simple terms, “tour operators organise,
package different elements of the tourism experience and offer them for sale to the
public, through the medium of a brochure, leaflet, advertisement, or the use of
Information Communication Technology (ICT) in travel retailing”. (Page, 2003)
Tour operators play a key role in the countries tertiary sector. It is called service
industry, including firms that, while producing no tangible goods, provide services or
intangible gains or generate wealth. (Weaver and Lawton, 1999)
Within Ireland, tourism is the largest item in the country's net invisible earnings;
overall Irish market is worth EURO 500 millions. (O'Halloran, 2004)
Tourism earnings in Dublin area were estimated in Euro 878 millions in 1999.
Guiney (2002)
According to the Irish Minister for tourism Mr. John O’Donoughue, its value has
increased considerably since the 1990s, in large part because of the establishment of
“Fáilte Ireland” as the national tourism development authority, and for the completion
of the first major review of tourism policy. (Guiney, 2002)
For instance, according to Niamh Fitzpatrick, director of the Irish tourism marketing
department, the budget for 2002 was EURO 34 millions, one of the biggest for any
organisation in Ireland. (MacCarthaigh, 2003).
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Furthermore, it has been encouraged new hotel construction, developed resort areas,
extended sporting facilities (i.e.: the special Olympic Games in 2003), and increased
tourist amenities. (Source: Department of Tourism and Sport, Strategy for Tourism
2000-2006 Government of Ireland 2000: cited by Guiney 2002) (See a political map
of Ireland below)
20

A political map of Ireland showing roads, ferry ports and airports
[Source: Guiney, 2002]
21

The Irish tourism Minister goes on saying that according to the Official Central
Statistics Office figures, the number of visitors grew by almost 5% up to the end of
September 2003. He finishes stating that “for 2004, Irish tourism industry will see
continued improvement, based on a return to normality in the global, political and
economic environment and continued growth in new routes serving Ireland. The
medium to long-term outlook for the tourism sector remains bright.” (MacCarthaigh,
2003) (See graphic below).
Graph of overseas tourists visiting Ireland
[Source: Guiney, 2002]
In support of this trend the World Tourism Organization (WTO), which recently
became a fully-fledged specialised agency of the United Nations (UN), forecasts for
Ireland an increase of 8% in the number of visitors from continental Europe and a
growth of 6% from the North America market by using key access routes and
increasing capacity to US.
Moreover, according to the International Institute for Strategic Studies (IISS), the
presidency of both the European Union (EU) with the Irish Prime Minister An
Taoiseach, Mr. Bertie Ahern and the EU parliament with Mr. Pat Cox gave massive
media exposure to the eyes of the world and thus enhanced a new challenge for
22

Dublin-based tour operators. This aspect was further emphasised in the speeches of
Presidents Bush and Clinton in 2004 which underlined Ireland’s reputation as a
quality tourist destination. (Daniels, Radebaugh and Sullivan, 2004)
To help this process, calculations based on results for previous years estimate pre-tax
margins across the tour operating business at EURO 10 million in pre-tax profit.
(Quarterly Magazine of the World Tourism Organization, 1st Quarter 2004)
[http://www.world-tourism.org -http://www.un.org/esa/sustdev/sdissues/tourism/tour2.htm]
According to Mr. Niall McDonnell, managing director of Panorama and Airtours and
president of the Irish Tour Operators' Association (ITOF) and the Minister for
Transport, Mr Brennan “there are all the conditions for Irish tour operator to perform
well in the long run”. (O'Connell, 2004) Therefore, it would be said that it is their
responsibility to take such an opportunity (See graphic below).
Graph of tourism growth
Tourism Growth in Ireland
0
200
400
600
800
1000
1200
1400
TouristNumbersin000's
1950
1960
1970
1980
1990
2000
2010
[Source:Guiney, 2002]
23

In this scenario, many writers (Kotler and Armstrong, 2003; Armstrong, et al.
2000; Rensmann, 2000; Harding and Ortiz 2002; Nicks and Ford 2002;
Suntook and Brooke 2002; El-Emary,2002) suggest companies, and
consequently tour operators, to develop stronger bonds with their customers called
customer relationship management (CRM). “This is the process of managing
detailed information about individual customers and carefully managing all the
customer “touch points” with the aim of maximising customer loyalty”. (Kotler,
2003) Nevertheless, it is well known that CRM is premised on the belief that
developing a relationship with customers is the best way to gain their loyalty.
However, the trick is to determine how to build such devotion. (Rees, Professor
Stone and Professor Nancarrow, 2003)
In the final analysis, relationship marketing has the ability to professionalise the
contact, but it does take considerable investment in time, money and, most
importantly, organisation-wide commitment to ensure success. For this reason, the
challenge is to match the level of 'relationship' with what the tour operator can
genuinely provide. (Enver, 2004)
In summary, as a part of firms’ marketing services strategies, CRM is a critical
concept which has attracted much attention in recent years. (White, 2003)
For this reason investigations were put into action in this new and fascinating topic
through this dissertation (See section 5 – Relationships with customers).
24

3. Tour Operator Performance
3.1The impact of service quality on Tour Operator
Performance
A tour operator’s performance is affected by a number of factors – financial
management, vision, strategic management, marketing, to name a few. However,
there is evidence to support the idea that service quality is one of the key ways in
which an organisation can achieve strong business growth and earnings performance.
Performing the service correctly the first time saves money directly by enhancing
productivity and indirectly by reducing customer loss. Therefore the quality of service
provided directly effects the bottom line. Service quality is seen as a key element of a
long-term profit strategy, according to Sewell (1991).
25

One of the most important sources of empirical evidence to support this contention
comes from the PIMS programme of business unit data.
PIMS is an acronym for Profit Impact of Market Strategy which has documented the
strategic experience of thousands of business units, principally in North America and
Europe between the years 1972 and the present. Among the items collected onto the
database for each business is an index of relative product quality. This is measured as
the customer perception of the key product and service attributes compared to leading
competitors. The first step in constructing this index is to assess the “weight” which
buyers typically place on each of the service attributes. Thompson, De Souza and
Gale (1985) found that across a wide cross-section of markets, the service elements
carried very significant weight with buyers; in many markets, service quality actually
outweighed product in importance. In only 15% of the markets surveyed was service
deemed irrelevant. The writers also show that sectors where service has high
importance have more profit opportunities than those that don’t. In line with the more
general findings of PIMS on quality, businesses that score high on service were
significantly more profitable than those that didn’t.
This major findings has been largely borne out by other studies and the literature of
service and customer care generally which we explore in the following Chapters.
Many writers have shown that not only is service a key competitive weapon but it
also significantly impacts on a tour operator’s profitability. Segmenting the market
and raising the level of service in the most appropriate way for the most profitable
customers helps to retain these customers. Retaining the most profitable customers
over time helps to raise the level of profitability in a tour operator.
26

3.2 Customer Retention
Reichheld and Sasser (1990) coined the phrase “zero defections” from quality
movement’s “zero defects”. They contend that “companies and consequently tour
operators can boost profitability by almost 100% by retaining just 5% more of their
customers”. They go on to say that “since companies do not hold customers captive, the
only way they can prevent defections is to outperform the competition continually. By
soliciting feedback from defecting customers, companies can ferret out weaknesses that
really matter and strengthen them before profits start to dwindle. Defection analysis is
therefore a guide that helps companies/tour operators manage continuous improvement”.
Writers such as De Souza (1992), Dawkins & Reichheld (1990), Reichheld (1993),
Rechheld & Kenny (1990), Furlong (1993), Reichheld and Sasser (1990) also contend
strongly that retaining more of your customers can lead to greater profitability. Figure 1
provides an illustration of the profit impact of a 5% retention rate increase on customer
27

value which is demonstrated over a number of companies in different industries
(Dawkins and Reichheld, 1990).
Profit impact of 5% Retention Rate Increase on
Customer Value
30
75
20
50
45 45
40
35
85
0
10
20
30
40
50
60
70
80
90
A
uto
ServiceChainBranch
Deposits
CreditCard
Creditinsurance
Insurance
Brokerage
IndustrialD
istributionIndustrialLaundry
O
ffice
Building
M
anagem
ent
Softw
are
%
However, many companies, according to Dawkins and Reichheld (1990), do not
calculate the retention rate, and of those which do, few analyse and act on the data. De
souza (1992) believes that if customer retention is not measured, it will not be managed.
Rosenberg and Czepiel (2001) put forward the idea that the customer retention area
deserves more attention on two counts: effectiveness and efficiency; effectiveness where
marketing can hold a loyal following of repeat buyers rather than constantly looking for
new recruits, and efficiency where it is estimated that the average company spends six
times more to get a new customer than hold a current one.
Reichheld and Sassers’s (1990) research has shown that there are a number of reasons
why customers become more profitable over time. Acquiring a new customer entails a
one time cost for advertising, promotions, etc.
Often there is an internal system to be set up for each new customer and this can be very
costly. New customers may not spend substantial amount with the tour operator at the
28

start; often this take time, so that over time the customer’s purchasing is greatly
increased. There are often opportunities for cross-selling other services to existing
customers. As purchasing increases, operating costs decline. With a particular customer,
as the tour operator gets used to dealing with him, it can serve client more efficiently.
Good relationships like this can lead to referrals by word of mouth to other customers.
Carroll (1991-1992) however, feels that this argument is “flawed and its prescriptions
are dangerous”. For example, in retail banking he says that the retention argument rests,
in part, upon mistakes in measuring the profitability of deposit gathering which tend to
exaggerate the gains to be made if account life is lengthened. His main concern appears
to be that Reichheld and Sasser’s argument assumes that all customers are equally
profitable. Reichheld (1992), in the same journal, argues however, that they do advocate
segmenting the market and placing more emphasis on the profitable customers.
Later, Reichheld (1993), held that companies, and indeed tour operators, need to target
the “right” customers, not necessarily the easiest to attract or the most profitable in the
short term but those who are likely to do business with the tour operator overtime.
Similarly, Furlog (2003) says that companies should follow the “80/20 rule”, that is that
eighty percent of your business comes from twenty per cent of your customers. However,
Hales (1995) says that companies should assume that ten percent of their customers are
unprofitable while fifteen per cent are responsible for eighty-five per cent of profitability.
Either way though, both writers advocate spending the time on the customers who are
most likely to bring the highest rewards. Davidow and Uttal (1990), (see 4.1, Service
Strategy) in suggesting having a service strategy, say that this is necessary in order to
choose the optimum mix and level of service for different customer sets. This suggestion
seems to bear out the later thinking in this area.
Not all customers, however, can be retained. Customers leave a company for various
reasons, according to de Souza (1992), and not all of them, he maintains are preventable.
He outlines six reasons for this: price, product, service, market, technology,
organisational factors. Price defectors are customers who switch to a low-priced
competitor, product defectors switch to a competitor that offers a superior product,
29

service defectors leave because of poor service. Market defectors may go out of business
or move out of the market area, technological defectors convert to a product offered by
companies from outside the industry and organisational defectors are lost because of
internal or external political consideration.
In summary, many writers and researchers have shown that sectors where service has
high importance offer more profit opportunities, and that tour operators that offer
superior service are more profitable that those that don’t.
To get payback from the service effort however, the important issues must be measured,
different classes of customers segmented and specific policies of customer service and
retention pursued. Many writers emphasise the importance of carefully targeted customer
care programmes as a means of retention. This issue is treated in the next session.
3.3 The increasing importance of customer care
This notion of “customer care” has been gaining increased attention.
This is possibly due to the fact that product quality in many tour operators has
become similar among competitors. The surrounding service elements therefore are
among the few variables on which tour operators can still compete. As Harris (1991)
puts it “Suddenly everything from cars to clothes began to look more alike than
different. This product sameness has made customer service the feature that makes or
breaks a sale”. Other developments have combined to increase the importance of
service and the particular component of customer care within the service mix. Carson
and Gilmore (2000), for example, point to such factors such as the increasing of the
sophistication of customers, the worldwide growth in the service economy itself,
combined with an increase in the intensity of competition, both direct and indirect.
(Ball et al, 2004)
30

The traditional marketing mix has been proving inadequate to respond to these
developments and to operationalise a service and customer care strategy involving, as
it does, a new emphasis on process. (Jobber, 2004)
Instead of the traditional four ‘P’s’ of marketing, product, price, place and promotion,
we now need a fifth ‘P’ focused upon the central issue of ongoing customer care.
(Brassington and Pettitt, 2003)
A number of new concepts and models have been developed which are of intrinsic
value in developing this customer care process.
There is some evidence to suggest that in this area Irish Dublin-based tour operators
may be trailing their international competitors. For instance, a 2001 survey of
purchasing managers compared their perceptions of Irish versus overseas salespeople.
In general, overseas salespeople performed much better in every category. While they
were clearly ahead in product knowledge, they also displayed clear superiority in the
process elements including ability to listen, selling skills probing to identify the needs
of buyers, willingness to satisfy buyers’ needs and general professionalism. While on
the more subtle aspects of process, such as pleasant manner and courtesy, the Irish
were equal or better than their overseas competitors, on five other elements, personal
appearance, positive attitude, reliability, clarity and honesty, they lagged behind. This
evidence contrasts strongly with the survey of 400 senior managers of leading
companies in Ireland by Quinn and Humble (2001). Over 81% of these managers
saw quality and service as a key to competitive success. This is the kind of gap which
may well have prompted many tour operators to seek certification under ISO 9000
and the Q Mark, as at least a beginning of a change process designed to address this
problem.
ISO 9000 and the Q Mark seem to have had a particularly strong impact on the Irish
market. Many ISO 9000 accredited tour operators simply will not do business with
any organisation which is not also accredited.
If, according to Carson and Gilmore (2000) the ability of a tour operator to
differentiate its offerings from that of its competitors is vital, and if according to
31

Berry, Parasuraman and Zeithaml (2000) service quality has become the greater
differentiator, then it behoves Irish Dublin-based tour operators to devote attention
and action to it as an area of major strategic importance.
3.4 Definitions
Before we proceed to elucidate on these issues further it is absolutely necessary to
make some attempt to clarify the language of service and customer care. In the
literature and in practice, words and phrases are often used interchangeably which
causes confusion. Among the terms that require some elucidation are: customer care,
customer service, service quality, customer satisfaction, and more recently, such
expression as delighting the customer.
Clutterbuck (1988) defines customer care as “a fundamental approach to standards
of service quality. It covers every aspect of a company’s operations, from the design
of a product or service to how it is packaged, delivered and serviced”. Peters and
Austin (2002) write that customer care “all boils down to perceived and appreciated
and consistently delivered service and quality to customers”. It appears therefore from
these definitions that customer care is the all-encompassing term to cover all aspects
of “the customer”.
Customer Service is believed by Carson and Gilmore (2000) to include advice and
information for customer regarding a product or service’s technical specifications and
after-sales back-up arrangements and procedures. Also, Christopher (1986) writes
that “ultimately customer service is determined by the interaction of all those factors
that affect the process of making products and services available to the buyer”. This
appears to be more procedural in nature and constitutes those procedures and systems
which follow the design but stops short of the actual transaction between the
customer and the tour operator.
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Carson and Gilmore’s (2000) definition of Service Quality refers to “the tour
operator/customer interface and relationship. It focuses on the customer’s experience
during the process of the transaction”. Berry et al (2000) observe that “quality is
often defined as ‘conformance to specifications’ but this phrase can be misleading.
Quality is conformance to customer specifications, but it is the customer’s definition
of quality, not management’s, that counts”. Lewis and Booms (2003) believe that
service quality is a measure of how well the service level delivered matches
customer’s expectations. Peters (1985) states this more explicitly when he says that
“the consumer perceives service in his or her own unique, idiosyncratic, end-of-the-
day, emotional, irrational and totally human terms. There is no such thing as fact as
reality. There is only what the customer thinks is reality”. Service Quality therefore
could be described as the match between the customers’ expectations and their
perceptions of the service they actually experience.
Customer satisfaction is where the service delivered meets customer’s expectation,
but, where the service delivered exceeds customer’s expectation, it results in
customer delight (Polischuk, 1991). In recent years, tour operators have been
moving from talking about satisfying customers to delighting customers. W. Edward
Deming has said, “It is not enough to satisfy the customer. You’ve got to move
beyond customer satisfaction to customer delight” (Peterson, 1993). Other writers
also advocate delighting customers rather than merely satisfying them, for example
see (Mather, 1993; Hall and Haslam, 1992 and Smith 1989, cited by Rensmann,
2000).
Mather (1993) states that superior technology, better sales and marketing and more
recently service quality have all been areas which have worked in the past to give tour
operators a competitive edge.
However, he argues these attributes are not enough, that to gain a competitive edge a
tour operator must figure out how to profitably delight your customer, not just satisfy
them. There is no edge anymore from giving customers what they expect.
In conclusion, there seems to be plenty of evidence to show that excellent customer
care can lead, among other things, to increased customer retention and thence to
greater growth and profitability. In spite of the sometimes confusing terminology to
33

describe the whole area, it is possible to extract a coherent model of customer service
and care, define its constituent elements and show how they fit into overall marketing
policy. Actually constructing a coherent customer care policy and making it happen is
another story. The literature points to significant areas of action which tour operators
must take cognisance of in a step-by-step way if they are to get the best result from
their efforts. These areas of action are explored in the next section.
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4. The Essentials of Excellent Customer Care
Perhaps the most important point is to understand the gap that might exist between
the customers’ expectations and perceptions and what the tour operator is actually
doing and offering. As mentioned in the earlier sections, the actual service which a
customer is offered may not always be all that meaningful. A tour operator may
believe they have provided an extremely efficient and effective service to a customer.
But if the customer perceives that service to be flawed, then it is the customer’s
perception that is important and must be considered above all else, not that of the
service giver. Zeithaml, Parasuraman and Berry (1990) believe that customer
expectations are set by their own wants and needs, their past experience of that and
other services, word of mouth and the tour operator’s external communications, e.g.
advertising. They identified five gaps that might exist in the tour operator’s
understanding of service quality. These are:
Gap 1 Between the customer’s expectations of service and the
manager’s perceptions of customer expectations.
Gap 2 Between the manager’s perceptions of the customer’s
expectations and the service standards they set.
Gap 3 Between the standards set and the actual service provided.
Gap 4 Between the external communications to the customer about the
service and the actual delivery of the service.
Gap 5 Between the customer’s expectation of the service and their
actual perception of that service.
See Figure below
35

[Zeithaml, Parasuraman and Berry, 1990]
DELIVERING QUALITY SERVICE
Conceptual Model of Service Quality
36

Organisations, they say, must constantly work to identify which gaps exist in their
particular tour operator and if they are negative, close them!
Helsen (2000) states that “service quality from an external perspective refers to
customer expectations of service delivery experience as compared with their
perceptions”. In this context, Gronroos (2002) says that perceived quality of service
is dependent upon the comparison of expected service with perceived service through
the outcome of a comparative evaluation process. Furthermore, as already stated,
Lewis and Booms (2003) believe that “service quality is a measure of how well the
service level delivered matches customer expectations”.
Horovitz and Cudennec Poon (1990) expand on this when they state that tour
operators who forget customer care risk decline and death. One of the main reasons
why 90% of newly formed tour operators fail is because the tour operators existed for
the owners, not for the customers.
It appears then that what is needed throughout the organisation is a very full
awareness of the “customer” and what the impact is on the bottom line of satisfying
the customer on all fronts including service. It follows that organisation requires great
vigilance and must seek constantly to find out the real needs and expectations of their
customers and be undeceived as to what those expectations might be. Moreover, there
must be regular follow through to check whether the customers are really receiving
the service they are looking for, and if not, there must be a clear plan of action to
close any gaps which may exist between customer’s expectations and the level of
service they perceive they are receiving.
It is a mundane observation that such plans of action cannot be constructed in
isolation from other major components of a tour operator strategy, policy on-going
process. The levels of excellence in customer care of which we speak, arguably
emanate from a combination, which for the sake of clarity, has been represented
37

The remainder of this chapter will expand on each of these variables.
39

4.1 Service Strategy
A company’s strategy as defined by Naylor (1999) “is the pattern or plan that
integrates an organisation’s major goals, policies, and action sequences into a
cohesive whole. A well-formulated strategy helps to marshal and allocate an
organisation’s resources into a unique and viable posture based on its relative internal
competencies and shortcomings, anticipated changes in the environment, and
contingent moves by intelligent opponents”. Today most successful organisations
spend time on formulating and implementing a corporate strategy for their company
40

and for each of the major divisions and business units within the company. (Porter,
1985)
However, as Davidow and Uttal (1990) contend, a service strategy is a vital
component, focusing the business more on the questions of who their customer are,
how much they value different aspects of the service, the cost of satisfying them in
this respect and the magnitude of the payoff which is likely to result. Importantly,
they also point out that an explicit service strategy creates a rallying point, can
identify conflicts between overall business strategy and customer strategy and it
forces the business to decisive effective ways to measure service performance
(Thompson, 2003).
Business without clear service strategies also have a hard time perceiving differences
among customers. Among the most important reasons for developing a service
strategy is to evolve an optimum mix and level of service for different customer sets.
Provide too little service and of the wrong kind, customer will leave; provide too
much, even of the right kind, and the tour operator will either be unprofitable or
become uncompetitive (Naylor, 1999).
To help make a service strategy more explicit, Bell and Zemke (1991)
State that an effective service strategy has distinct characteristics.
Specifically, it is a non-trivial statement of intent or a promise, that:
- Noticeably differentiates you from others.
- Has value in your customer’s eyes.
- Can realistically be delivered by your organisation.
- Is understood by all employees.
Adding to this, Carlzon (1997) and Albrecht & Zemke (1985), cited by Porter .
(1996) believe that not only is a service strategy essential, it also needs to permeate
all parts of the organisation. It is this which directs the attention of the people in the
41

organisation towards the wants and needs of the customer. In other words, it must
become part of the culture to be effective.
So, although it is obviously more essential for a tour operator to have a well
developed corporate strategy, it may also be extremely useful for them to develop a
service strategy to help them focus on the customer. A service strategy involves
segmenting customers and deciding what is the optimum level of service to offer that
set of customers in order to be profitable but also to retain those customers. It should
act as a differentiator and must have value in the customer’s eyes. In order to be
useful, it must be both realistic and understood by all employees.
Therefore it must become part of the culture of the organisation. (Hollensen, 2003)
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4.2 Organisation Culture
In order to see how organisation culture can impact on customer care, it would be
useful in the first instance to look at some definitions.
“Culture is the set of key values, beliefs, and understandings that are shared by
members of an organisation. Culture defines basic organisational values, and
communicates to new members the correct way to think and act, and how things
43

ought to be done. Culture represents the unwritten, feeling part of the organisation”
(Daft, 1996).
“Organisational culture is the collection of relatively uniform and enduring values,
beliefs, customs, traditions and practices that are shared by an organisation’s
members, learned by new recruits, and transmitted from one generation of employees
to the next”(Buchanan and Huczynski, 2004).
Clearly, from these definitions, culture has a powerful affect on ways in which
employees actually behave. Since employee behaviour is at the very core of any
service strategy and plan, the management of culture is critical to service strategy.
Most writers on the subject concur. Horovitz and Panak (2002), Gronroos (2000),
Albrecht and Zemke (1985), Bowen and Schneider (1988), Johnson (2001), Lewis
(1989), Schneider (1986) cited by, Buchanan and Huczynski, 2004.
Pollen (1991), all advocate the need for a service culture when an organisation is
planning to offer excellent customer care. The main reason they advance is that
customers and their behaviour cannot be standardised and totally predetermined. For
instance, Schneider (2001) believes that because customer situations vary, a
distinctive service oriented culture is needed that empowers employees to respond to
new, unforeseen and even awkward situations.
In the same vein, Parasuraman (1987) differentiates between routine and non-
routine service. He emphasises that non-routine service can have a disproportionately
large impact on a firm’s image. “Every time a non-routine service encounter arises, a
firm and its organisational culture are put through a crucial test. If the tour operator
has the ‘right’ culture, it can not only pass the test with flying colours but also
enhance its reputation through invaluable word-of-mouth communication”.
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However, it is a template of modern management thinking that the underlying value
system of the organisation cannot be managed in any traditional way. Issuing a
written rule or policy, for example, may secure compliance in the short term but may
have little impact on the organisation’s real value system. Instead, writers like Daft
(1996) stress the need for managers to convey appropriate values and beliefs using
more subtle instruments such as rites and ceremonies, stories symbols and slogans.
Carefully planned human resource practices in an organisation also play their part in
helping to develop a strong corporate culture. Payne (1991), states that while
specialised personnel departments may not be responsible for defying the overall
culture, they must hold themselves ready to create the processes and practices to help
senior management nurture a suitable culture. The personnel policy areas which he
identifies as having potentially important effects on the nature of the culture are
recruitment, promotion policies, training and development and reward systems.
Finally, many writers emphasise the crucial importance of leadership in shaping
organisational culture. For instance, Lewis (2000) found that “to develop a service
culture calls for strong and visible leadership which may be well facilitated by an
identifiable “hero” or “champion” of the cause. For example, Collin Marshall at
British Airways or Jan Carlzon at Scandinavian Airlines”.
In summary, a service culture can be a powerful tool for creating an appropriate
customer service attitude among employees. It can help employees to be more aware
of the needs of the customer and the necessity to satisfy those needs through their
own value system rather then written rules and procedures. This is especially true of
non-routine and unpredictable customer situations. Human resource practices need to
be explicitly customer focused and senior managers totally committed to customers
for a strong service culture to emerge and be maintained.
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4.3 Systems
There are other factors which appear to impact significantly on the level of
customer care which organisations offer their customers. For the purpose of this
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customer care which organisations offer their customers. For the purpose of this
paper, I have drawn together under the heading of systems. They are: marketing;
standards, policies and procedures; human resource practices, and technology.
4.3.1 Marketing
“Marketing is too important to be left to the marketing department”, David Packard of
Hewlett-Packard. “In a truly great marketing organisation, you cannot tell who’s in the
marketing department. Everyone in the organisation has to make decisions based on the
impact on the customer”, so adds Professor Stephen Burnett of Northwestern. These
quotes taken from Philip Kotler (2003) best encapsulate the essence of the marketing
concept.
As discussed in the previous section, under culture, in order for the organisation to think
“customer”, this focus must be ingrained in every employee. This philosophy of
marketing does not always line up with the image of the traditional marketing department
which is often seen as a group of specialists using arcane techniques to promote the tour
operator’s services. For a tour operator to be excellent at customer care, this is not
sufficient! Whilst such departments may espouse the marketing philosophy their actions
often belie a narrower concept of hard selling.
Kotler (2003) draws a comparison between this selling emphasis and the true concept of
marketing. “The marketing concept holds that the key of achieving organisational goals
consists of determining the needs and wants of target markets and delivering the desired
satisfactions more effectively and efficiently than competitors”, whereas “the selling
concept holds that consumers, if left alone, will ordinarily not buy enough of the
organisation’s products. The organisation must therefore undertake an aggressive selling
and promotion effort”. Here Kotler is reinforcing a point made long ago by Theodore
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Levitt (1960), “selling focuses on the needs of the seller; marketing on the needs of the
buyer”.
Kotler (2003) shows it like this:
Starting Focus Means Ends
point
--------------------------------------------------------------------------------------------
Factory Products Selling & Profits through
Promoting sales volume
a) The selling concept
Market Customer Coordinated Profits through
Needs Marketing Customer satisfaction
b) Marketing concept
As a result, the organisations which are deemed to be excellent at customer service work
under a lived marketing concept, not the selling concept!
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4.3.1.2Market Research
What is a lived marketing philosophy? If one of the characteristics of this philosophy is a
focus on the customer, it follows that the tour operator must find out what the customer
really wants. Many writers (Kotler et al, 2002; Berry et al, 2000; Pollen, 1991;
Davidow and Uttal, 1989; Hensel, 1990; Quinn and Humble 1991; Zemke, 1992;
Kotler, 2003 and Quinn, 1990) labour this point over and over again, because they
know that, although, it may appear obvious, this step is frequently neglected by
organisations. How on earth, as Pollen (1991) states, can you make a customer happy if
you have no idea of his or her needs and preferences. There are many telling examples in
the literature of how the simple act of listening to the customer has made all the
difference. For example, Parasuraman et al (1991) describe an experience with the
Chicago Marriott Hotel. This hotel had been open for fifteen years before management
realised that two-thirds of all guest calls to housekeeping were to request ironing boards.
This discovery prompted the idea of placing irons and ironing boards in all of the hotel’s
guest rooms, attracting a cost of $20,000. The hotel manager was coming up against
resistance to his investment. On reviewing the capital budget he found that $22,000 was
allocated to replace black and white televisions in the bathrooms of the concierge-level
bedrooms with colour sets. On enquiring as to how many guests had made such a request,
he discovered that none had. A major hotel chain had not asked the customer what
service they wanted improved. They had not listened to their customers. They were
investing resources in an area of service which would not result in a return for them.
Pollen (1991) quotes another interesting example of a travel company that targeted senior
citizens as their primary client. Management came up with a great new idea – to have a
senior citizen act as a tour guide on one of these trips. After the trip, the company asked
the senior citizens on the tour what they liked or disliked about the trip. Much to the
company’s horror, almost every customer commented that they were disappointed that a
younger person (someone who was not just like they were) was not their guide. If this
question had been asked before the trip had taken place, the company might have more
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happy customers afterwards. Gap number one of this company, as expressed by
Zeithaml, Parasuraman and Berry (1990),
(See 4.0) which is the gap between the customer’s expectations of service and the
manager’s perceptions of the customer’s expectations would have been closed.
These are small and quite simple examples. Arguably, understanding the needs of
thousands and even millions of customers, particularly in mass consumer markets
requires more elaborate and systematic forms of scientific market research of the kind
that require the use of a specialised external agency. Without going into detail about the
different qualitative and quantitative form of research, it is important to emphasise that
such techniques are a supportive tool, an aid to judgement. They can never quite
substitute for the kind of acuity about the customer’s need that comes from direct and
constant interaction with real customers, particularly if the tour operator needs to keep
itself undeceived about how satisfied customers are with the level of service it is
providing.
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4.3.2 Hum
an Resource Practices
“The vital elements of a service culture include selecting the right candidates for
employment, establishing an appropriate reward structure, and developing training
programs to ensure that every level of the organisation believes in and acts within the
culture”, Pollen (1991). As seen in 4.2., Payne (1991) believes that the personnel
department must be responsible for facilitating the development of a service culture.
Barnes (1999) also argues that in order to be able to offer good service, tour operators
will require a much closer link between marketing and human resources. He goes on to
say that this means better selection of staff, better training, better reward systems and
better support and motivation. Ulrich (1991) goes even further by believing that
customers should be involved in the human resource practices in an organisation in order
to gain customer commitment and enhanced competitiveness (see also 5.0, Relationships
with Customers).
4.3.2.1 Recruitment
Recruitment of front line staff is believed by many writers to be one of the keys to
excellent customer service (Barnes, 1999; Ulrich et al, 1991; Pollen, 1991; George,
1990; Berry, Zeithaml and Parasuraman, 2000; Schneider, 2001; Schlesinger and
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Heskett, 1991; Horovitz and Panak, 2002). This is because customers have most
contact with front-line staff who are, in effect, the ambassadors of the tour operator. Jim
Daniel, President of the high performing Friendly Bank sums it up well he says, “ A
continual challenge is finding people… who have the qualities necessary to provide the
top-notch customer service that we require. Creative interviewing techniques must be
utilised to obtain a clear picture of how the applicant truly feels about the public. Most
applicants have had some degree of customer contact. However, very few really thrive on
customer contact. We look until we find that person” (Berry, Zeithaml and
Parasuraman, 2000).
However, few tour operators, unfortunately, give as much time and energy to recruiting
the key front line people as they should. When hiring front line staff, it is necessary to use
a structured approach, (Bell and Sims, 1990).
Their approach includes steps such as: defining the service role, making the selection
process match the service outcome, helping the applicant’s selection decision to be as
accurate as yours, learning how the applicant reacts to pressure and outlining the critical
service qualities.
4.3.2.2 Training
Horovitz and Panak (2002), found in their survey of top service companies that training
was seen as even more important than recruitment and was a crucial success factor. Carr
(1990) believes that the performance of each individual is a product of three related
factors: skills, motivation and affinities. He says that it is essential to recruit people with
the right affinities; they will be motivated or de-motivated by their supervisors or
managers (see 4.4., Role of the Manager) but training can provide skills. Pollen (1991)
adds that a front-line person must be trained in both the tour operator’s service policy,
which is a classroom issue and in product information, which is a manager issue. She
goes on to say that in order for the classroom training to be effective, the trainers must
constantly look at the policies of the tour operator and make them “living”. Other writers
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(Quimby, Parker and Weimerskirch, 1991 and Long, 1990) have explored this same
issue and also feel that employees need to be able to relate their training to real life.
In Section 4.3.2.2, (Policies and Procedures), empowering front-line staff was put
forward by many writers as an important prerequisite to excellent customer care. Unless
these front-line staff, however, have been fully trained and are knowledgeable in the tour
operators’ services, they cannot be empowered successfully: “People without information
cannot behave responsibly” Carlzon (1999). However, not all writers value this in-depth
approach to training. Piskurich (1991) believes that thirty minutes’ training is all front-
line staff need. He trains his people to smile and greet customers each time they meet
them. He calls it the “every customer – every time” approach to training which he feels is
easy to administer and follow up. Cross-training is also recognised as being useful. This
can help team-building among people in different departments, helping all staff to have a
greater awareness of each others activity. It also helps everyone to know about the tour
operator, ultimately helping them to serve their customers better, (Johnson, 2001 and
Bombard, 1990).
For employees at this level, personal training can also be included. Objectives, such as
confidence building, increasing self-esteem, enhancing interpersonal skills, managing
stress, and goal setting can be embraced during training and are highly desirable as they
can help the individual to be a well rounded person, (Buchanan and Huczynsky, 2004;
Peters, 1991; Johnson, 2001; Bombard, 1990).
4.3.2.3 Rewards
As we have seen from 4.2, Organisation Culture, encouraging a service culture is
desirable where you are hoping to offer excellent customer service. Many writers
(Buchanan and Huczynsky, 2004; Parasuraman, 1987; Schlesinger and Heskett,
1991; George, 1990; Gunnigle Heraty Morley, 2002; Carr, 1990; Richard, 1991;
Ulrich et al, 1991; Calrzon, 1999; Dessler and Farrow, 1990) agree that management
54

should recognise and reward employee behaviour that reflects these desirable values.
However, in many organisations, pay for performance is only believed to be feasible at
managerial level.
But Schlesinger and Heskett (1991) believe that compensation should be linked to
performance for employees at every level, not just for those at the top. Authors such as
(Richard, 1991; Mabey et al, 2001; Pujol and Tudanger, 1990; Pollen, 1991; Berry,
Zeithaml and Parasuramam, 2000; Wright et al, 2000) feel that companies, and
indeed tour operators do not use financial incentives enough at front-line. Mabey et al
(2001) quote from a study conducted in the late 1970’s for the National Science
Foundation which stated that when pay is linked to performance,
employees’ motivation to work is raised, their productivity is higher and they are usually
more satisfied with their work. We also saw in 4.3.2.1 that the quality of service
delivered by customer contact personnel is critically influenced by the standards against
which they are evaluated and compensated.
Pay, however, is not the only method of recognition or reward. Mabey et al (2001) writes
about symbolic rewards used in Southern Bell. Employees there often ask where they can
buy the designer style jackets and sport apparel the company awards to outstanding
service providers. They are told the items are not for sale – “the only way to get a jacket
is to earn a jacket”. Lapel pins and “bright ideas” coffee mugs can also act as morale
boosters and motivators. Carr (1990) outlines a few more methods, including simple, on-
the-spot praise and thanks, recognition for teamwork and more independence.
So, in summary, the HR department is responsible for many areas such as recruitment,
training and rewards, which have a great impact on the organisation culture. Recruiting
front-line people with the right attitude, training them in service knowledge and the
necessary skills, and rewarding them for their performance in the desired areas is seen by
many as a pre-requisite to excellent customer care.
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4.4 Role of the Manager or Team Leader
When writing about the role of the manager, (Hensel, 1990; Horovitz and
Cudennec- Poon, 1990; Berry et al, 2000 and Wright et al, 2000) all place strong
56

emphasis on recruiting, managing, communicating with and supporting the customer
service team. But probably the most important influence on front-line people is their
boss. According to (Richard, 1991; Urich et al, 1991 and Pujol and Tudanger,
1990) the employee-customer relationship is a mirror image of the employee-
management relationship. If an employee is managed well, is recognised for doing a
good job, is motivated and feels secure, then these good feelings are bound to rub off
on the customer. Research has also shown that when employees feel an attachment to
the firm, they are more likely to share their positive images and feelings about the
firm with customers.
Increased employees attachment eventually spreads to customer attachment (Ulrich et al,
1999).
In this scenario, Carr (1990) believes that an important role of any manager is to protect
their customer-contact people from abuse. He says once they know that help is at hand,
they will rarely ask for it. But what is most important is that they know they have the
support when needed.
The managers of a customer service team therefore have a lot of roles to play. It seems
also that it is important from a credibility point of view that the manager can do the job
well himself/herself (Richard, 1991; Carlzon, 1999). He or she must be able to react
well to customers and show their staff how to handle situations by example. They must
show by example that they themselves have a commitment to service, (Ulrich, 1991).
They shall coach, guide and support rather than direct and control. In other words they
should help the front line person to keep a good focus. (Richard, 1991; Ulrich and
Lake, 1991; Schlesinger and Heskett, 1991; Zemke, 1992; Carlzon, 1999; Zeithaml,
Parasuraman and Berry, 1990). Wright et al, 2000 sum it up when he says “when
managers guide instead of control, the sky’s the limit on what people can accomplish”.
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Communication is defined by the Oxford Illustrated Dictionary (2001), as “imparting
(esp. news); information given; intercourse”. It defines communicative as “ready to
impart; open; talkative”. Horovitz and Panak (2002) found that companies, and
consequently tour operators who succeed in installing values and a culture in their
employees spend more money than average on internal communication. They
communicate internally in order to motivate people, to keep them abreast of the tour
operator’s successes and failures, and to ensure that the goals and objectives of the tour
operator are understood by everyone. We have seen earlier in this thesis (4.1) the
importance of having a service strategy and that to be useful it needs to permeate all parts
59

of the organisation (Carlzon, 1997). This can only happen by management
communicating the strategy to all employees. The organisation culture (4.2), on the other
hand, is responsible for communicating to employees the correct way to think and act,
and how thinks ought to be done, Daft (1996). Customer care values are therefore
communicated though the tour operator culture, which is in turn influenced by the
strategy which should be passed on by management. Policies and procedures (4.3.2.2)
and service standards (4.3.2.1.) also need to be communicated to all employees.
Front-line people who are taking responsibility for their customers’ needs must also have
an accurate feedback system; it is necessary for them to realise the consequences of their
actions. When an organisation collects customer satisfaction data (4.3.1.3), they should
feed this information back to the people actually dealing with the customer, otherwise the
information is not being properly utilised, (Carlzon, 1999; Parasuraman, Berry and
Zeithaml, 1991; Shlesinger and Heskett, 1991). Although most tour operators advocate
downward communication though team briefings, newsletters, staff meetings etc. upward
communications is not so prevalent. However, companies such as, Marriott, Wal-Mart
and Syntex encourage, appreciate and reward upward communication from contact
people (Parasuraman, Berry and Zeithaml, 1990). Through this channel, management
learns about customers’ expectations from those employees in regular contact with
customers and can thereby reduce the size of Gap 1 (see 4.0).
Horovitz and Panak (2002) found that tour operators with good service records
communicative externally to make sure that customers understand what the tour operator
is offering in terms of service so as to manage customer expectations. In addition to this,
the keep open a running dialogue with customers in order to keep ahead of changes in
customer expectations and to integrate customers’ expectations or ideas into their
organisation’s service offering. As seen from 4.3.1.1., external communications must be
managed carefully in order to help manage the expectations of customers.
Communication both internally and externally has been found to be an important tool in
the area of customer care. Just about all of the areas looked at so far have to be
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communicated about to either employees or customers, or both. You will see from the
above diagram that there is a link between all of the other areas through communication.
If communication is not open, frequent and in all directions, then an organisation cannot
hope to offer the best possible quality of service to its customers.
The five areas which were discussed in this chapter i.e. strategy, culture, the role of the
manager, systems, and communication, are essentially the ingredients which make up
excellent customer service. However, an area which has been gaining in importance in
recent years is the actual relationships between customer and tour operator. Competence
in the five main areas is a pre-requisite for a tour operator to have good relationships with
its customers but there are other elements to be considered in addition. These will be
explored in the next part.
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Part 2
Customer Relationships
5. Relationships with Customers
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Notwithstanding the known evidence for the profit and competitive benefits of
service quality and the philosophies and techniques we have described for
constructing coherent service policies, many writers have suggested the need for a
more multi-faceted relationship with customers.
In other words the focus must transcend any particular transaction with customers and
encompass interface with the customer at all levels within the tour operator. A new
even broader concept of marketing relationship marketing, has evolved a set of
63

principles and practices to address this challenge. (Rees, Professor Merlin Stone
and Professor Clive Nancarrow, 2003)
A customer may have had twenty good experiences with a tour operator, but then
deals with one person who is rude to him or her; the latter is the experience which
may have the greatest impact. In this scenario, each important interface with the
customer needs to be carefully identified and relationships need to be fostered
because any of these relationships breaking down can cause customers to go
elsewhere. While Gronross (1990) believes that the marketing concept, as the basic
philosophy still holds, the marketing mix approach to transferring this concept to
marketing in practice is, however, too simplistic and too narrow in scope to be more
than partly useful in most service situations. He therefore formulated a relationship
definition of marketing: “Marketing is to establish, maintain, enhance and
commercialise customer relationships (often but not necessarily always long term
relationships) so that the objectives pf the parties involved are met. This is done by a
mutual exchange and fulfilment promises”.
The benefits of developing this closer relationship with customers are seen by
Magrath and Hardy (1994) cited by Harding and Edgar Ortiz (2002) as improved
quality, reduced costs and service satisfaction, all means, they believe, of retaining
customers.
Henderson (1990) cited by Lindgreen (2004) also sees these benefits but adds
preparedness to share risk and the ability to create a positive, mutual work
environment.
Barnes (1999) adds to this notion by saying that tour operators which have adopted a
long term relationship-based view of marketing have gone well beyond viewing the
transaction as the objective of marketing and the marketing mix as the means of
achieving that objective. He draws on many writers, Gronroos (2001), McKenna
(1991), Webster (2002), Reichheld and Sasser (1990) to make his case. He goes on
to say that customer relationships will be seen in the future as a key strategic resource
of business. He says that, increasingly success full tour operators are focusing their
attention beyond the transaction, and looking toward the building of such long term
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relationships with their customers. While technology and skills may be available to
every tour operator, access to a loyal customer base is difficult, if not impossible to
emulate easily.
How to actually build such a powerful asset is another question. Jackson (2001)
wrote, that although marketers very much believe that they are building lasting ties
with buyers, unfortunately they are not. Sometimes they want to be involved in
relationship marketing but their customers think more in terms of transaction
marketing. Alternatively, Parasuraman, Berry and Zeithaml (1991) say that many
of the customers they interviewed during this research want to be “relationship
customers” of the tour operator serving them. They want a “partner” – someone who
knows and cares about them. They go on to say that, unfortunately, relationship-
seeking customers are frequently disappointed. Despite the stated intent in
relationship marketing within numerous tour operators, the preponderance of
evidence from their own research indicates an unrealised ambition.
Jackson (2001) also believes that there is a need to carefully distinguish between
relationship marketing opportunities on the hand and purely transactional marketing
on the other. She developed a spectrum of behaviour, with an extreme at each end, to
help explain how customers behave when making buying decisions. On one extreme
is what she calls the “always-a-share model” which assumes that a customer making a
purchase of some service repeatedly can easily switch part or all of its patronage from
one vendor to another. The customer therefore can share its patronage among
multiple suppliers. The always-a-share model customer faces low switching costs, so
even tour operators who make consistent sales to the customer are obliged to give
immediate reasons for continuing the relationship with each purchase. Transaction
marketing is appropriate for this type of customer. On the other end of the spectrum is
the “lost-for-good” model. This customer faces high switching costs and therefore
changes supplier very reluctantly.
Relationship marketing is more appropriate for this type of customer. She goes on to
say that real customers are likely to approximate various spectrum points between
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lost-for-good and always-a-share. The position of a certain customer will depend in
part on characteristics of the service, on the customer’s usage system for the service
and on actions both the vendor and the customer take. In other words, this new form
of relationship marketing requires new segmentation approaches (Roderick White,
2003).
Furthermore, Ulrich (1989), cited by Rensmann, (2000) highlights that the
concept of customer commitment is a powerful idea. He says that “firms earn
customer satisfaction in the short term by assessing and meeting needs; they earn
customer commitment in the long term through hundreds of small heroic acts that
create loyalty and devotion. Satisfied customers feel good as long as their needs are
fulfilled; committed customers look beyond short- term pleasures and develop an
allegiance to the tour operator. Satisfied customers remain independent from the
tour operator; committed customers become interdependent with the tour operator
through shared resources and values”. Ulrich’s logic is in five steps:
1. Building customer commitment is key success for any firms.
2. Efforts to gain customer satisfaction may be necessary but not sufficient
components of customer commitment.
3. Increased customer commitment comes from sharing information with customers
and involving them in a firm’s strategic and organisational activities.
4. Complete customer commitment develops as customer receive information about
and participate in a firm’s HR practices.
5. As customer and employees approach unity, complete customer commitment
results.
While Ulrich has explored how customer commitment can be gained through the use of
human resource involvement, other writers have looked at different areas. Cardozo,
Shipp and Roering (1992), cited by Nicks and Kevin Ford (2003) describe a type of
partnership: a “customer- linked strategy” which is a comprehensive, integrated set of
marketing, operations and information policies designed to serve the needs of a small
66

number of significant customers. Henderson (1990) cited by Lindgreen (2004)
researched strategic partnerships in the information systems area. He believes that while
partnership is a concept easily invoked, it is difficult to actually make it work. He also
point out that a partnership relationship is not always appropriate.
However, Morgan and Hunt (1994), cited by Harding and Edgar Ortiz (2002) state
that “conspicuously missing from all extant definitions of relationship marketing is the
specific recognition that many instances of relationship marketing do not have a
“customer as one of the exchange participants. Strictly speaking, in strategic alliances
between competitors, partnerships between tour operators and government in public-
purpose partnerships, and internal marketing, there are neither “buyers”, “sellers”,
“customers” nor “key accounts” – only “partners exchanging resources” They therefore
proposes that “Relationship marketing refers to all marketing activities directed toward
establishing, developing, and maintaining successful relational exchanges”.
Similarly, Fahy (1993) believes the tour operators can achieve a competitive advantage
by forming long-term contractual arrangements with customers. He says that once a
contract is signed an asymmetry is introduced between incumbents and potential entrants
so that the competitive advantage is maintained through the contract. He goes on to say
that where formal pre-commitment contracts are not possible, tour operators can engage
in implicit contracts with customers which is essentially the concept of memberships.
Many service business automatically lend themselves to long-term relationships with
customers, for example banking and insurance. Other service companies have tried
various ways to look in customers, such as airlines with frequent-flyer programmes and
hotels with their honoured-guest cards.
Although there has been much research into the advantages of building customer
relationships, there appears to be dearth of literature on how this strategy can be
implemented. Parasuraman, Berry and Zeithaml (1991) state simply that genuine
customer relationships are built on the foundation of fairness, sincere efforts to
understand and help the customer and ongoing, personalised communications. Webster
67

(2002) expands on this by saying that organisations must place increased emphasis on
relationship-management skills. He goes on to say that everyone in the organisation must
be charged with responsibility for understanding customers and contributing to
developing and delivering value for them. It must be in the organisation culture!
Furthermore, Morgan and Hunt (1994) cited by Harding and Edgar Ortiz (2002)
suggest that commitment and “trust” critical factors. They say that commitment and trust
are key because they encourage marketers to (1) work at preserving relationship
investments by cooperating with exchange partners, (2) resist attractive short-term
alternatives in favour of the expected long-term benefits of staying with existing partners
and (3) view potentially high-risk actions as being prudent because of the belief that their
partners will not act opportunistically. In short, they believe that commitment and trust
lead directly to cooperative behaviours that are conductive to relationship marketing
success.
Henderson (1990) cited by Lindgreen (2004) is more specific in his prescription. He
believes that these are the most important areas to look at:
In summary, while many writers have shown the general profit and competitive benefits
of customer service and have prescribed numerous organisational and management
techniques for creating better customer service, leading edge thinkers are point with
increasing urgency to the importance of this last all-compassing relationship component
which goes well beyond the particularities of the single transaction.
Based on this key assumption, this study set out to explore how Irish Dublin- based tour
operators build lasting customer relationships.
To achieve the objectives of the study, the following research questions were formulated,
by adopting a three -steps process:
68

1) To establish if the findings of the more general literature on customer care are
born out in the Irish context.
The following propositions will be tested:
• That there is a link between customer retention and profitability
• that there is a link between customer care/relationships and customer
retention
2) To ascertain the perceived importance of customer relationships to Irish Dublin
based tour operators.
• Attitudes to customer relationships; are they important?
If so, why?
• Do Dublin-based tour operators build relationships?
• What so they know about their customers; why do some customers stay
and other leave?
• What data do they collect?
3) The final objective of this study will be to gather data on how Dublin-
based tour operators build customer relationships.
In order to address this objective the following research questions were asked:
• What customer contact situations do Dublin based tour operators have with their
customers?
• What specific methods they use to build customer relationships?
69

• Which are the most effective methods to use in building relationships and do
these differ for different customers?
• How have they put these methods into practice?
• Which staff deal with which customers?
• Will differ situations or circumstances dictate the use of different relationship
building methods, i.e. small tour operator versus bigger tour operators.
The next chapter will outline the research methodology chosen for this study, why it was
chosen and how it was carried out.
70

6. Research Methodology
The Research Process
[Cooper and Schindler, 2003]
In order to make the decision as to which research(s) methods to use for this
particular study, an analysis of the available methods was necessary.
Gill and Johnson, (2002) describe a continuum of research methods.
On the one end are “nomothetic” methodologies which have an emphasis on the
importance of basing research upon systematic protocol. At the other end of the
71

continuum are ideographic methodologies which emphasise the analysis of subjective
accounts that one generates by getting inside situations and involving oneself in the
everyday flow of life. Their comparison is as follows:
Nomothetic methods emphasise Ideographic methods emphasise
1. Deduction vs Induction
2. Explanation via analysis of causal Explanation of subjective
relationships and explanation by vs meaning systems and
covering-law. explanation by understanding
1. Generation and use of quantitative vs Generation and use of qualitative
Data Data.
2. Use of various controls, physical or Commitment to research in
statistical, so as to allow the testing vs everyday settings, to allow
of hypotheses. access to, and minimise reactivity
among the subjects of research.
3. Highly structured research vs Minimum structure to
Methodology to ensure replicability methodology to ensure 2, 3 and 4
of 1,2,3,4 (and as a result of 1)
Lab. Experiments Quasi experiments Surveys Action Res.
Ethnography
Source: Gill and Johnson, (2002)
72

6.1 The choice of Research Methodology for this
Study
In order to obtain an accurate picture of how Dublin-based tour operators view the
effectiveness of building relationships with their customers, it seems most useful to
question a reasonable number of tour operators. However, in-depth information on
how relationships are built between tour operators and customers would also be
highly desirable.
On investigating the different research methods available, it appears that three of the
aforementioned methods – laboratory experiments, quasi-experiments and action
research – attempt to explain situations by the use of various interventions. This study
necessitates finding out what is actually happening in Irish business at present and is
therefore investigative and descriptive in nature, so intervention techniques would not
appear to be suitable. On the other hand, ethnography approaches focus on
observation of participants, and do not involve quantitative measures, so these
methods would not appear to be analytic enough for this research. Each of these
methods mentioned would also be limited in the number of tour operators which
could be observed.
Surveys, on the other hand, allow for quantitative measures so that it would be
possible to see what percentage of the chosen sample feel about each issue under
scrutiny. With postal questionnaires, they also allow a large population to be
questioned. However, many surveys are deductive in nature and use an analytical
approach, seeking only quantitatively analysable data. Certainly this will be useful.
But the main thrust of this research, is to collect the views and opinions of managers
who are responsible for the customer care in their organisations.
It will therefore be necessary to use a deductive approach to test the initial hypothesis,
which is that building relationships with customers can lead to greater customer
73

retention, but also to use open-ended questions to collect data in a more inductive
form, therefore merging the survey approach with a style of research which is more
qualitative in orientation.
In summary, it was decided to develop a postal questionnaire which would be mailed
to a targeted sample of approximately 55 tour operators by using a simple random
sampling technique, (Morris, 2003). This questionnaire would include both multiple
choice and open-ended questions in order to obtain easily analysable quantitative data
and richer data from the respondents on their opinions and observations. As the
questionnaire needed to be detailed and therefore take time and commitment on the
part of the respondent, it was not envisaged that the response rate would be very high.
6.1.1 Approach to Research
By analysing The Kolb Learning Cycle, the approach which best addressed both my
objectives and learning style was deductive (See Appendix: Reflections on Learning
and Skills Development). This theory was chosen it because generates hypotheses that
can be tested and thereby allowing explanations of laws to be assessed. (Saunders,
Lewis and Thornhill (2003).
As a result, “it has a much stronger bond between reasons and conclusions than is found
with induction.” Cooper and Schindler (2003)
Furthermore, “this approach marries an epistemological position that advocates the
application of the methods of the natural sciences to the study of social reality called
positivism. (Bryman and Bell, 2003). This method also places greater focus on the
quantitative research approach which involves the collection of information that enables
a factual base to be developed with sufficient strength to allow rigorous statistical
analysis. (Brassington and Pettitt, 2003)
Thus, including data that can be collected through primary research such as
questionnaire-based surveys. (Kotler, 2003)
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6.1.2 Research Strategy
As mentioned above my research mainly involved quantitative analysis.
However, qualitative analysis was taken into account. For instance, by using a highly
structured questionnaire to gather data in a form that is quantitatively analysable,
respondents might be constrained by self-completed questionnaire or led by interviewer.
Therefore care was taken in their construction to allow enough qualitative statements to
gain real insight and views from the respondents.
In this context, Saunders, Lewis and Thornhill (2003) state that an advantage of using
multi-methods is that it enables triangulation to take place. Thereby, increasing and
improving research strength in information validity and reliability.
For this reason, according to past research conducted in customer retention, a survey by
using questionnaires was put in action to test my hypothesis, which is to investigate if
Irish Managers employed in Dublin based tour operators do understand the benefits of a
strong customer care policy and if so, to ascertain how they actually build customer
relationships. To reach this objective, it was used as both quantitative and qualitative
approaches.
6.1.3 Research Design and Creditability of Research Findings
Cooper and Schindler (2003) suggest that “through exploration, researchers develop
concepts more clearly, establish priorities, develop operational definitions, and improve
the final research design. Exploration may also save time and money.”
For this reason, my final objective was not only to explore but also to describe how
Dublin-based tour operators actually build customer relationships.
However, according to the “multi-methods” approach adopted, both exploratory and
descriptive approach was implemented.
Furthermore, according to Bryman and Bell, 2003 objectivity and being systematic are
both qualities that if applied in the consistent manner lead to suppress bias.
75

As a result, I scrupulously applied those qualities so that if anyone employs the same
rules adopted, he/her will come up with the same results; thereby respecting key criterion
such as Validity and Reliability.(See graphic below)
Understanding Validity and Reliability
. [Cooper and Schindler (2003)]
6.2. Construction of the Questionnaire
Gill and Johnson (2002) outline four interrelated issues in questionnaire design
which they believe should be considered: questionnaire focus, questionnaire
phraseology, the form of response, and question sequencing and overall presentation.
On designing the questionnaire for this research, all of these areas were considered.
The focus, according to Gill and Johnson (2002) means the extent to which the
questions intended to be asked cover the various aspects of the research problem
76

adequately and in sufficient detail. The questionnaire (see appendix 1) is attempting
to discover the following:
Profile respondent
Questions 27 and 28 ask about the tour operator profile
Customer contact
Questions 1 and 2 attempt to find out what transactions are taking place between Irish
tour operators and their customers and what method of contact is used. Questions 7
and 8 ask how their customers buy and how often.
Reasons for customer loyalty
Questions 9, 10, 10a, 11, 12 ask why customers leave or stay with the tour operator
and how this is tracked.
Acquiring new customers
Questions 3 and 4 ask how the company acquires new customers.
Questions 5, 6 and 23 ask if the tour operator have a different focus on new existing
customers.
Should you keep all customers?
Questions 15 and 16 ask whether a tour operator should keep all customers.
Most profitable customers
Question 11 asks the tour operator’s opinion on which customers are most profitable.
Question 14 seeks to find out the customer retention rate.
77

Retention building
Questions 17 to 26 ask the tour operator how they go about building relationships
with their customers, how effective these methods have been and if there have been
any spin-off effects.
Phraseology is the term used to describe whether or not the ways in which questions
are asked are intelligible to respondents, (Gill and Johnson, 2002 and Selltiz,
Wrightsman and Cook, 1981) provide many useful hints on wording questions so as
to be sure that they are providing the data being sought.
Gill and Johnson (2002) emphasise that the data provided must be elicited in a form
that permits subsequent analysis. As this analysis usually entails computer-aided
statistical manipulation, it is vital that measures of the variables important to be the
research problem are built into the questionnaire by asking questions in an
appropriate way and providing an appropriate pro forma for the responses. The
problem with this is that often respondents are forced into ticking a box which they
are not comfortable because they are only presented with a limited range of options.
On the other hand, when an open question is asked, it is often difficult for the
researcher to decide into which category of answer to put the respondent.
Best results, according to Selltiz, Wrightsman and Cook (1981) are often achieved
by means of a combination of free-answer and fixed-alternative methods. This survey
used a combination of the two. One of the primary purposes of this study was to
investigate which methods of relationship-building were being used among Dublin-
based tour operators. As the level of awareness of relationship building methods was
not known, it was felt that it would not be sufficient to pose an open free-answer
question. Because it was preferable to investigate the level of awareness of
relationship-building methods, neither was it deemed sufficient to ask a fixed-
alternative question. A method was used therefore which combined both, first posing
78

the question as a free-answer question (see Question 18), followed on the next page
by the same question, in a fixed-alternative format (see Question 19). This delivered
some very interesting and differing results as can be seen in the next chapter.
The sequence of the questions is also important to consider. Gill and Johnson (2002)
argue that this is particularly necessary where a postal self-completion questionnaire
is to be used. In fact they believe that the questions should have a natural and logical
order. Selltiz, Wrightsman and Cook (1981) call this the “correct psychological
order”. Every effort was made when drafting the questionnaire for this study to order
the questions in the most beneficial way, commencing with general, easy to answer
questions, and finishing with specific, more complex questions.
6.3Piloting the questionnaire
An important step in developing a questionnaire is the plot study. In essence, pilot
research is a trial run-through to test the research design with a sub-sample of
respondents who have characteristics similar to those identifiable in the main sample
to be surveyed, (Saunders, Lewis and Thornhill, 2003).
Gill and Johnson (2002) believe that piloting is necessary as it is very difficult to
predict how respondents will interpret and react to questions. The population to be
surveyed in this instance are the managers who have responsibility for customer care
within the tour operator. Typically this is the customer service manager or the
marketing manager in large or medium sized tour operators and the chief executive in
small organisations.
For this pilot study, five marketing managers from large to medium-sized tour
operators were used.
All of them had responsibility for or had a great deal of involvement in managing
customer service in their organisations. The author visited them and remained
79

available while they completed the questionnaire so that they could ask any questions
of clarification.
As a result of this pilot study, three questions were deemed to be open to
misinterpretation. These were changed for the main survey.
Each of these questions was clarified with the managers during the time when they
were completing the questionnaire.
This meant that their responses were valid and could be used in the main body of
data. Moreover, after the pilot study, it was evident that the open-ended questions, as
worded, would provide a rich source of data.
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6.4. Population and Sample
Sampling Design within the Research Process
[Cooper and Schindler, 2003]
“Before any sample can be drawn, we must have some form of comprehensive
inventory or list of all elements in the population. This so called ‘sampling frame’ or
‘population list’ is fundamental to the sampling process”. (Brannik and Roche,
1997)
81

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