Hospitality CRM Systems Customer Relationship

Hospitality CRM Systems

Customer Relationship Management Systems in the Hospitality Industry

In the hospitality industry, one of the most critical success factors for greater profitability is to increase customer loyalty and increased share of spending on entertainment, lodging and travel. Customer relationships are crucial for this to occur. The rapid advances in Customer Relationship Management (CRM) software and systems have made it possible to electronically capture, analyze, extrapolate and create highly effective services strategies aimed at gaining greater customer loyalty and sales in the hospitality industry (Singh, Kasavana, 2005). The greater the level of customization a customer expects, the more critical the CRM system is for tracking, reporting and providing insights into how best to tailor hospitality products and services to their needs (Phillips, Louvieris, 2005). The intent of this analysis is to define how CRM is used in the hospitality industry, defining it pervasive effect on all facets of marketing, sales, service, pricing and planning. The ethical implications of CRM in the hospitality industry are also discussed.

Defining Customer Relationship Management in the Hospitality Industry

The hospitality industry's competitive dynamics have accelerated so much that today a business traveler in a typical metropolitan city has hundreds of options for hotel rooms, with many being discounted through websites including booking, com, hotwire.com or priceline.com. All of these options have put the pressure on hospitality providers to deliver a much more differentiated, high quality experience. The only way to understand what customers like most and least in the way of accommodations, what their individual preferences and needs are, and through which communications channels they most want to learn about hotels are is through the use of an enterprise CRM system (Murphy, Olaru, Schegg, Frey, 2003). CRM systems are predicated on a database architecture that allows for each individualized record for a given customer to be updated by each activity they engage in with a given business (Ivanovic, Mikinac, Perman, 2011).

CRM systems have progressed beyond being status histories of customer interactions. Today they are used in real-time to initiate and support conversations with customers, making sure hospitality service providers have a very clear sense of what their best, mid-level and worst customers are looking for in terms of services and location amenities (Singh, Kasavana, 2005). CRM systems are proving to be pivotal in the development of new resorts as they are often relied on for understanding the preferences and wants of prospective guests (Ivanovic, Mikinac, Perman, 2011). The ability to generate analytics out of a CRM system is one of the most rapidly evolving aspects of this technology (Phillips, Louvieris, 2005). A secondary trend is the integration to social networks, which is often called Social CRM (Lim, Saldana, Saldana, Zegarra, 2011). Social CRM is nascent yet showing significant potential for better understanding the needs and wants of younger, affluent and highly connected business and leisure travelers. The continual pursuit of insights into what guests are looking for is just one aspect of how CRM systems are being used today. Another is the continual monitoring of customer satisfaction and the development of customer loyalty programs. Using the analytics foundations of these applications, hospitality providers are able to architect new approaches and strategies for gaining and keeping high levels of customer loyalty, leading to greater profitability over the long-term (Phillips, Louvieris, 2005). Finally CRM systems are also invaluable for defining service strategies as well, and are actively being used for tracking lifetime customer value (LCV) and long-term effects of multichannel marketing and loyalty programs (Murphy, Olaru, Schegg, Frey, 2003).

Effects of CRM on the Hospitality Industry

At a very strategic level, CRM has made the hospitality industry much more attuned to the preferences, wants and needs of guests. It has also created a more responsive industry by capturing the needs of customers more efficiently and economically than was ever possible before. Specific areas that have changed the most include more of a focus on making multichannel strategies, from websites to Facebook, Twitter and other social networks, more responsive to the needs of the guest to provide feedback (Lim, Saldana, Saldana, Zegarra, 2011). There are also more effective analytics being used than ever before, creating greater insights into guest's patterns of purchasing not only accommodations but amenities as well (Phillips, Louvieris, 2005). CRM's effect on the hospitality industry is very significant, bringing a strong customer orientation to the industry and also giving hoteliers and service providers much greater insights into how they can position their brands, locations and specific services. It has revolutionized the sales, marketing and services of this industry as a result.

Ethical Implications of CRM in the Hospitality Industry