In the case study titled “Customer-Driven Learning at Radisson Hotels Worldwide” the background, growth, and service guarantees of the Radisson Hotel chain is discussed. Radisson Hotels was founded in 1938 by Curtis L Carlson of Carlson Companies Inc. The company’s headquarters were located in Minneapolis, Minnesota and was divided into four operating groups – Carlson Hospitality Worldwide, Carlson Wagonlit Travel, Carlson Marketing Group, and Carlson Leisure Group. In 1975 Radisson only had ten hotels but quickly grew to three hundred and sixty locations in forty seven countries by 1998 by partnering with existing hotel companies creating Radisson SAS Worldwide under the “growth at any cost” model. By 1998 Carlson Hospitality Worldwide included Radisson Hotels Worldwide, Country Inns & Suites by Carlson, TGI Friday’s, Regent Hotels, Italianni’s, Friday’s Front Row Sports Grill, Friday’s American Bar, and Radisson Seven Seas Cruises (Schroeder, pg 454).
Also in 1998 Curt Carlson’s daughter Marilyn Carlson Nelson took over as CEO of the Carlson Companies. It was at this time that Brian Stage, Radisson’s president, and Maureen O’Hanlon, Radisson’s executive vice president, started taking initiatives to transform the “growth at any cost” model to becoming a more customer-focused brand. To achieve this transformation from the current diverse hotel quality, they included a service guarantee, a guest satisfaction measurement program, and employee satisfaction measurement program, and an information technology initiative. Their goal was to make Radisson the “most trusted and respected brand worldwide” (Schroeder, pg 454). To support these strategies, Stage and O’Hanlon initiated a 100% guest satisfaction program, a fully integrated guest information system, guest and employee satisfaction measurement programs, guest recognition and rewards program, and a genuine hospitality program.
Customer satisfaction is a relative concept that varies from one customer to another (Schroeder, pg. 147). A service guarantee is a promise by a company to compensate the customer in some way if the defined level of service delivered is not duly met. An effective service guarantee sets clear standards of performance for customers to expect and to which employees adhere (Al, 1993; Rose, 1990; Hart, 1988).
It communicates to workers the level of service the organization intends to offer to its customers, as well as provides a clear and strong task identity (Cahill & Warshawky, 1995). It mandates that every decision and employee must focus on the customers. Successful implementation of a service guarantee would require managerial emphasis and proper allocation of resources on key determinant variables. Management staff is primarily responsible for the formulation and communication of service priorities to frontline staff as well as the design of recovery measures for resolving customer complaints.
Quality of service and the ability to attract and retain customers dictate the success or failure of hotel service providers. Hotels typically measure quality through inspections and with customer-satisfaction data. David Kearns once said “Performance benchmarking is the continuous process of measuring products, services and practices against the toughest competitors or those companies recognized as the industry leaders.” In today’s competitive environment, customers are quick to abandon services that do not meet expectations.
The ease with which customers can switch from their current service to another, demands that providers deliver the highest possible levels of service quality and performance. To be successful, hotels must deliver positive customer experiences with rich, value-added services supported by comprehensive service quality management. Significant changes are occurring in the hotel industry that affect how providers run their businesses as well as what services they offer. There is a greater need to attract new customers, find new revenue sources, reduce operational costs and increase customer satisfaction.
Successful quality management of next-generation services requires end-to-end service management across complex, multitechnology, multivendor infrastructures. Providers need to be able to quickly assess the impact of events on the performance and availability of revenue-generating services, establish and ensure aggregate service quality levels, and provide a detailed analysis of an individual subscriber’s experience that correlates back to broader service quality trends. In effect, providers need to be able to visualize service quality, prioritize their efforts and communicate relevant information to all stakeholders. This means they need to consolidate key data from disparate systems and from multiple vendors. They need to be able to model relationships and dependencies between the network, applications and databases so they can see what resources are critical to their service.
Communication plays a vital role in managing overall service quality. Providing relevant service intelligence to those who need it such as operations, IT, executives and customer care, helps providers rapidly resolve issues and minimize service impact on customers. They can quickly relate performance to business metrics. They can get a real-time view to better understand the customer experience. By improving communication across all levels of the value chain, they can help improve overall service quality and customer satisfaction.
With the improved communication, Radisson must train all employees from all franchises in the same fashion to create a more consistent customer-driven concept. Many companies and franchise systems have found themselves in a situation where rapid change and deployment is critical to the company’s success. It’s absolutely essential to have a roadmap under these conditions. Once training is completed, studies and surveys must be done that include guests and employees to provide information that can be used to increase customer and employee satisfaction as well as help shape the direction for a defined service guarantee. Once defined, the service guarantee should be implemented to continually provide quality measurements and improve employee motivation.
Providers also need a real-time view to understand the customer experience. How many customers are experiencing the service? Who is impacted by service issues? Providers need to be able to quickly assess the impact of events on service performance and availability, as well as how the business is affected. By providing a detailed analysis of an individual subscriber’s experience and correlating it back to broader service trends, providers can better manage the overall customer experience.
Information technology software delivers comprehensive service quality management and customer experience management that help service providers differentiate through improved service quality and lower operational costs. It gives them the ability to monitor and manage, from a single, central location, the availability, performance and quality of services. Information technology software equips them with a complete view of all the resources that comprise a service, from very beginning all the way to the customer.
Information technology software not only plays a part in accelerating the drive to improve service quality but additionally measures information needed to improve customer and employee satisfaction. It can measure and create reports against key measurements to more effectively monitor availability, quality of virtually any service. By delivering new, high-quality services to market, they can attract new customers and generate new revenue streams. By enabling an improved customer experience, providers can help reduce churn, positively affect the uptake of that particular service and impact a subscriber’s willingness to try new services.
Delivering consistent high-quality services to customers in a franchise business is more difficult than in a non-franchised business. In a franchised business, all employees must be trained in the same manner as well as have access to the same information. There are no exact guidelines, nor books to follow, nor formulas to adhere to when it comes to establishing and maintaining strong franchisor-franchisee relationships. It must be a strategic choice that is constantly enhanced, nurtured, and developed (Howe, 2003).
Once a relationship is commenced it must be sustained, and any effort to maintain a high-quality affiliation requires the vital component of effective, two-way, communication. The franchisor is responsible for providing the channels for communication. A commitment to high-quality communication will also help to align the goals of the management team, hotel workers, owners, corporate management, and corporate staff. There are other benefits that come from this commitment to a two-way exchange of ideas and perspective.
It cultivates a mutual respect and commitment between the employees, building trust and therefore solidifying a fully functional and working relationship. This should be designed to keep in touch with the franchisees’ core needs and goals, and provide an environment that enables franchisees to approach the franchisor with questions, concerns, or ideas for improving the programs or recommended changes. Another means of communication is an intranet site accessible only by the franchisor, franchisees and their employees that provides a forum for questions, news updates, and other business information.
Through these various forms of communication the franchisor can educate franchisees on the brand strategies and enhance their ability as keepers of the brand (Howe, 2003). Through a commitment to each of the key elements of effective two-way communication franchisors and franchisees can strengthen the strategies and consumer level execution that will drive their brand’s performance (Howe, 2003).
Since the beginning of the change that Stage and O’Hanlon brought about, services have been implemented to acquire and satisfy customers. These services include the Express Yourself pre-arrival online check-in, the “Curtis-C” reservation system, the “Yes I can!” training program, the gold points plus customer reward program, and their 100% guest satisfaction service guarantee. These programs are designed to link the customers with the staff. The information technology used to create the check-in and reservation systems is an amazing service that benefits both the guest and the staff.
The “Yes I can!” training program has been developed to train all employees consistently throughout the franchises to assist in aligning the goals of each franchise with their new brand strategy. The gold points plus reward program is a program that allows it’s customers to earn reward points that can be used for free stays or air miles. It also gives its members access to exclusive hotel and travel offers as well as in-hotel benefits. The website for the gold points program also lets it’s members make online reservations, check-in online, and select their stay preferences.
In the matter of the last ten years, Radisson Hotels has escalated from a once “unfocused” brand into one of the world’s leading, full-service global hotel companies. This has been successfully accomplished through the organization of its franchises and implementation of information technology systems. Radisson Hotels & Resorts is committed to change and innovation in all key areas including its growth strategy, operations, franchising, sales and marketing, and technology, to operate with maximum effectiveness in a highly competitive business environment (The Radisson Story). Technology will undoubtedly continue to develop and Radisson Hotels should continue to progress along with it to stay on top of the service industry as one of the best global hotel companies out there.
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Schroeder, Roger. (2008). Operations Management: Contemporary Concepts and Cases 4th Edition. McGraw-Hill. New York, New York.
The Radisson Story. http://www.radisson.com/section/aboutus.story/aboutus.sidemenus