Customer relationship management in Hotel Industry
Evolution of CRM
Why are Customer Initiatives Important ? 6 Participate in GlobalRemain In VillageBusiness 5 Customer Reach the Initiatives CustomerIncrease 4 DecisionRevenue Enhance Executive Support Decision Making Initiatives 3 Enhance Products & Services OperationalOptimize Initiatives 2Resources &Minimize Leverage Investments 1 FinancialCosts Initiatives Reduce Costs 1960s 1970s 1980s 1990s 2000s 2010s 2020s
Customer is the Focus StrategyStructure PeopleProcess Systems
Core and Extended Customer ServiceCore Customer Service. Mechanical elements including Quality, Cost and serviceDelivery.Extended (Caring) Customer Service. Human elements including: Friendliness,Caring, Flexibility, Problem-solving, and Recovery. Customer Grade Perceived Outstanding A Value Exceeds Expectations B Customer Perceived Customer Satisfactory C Expectation Value Expectation Unsatisfactory D Failing F Core Service Caring Service Satisfies DelightsCore service will never exceed a grade of C or satisfactory. Don’t spend time and moneyattempting to exceed expectations here. Caring service will allow the organization toexceed customer expectations through perceived service delivery.
The Customer’s Perceived Value = The State in which the quality of a totalexperience, perceived by the customer, exceeds its cost. How is a Customer Delighted? Expectations Customer Delight A condition in attitudes which form a which experience exceeds framework for judging expectations. performance. Touch Experience The point at Satisfaction The measure Point which the customer reflecting a customers Service interacts or touches the experience against their organization. expectations. Quality A bundle of tangibles Value The quality of an experience and intangibles a customer takes as perceived by the customer and into account when evaluating the related to its cost experience
Customers Value Package Aesthetic - any sensory experience that affects the perception of value (flavor, visual appeal, smell, temperature, music, Environmental - the physical sound levels). setting in which the customer experiences the delivery of the product. Interpersonal - the customers’ experience or human interaction with those who deliver the Procedural - what anindividual must go through The Customer product or service. to function as a customer Value Package(waiting in lines, filling out forms, visiting numerous Financial - what the customer facilities). pays for the total experience, as well as the nature of the financial interaction. Deliverable - anything of which the customer takes custody, even Informational - the information a temporarily. person needs to function as a customer (where to go, who to contact, payment amount, office hours).
Today, Emphasis is placed on the customer transaction rather than the long-termrelationship, e.g. staff are measured by how many telephone calls they can take within anhour. The Need to Move Beyond a Single Transaction Service’s Customer Understanding and Analysis Service’s Long-Term Customer Relationship Service’s Transactions Customer Interactions Channels Customer Transactions Channels
Transaction vs. Relationship Marketing:Transaction Relationship Ongoing One-time Managing People Managing Brands Individual Mass communication communication Market share Customer share Profitability of Profitability of transaction longevity Brand Equity Customer share equity
CRM Definitions Customer Relationship Management (CRM) is a business strategy to select and manage customers to optimize long- term value. Customer Relationship Management is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer. “CRM is a complete system that: 1) provides a means and method to enhance the experience of the individual customers so that they will remain customers for life, 2) provides both technological and functional means of identifying, capturing, and retaining customers, and 3) provides a cohesive view of the customer across the enterprise.
CRM Definitions CRM is a management approach, a model that puts a customer at the core of a company processes and practices. CRM leverages cutting edge technology integrated strategic planning up-close and personal marketing techniques and Organization development tools to build internal external relationships that increase profit margins and productivity within a company. CRM requires a customer-centric business philosophy and culture to support effective marketing, sales, and service processes. CRM applications can enable effective Customer Relationship Management, provided that an enterprise has the right leadership, strategy, and culture.
Importance of CRM CRM is the transformation of people, process and technology required to become a customer-centric organization. CRM is not just a software that allows for the recording of customer interactions, accurate histories to be kept, and knowledge to be shared across departments within a company. CRM is not a product. It is not even a suite of products. CRM is a business philosophy that touches upon many independent parts of the organization, CRM addresses the Sales, Marketing, and Service activities of the organization.
Importance of CRM CRM must be part of an overall company philosophy. CRM is core to all businesses, essentially it is about selling good products or services to the right people. CRM solutions must include not just systems, but also people, process and strategy. CRM must focus on selecting and managing customer value and loyalty through a long-term relationship. CRM is not a single system but a comprehensive application architecture consisting of several systems.
Need for CRM To meet the changing expectations of customer due to: (a) social and demographic factors. (b) economic situations. (c) educational standards. (d) competitors product (e) experience. Loyal customers are the source of most profits A relatively small percentage of customers may generate most of the profits. Marketing cost and efforts are less for existing customers. Dissatisfied customers tell others about their experiences, So do satisfied customers. Slowing the rate of defection grows the customer base.
Need for CRM CRM typically costs 5-10 times to acquire a new customer. “Some companies can boost profits by almost 100% by retaining just 5% more of their customers.” Most companies lose 50% of their customers in 5 years . 70% of repeat purchases are made out of indifference to the seller, NOT loyalty…. Customer Customer Customer Profit satisfaction commitment retention
Economics of Customer Retention“Winning back a lost customer can cost up to 50-100 times as much as keeping a current one satisfied.” Rob Yanker, Partner, McKinsey & Company
Goals of CRM Provide better customer services. Cross sell product, Cross-selling is a strategy of providing existing customers the opportunity to purchase additional items offered by the seller. Cross-selling involves offering the customer items that complement the original purchase in some manner more effectively. The telecommunications industry is a prime example of this type of sales activity. When establishing local telephone service, the new subscriber is often invited to enjoy other telecommunications options offered by the service provider. These may include long distance packages, cell phone services, or high-speed Internet services.
Up selling involves promoting upgrades or add-ons tocustomers that are extra purchases and increasesales. When you up sell, you offer the customer anotherproduct for purchase.Incentives are crucial features of up selling. Incentivessuch as a discount and/or free shipping give thecustomer good reasons to purchase something extraright away.Helps sales staff close deals fasterIncrease customer revenue
Personally recognizing customers; Offering appropriate value and great service to encourage repeat business; Ensuring that employee and customer satisfaction continues to improve. Beating the competition by offering a better product, competing on the service experience rather than price alone.
Benefits of CRM Simplify marketing & sales process Access to customer information With CRM, all of your customer information is in one centralized location and is constantly updated every time an activity happens with a prospect or customer. So now you have up to the minute tracking of all your prospects and customers.
Benefits of CRM Increase Sales Effectiveness Make sales teams more effective by automating tedious repetitive tasks. With CRM, sales people can automate a big chunk of their daily tasks such as sending out emails, generating reports, organizing leads and so on. With CRMs Mobile access, sales people have instant access to customer information when they need it, without being tethered to a computer.
Benefits of CRM Reduce Customer Support Time CRM enables your service agents to answer all customer inquiries quickly, accurately and consistently by phone, e-mail, chat or in person. With FAQs and the knowledge base you can help your customers help themselves.
Benefits of CRM Retention rate: CRM increases customer loyalty, which increase revenue per customer and frequency of purchases. Referrals: CRM can turn customers into advocates. Referrals typically have higher retention rates and spending rates than other newly acquired customers. Increased sales: CRM leads to increased cross-selling, upgrades, or simply more products by existing customers. Reduced costs: CRM can lead to more cost effective marketing; avoids expenses of mass marketing.
Benefits ofservice Provide better customer CRM Cross sell products more effectively Help sales staff close deals faster Simplify marketing and sales processes Increase customer revenues Reduced costs, because the right things are being done Increased customer satisfaction, because they are getting exactly what they want Ensuring that the focus of the organisation is external Growth in numbers of customers Maximisation of opportunities Increased access to a source of market and competitor information Long term profitability and sustainability
Customer Life Cycle Management Customer Need Assessment and Acquisition Customer Customer development through Retention and Personalization andReferrals for new Customization Customers Customer Equity Leverage through Cross Selling, and Up Selling,
RFM Data in CRM Organizations can find their most valuable customers through “RFM” Recency - How recently a customer purchased items. Frequency - How frequently a customer purchased items. Monetary Value - How much a customer spends on each purchase.
CRM evolutionStage State CultureSatisfaction Re-active Meet customer needsBased Respond to complaints Minimal evaluation of customer service levelsPerformance Pro-Active Evaluate customer perceptionBased Identify customer retention factorsCommitment Very Pro- Evaluate multiple customer needsBased Active Continuous inbound/outbound flow and feedback Continuous improvement
Stages of CRM Stage 2 • Marketing Stage 6• Collecting • Accessing Stage 4 more information • Storing information effectively information • Analyzing • Enhancing customer the Stage 1 Stage 3 behaviour Stage 5 customer experience
CRM ComponentsStaff Customer CRM may include: Call Center Management Customer Call Center Software Interaction Contact Management Software Center Customer Relationship Management Customer Interaction Center Customer Service Self-serve Channels Document Production E-Business Electronic Commerce Customer Sales Electronic Purchasing Executive Information System Field Service Management Help Desk Management Customer Marketing Marketing Mobile Computing Online Auctions Customer Field Service Various Portals Sales Systems Sales & Marketing Systems Sales Force Automation Customer Service Supply Chain Automation Telemarketing / Telesales Value Chain Customer Analysis & Voice Over IP Reporting Web Collaboration, Chat, Email
TYPES OF CRM: Front Office Operations (sales, Operational marketing, service Inter- etc) department coordination Collaborative Analytical Enhance Company Relationship with Customer
Types of CRM OPERATIONAL CRM Gives support to ‘Front Office’ business process (e.g. sales, marketing etc) Any interaction with customers is stored in customers contact histories, which the staff can retrieve as necessary. Gives staff access to important information about the customer. Operational CRM possesses customer data for a variety of purposes Managing campaigns Enterprise Marketing Automation Sales Force Automation Sales Management System
Components of Operational CRMCUSTOMER SERVICE AND SUPPORT (CSS) Is the part of a companys CRM department that interacts with a customer for their immediate benefit, including components such as the contact center. 20-25% of CRM Provides information to support customer call center activity Build customer satisfaction & loyalty Resolve customer issues after the sales responsively It comprises two key functional areas: Cases:- Track every interaction of customer service & support teams with each customer. Solutions:- Maintain a centralized database of solutions to leverage knowledge across the enterprise.
SALES FORCE AUTOMATION (SFA): These are tools which automate the collection and distribution of all types of sales or sales related information. Calendar management, activity management, sales reporting and forecasting, lead distribution and tracking of sales contacts with customers are some of the capabilities offered within these solutions.
Sales Force Automation (SFA) 35-40% of all CRM activity Sales force automation comprises of: Account Management Contact Management Activity Management Revenue Forecasting Reporting & Analysis
Components of Operational CRM Field Force Automation (FFA) Field Service or Field Force Automation (FFA), is an attempt to optimize processes and information needed by companies who send technicians or staff "into the field" (or out of the office) for maintenance and repair of equipment at the customers location. It involves a combination of some or all of the following: CRM applications, work order management, dispatch, wireless technology. 3-5% of all CRM activity
Components of Operational CRM Marketing Automation (MA): Applies technology to marketing processes Generating lists of customers to receive mailings or telemarketing calls, scheduling automatic or manual follow-up activities and receiving third-party lists for incorporation into the campaigns are all typical functions. Ensures high efficiency by creating integrated, highly- targeted campaigns and tracking results across all channels. Target the Best Customers. Manage Marketing Campaigns.
Components of Operational CRM Marketing Automation (MA) It comprises of two main functional areas: Campaign Management Lead Management 3-5% of CRM, but growing 5X faster than all others. Interacts with SFA to support field sales efforts. Inbound and outbound e-mail management capabilities are also becoming popular components of the marketing automation suites.
2. Analytical CRM analyses the customer data for various purposes such as design and execution of targeted marketing campaigns to optimize marketing effectiveness, design and execution of specific customer campaign, analysis of customer behavior to aid product and service decision making, management decision, prediction of probability of customer defection.
Components of Analytical CRM OLAP (Online Analytical Processing) One of the most popular type of decision-support analysis, allowing the average business person to explore data online with the aim of focusing on detailed data at a lower. More often, this means generating an online report, analyzing the results and submitting a detailed query in order to understand the result data.
Data mining : Data mining tools identify patterns in data and deliver valuable new information that can increase a companys understanding of itself and its customers. The three types of data mining are: Prediction: The use of historical data to determine future behaviors. Sequence: Sequential analysis identifies combinations of activities that occur in a particular order. This is used to determine whether customers are doing things in a particular order. Association: Association analysis detects groups of similar items or events.
3. Collaborative CRM covers aspects of a companys dealings with customers that are handled by various departments within a company, such as sales, technical support and marketing. Collaborative CRMs ultimate goal is to use information collected by all departments to improve the quality of services provided by the company.
Implementation of CRM To implement CRM, following factors need to be given due consideration Easy interaction between customers and company, Easy access to information about company like content of customization, advantages of the company, benefits to the customers. Abundant supply of customer information Customers information should be updated always Have cordial relationship with other companies targeting the same customer segment Analyze human resources and ensure that everyone has an understanding of philosophy of CRM
BE RELIABLE- consistent performance is what customer wants from us BE CREDIBLE- if the customer buy the product, he wants to safe and guaranteed. BE ATTRACTIVE- body language BE RESPONSIVE– accessible, available and willing to help customer whenever the customer has a problem. BE EMPATHETIC- be in customer’s shoes and grasp his point of view
Need for e-CRM Due to the introduction of new technology Due to globalization to satisfy the customers at global level Sometimes customer itself prefer to do online purchasing. Also, e-CRM is used for attracting & keeping economically valuable customers & eliminating less profitable ones.
Benefits of e-CRM Convenience Improvement in overall quality of customer experience Increased profitability Low implementation Cost Rapid Development Accessibility Instant Information Sharing Increased customer loyalty More effective marketing. Improved customer service and support. Through e-CRM, right tools helps sending right orders to right customers at right time. Greater efficiency and cost reduction.
Some Applications of Technology in CRM Call centers These are organizations which deal directly to the customer interactions. These are otherwise known as "Customer Care Centre" or "Contact Centre" indicating more technological sophistication and multichannel support. Call centre technologies entered the market place to effectively alleviate some of the repeat work and increase efficiencies, allowing companies to handle escalating call volumes.
Web based self-service The customers themselves, without the help of a live person can resolve their problems or find out answers to their queries using the web. This model is founded on the principle of enabling customers, partners and employees to obtain information or conduct transactions directly over the internet, avoiding time consuming and costly traditional processes involving multiple verbal or written interactions. It provides control, performance, convenience and efficiency.
Customer satisfaction measurement: Survey mails are the major way for companies to monitor customer satisfaction. Nowadays, these survey forms are even personalized to specific customers or customer groups. Responses are input into customer databases and included as part of individual customer profiles. Such tracking of customer satisfaction over time enables a company to fine tune how it communicates with its customers according to their preferences.
Cyber agents Cyber agents are life like representatives‘ normally depicted on a company’s web site as a real person. It is an attempt to put together the best of both personalization and advanced technology. It is given a personality and is having facial expressions and volume. Usually a cyber agent addresses the web visitor with his/her first name. It can draw from the wealth of detailed information to answer basic FAQs as well as guide a customer to the appropriate screen for a definite purpose/action.
Web site It is the efficient and effective use of worldwide web for providing information to the customers, by a company who had created that site, in a hassle-free manner. The main advantage of a web site is its 24 hours accessibility. Usually gathering information from the site is a simple task and is cost-effective.
Information Technology and CRM: Examples Cookies “A “cookie” is a parcel of text sent by a server to a web browser and then sent back unchanged by the browser each time it accesses that server. HTTP cookies are used for authenticating, tracking, and maintaining specific information about users, such as site preferences and the contents of their electronic shopping carts”. Illustration: The online store, Amazon, uses “cookies” to provide a personalised service for its customers. Amazon requires customers to register with the service when they purchase items. When registered customers log in to Amazon at a later time, they are ‘greeted’ with a welcome message which uses their name (for e.g. “Hello John”). In addition, their previous purchases are highlighted and a list of similar items that the customer may wish to purchase are also highlighted.
CRM Limitations Not feasible for every market and customers customers don’t want to be committed to every brand/relationship Not feasible for low-involvement, habitual purchasing in B2B or B2C Some markets/customers may have low “personalization potential”.
Reasons for Failure of CRM CRM Strategy not clear CRM strategy and vision need to define what customers experience at each touch point, and how will they be handled at each touch point. The vision needs to be clear to everyone. Implementation was limited to software installation Inadequate motivations for employees to learn, provide input, and take full advantage of the information systems
Technology Errors Customer data is in more places than expected. Different CRM solutions are in place but do not work well together.People errors Introducing CRM to hundreds of employees at a time. Changing the system, but not the people.