Literature Review on Customer Relationship Essay

Custom Student Mr. Teacher ENG 1001-04 13 June 2016

Literature Review on Customer Relationship

The hospitality industry is a broad category of fields within the service industry that includes lodging, restaurants, event planning, theme parks, transportation, cruise line, and additional fields within the tourism industry. The hospitality industry is a several billion dollar industry that mostly depends on the availability of leisure time and disposable income. “CRM”, or Customer Relationship Management, is one of the most important topics in the business world. Its attributes and consequences cannot be disaffirmed. Without proper customer relationship management, there is no way you can build interest and acquire and retain customers to the business, in order to be profitable. CRM features an embryonic reputation and it is getting among the most popular educational as well as useful subjects in the industrial area.

Due to the competing atmosphere, it has turn into a niche with regard to a company’s overall performance. Still there is certainly restricted investigation which shows the relationship between CRM and hotels’ overall performance. Consequently this particular research is a try to give a worth conceptual model which describes the actual speculative linkages between CRM and hotel’s performance. This particular research just not explains the connection among CRM and hotel performance, but in addition describes the actual mediation part of promoting/marketing abilities in the relationship. “CRM is never done, it is an ongoing effort.”

The essence of a customer-focused environment is a preliminary indication of how the hotel industry can truly benefit from a strategic and focused approach to CRM. Hotel companies have in evidence had recourse to elements of CRM for a variety of strategic and tactical reasons. It is argued that the success of a strategy depends not only on the ability of a company to identify and understand what its target customers genuinely need and want, but also on the company’s ability to deliver enhanced value in terms of these specific needs and wants (Diana Luck and Geoff Lancaster ,2013). In order to remain competitive, hospitality and tourism companies must adopt the knowledge management approach (Ruhanen & Cooper, 2004). As customers become more experienced at finding the best deals for hotels, restaurants, travel agencies, and tourist destinations, the hospitality and tourism organizations face increasingly intense worldwide competition.

Considering the severe competition and the nature of the industry, employees and managers have to acquire more knowledge, in order to consistently provide the best deals and service to customers. What is more, customers’ preferences can be various and changeable, requiring employees and managers to understand the changes and continue to provide the best experience (Hallin & Marnburg, 2008). However, the question often posed is: What kind of knowledge should be obtained in order to gain competitive advantage (Ruhanen & Cooper, 2004).

One of the basic and most common sources of failure for CRM implementations is a missing customer strategy “as the creation of a unique and valuable position involving a different set of activities”. A robust customer strategy is based on customer segmentation is one of the first steps necessary when implementing a sound CRM solution (Gillies et al.2002). Human beings have had the urge to select and choose what to them can satisfy their desires since creation and will continue to have this desire because of their changing nature. This tendency makes them explore what to them is the best in terms of quality when purchasing, especially in the area of service consumption.

This is supported by Palmer’s assertion that: “customers have always been concerned about quality and that the proliferation of competitive market for a lot of services has also made customers become more selective in the services they choose”. This attitude means that service providers must be innovative in their service provision and delivery. The Hotel Industry is also experiencing increased globalization, competition, higher customer turnover, growing customer acquisition costs and rising customer expectations, meaning that hotels’ performance and competitiveness is significantly dependent on their ability to satisfy customers efficiently and effectively.

To enhance profitability and guest loyalty, hotels must nowadays focus on implementing Customer Relationship Management (CRM) strategies/techniques that aim to seek, gather and store the right information, validate and share it throughout the entire organization and then use it throughout all organizational levels for creating personalized and unique guests’ experiences (Nana Yaw Asabere and Vida Doku, IJAIEM, Volume 2, Issue 3, March 2013).

To retain customers, the relationship with customers has to be managed in a long-term and trusting manner for mutual benefits. Thus, the adoption of CRM should enhance the hotels’ performance through increasing customer satisfaction and loyalty, declining customer acquisition costs and increasing profitability by customers who are willing to pay a premium for better services (Piccoli et al., 2003). Although CRM is imperative for organizational survival, its implementation has resulted in mixed outcomes (King and Burgess, 2008), which is customer oriented believing that customer loyalty increases organization’s profitability. Therefore, Performance is improved since CRM involves the ongoing process development of market intelligence for building and maintaining a profit-maximizing portfolio of customer relationship (see Zablah et al., 2004).

Thus, the hotels are expected to use strategy that focused on customers in order to sustain their competitive advantage. For these hotels, the use of the financial measures is not only short-term oriented but also inadequate to capture the customer perspective of performance (Kaplan and Norton, 1996). Customer-related performance measures are therefore needed to quantify customer relationships (Shoemaker and Lewis, 1999) and to differentiate customers who are worthy of the CRM efforts (Noone et al., 2003).

All participating hotels have practices in place to manage customer relationships. The most commonly cited goal for CRM is guest retention. Evaluation and control are perceived as very important activities not only to create value for the customers, but also to track the performance of the guest contact departments and the customers’ evaluations of the hotel/restaurant experiences (Ada S. Lo, Hong Kong, 2010).

Freeland (2002) suggests that organization must address four critical strategies and understand the key interplay with them:
* Identifying the customer
* Selecting the most appropriate channel to reach the customer
* Receiving the effects on the brands value
* Determining the most appropriate CRM capabilities (Wolfgang Emperger,

The use of a Customer Relationship Management (CRM) application to create a business strategy is an excellent way to increase customer loyalty and customer retention. By personalizing a customer’s stay, a hotel can ensure that customers will come back again and again simply by remembering their favorite beverage, pillow or other preferred amenity (Nick Nikolis, Article Source:

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