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Effective Customer Relationship 
Management (CRM) Implementations
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This article is from the Fall issue of Hospitality Upgrade Managzine
By John Schweisberger and Amitava Chatterjee, CHTP

Once you’ve decided to invest in a CRM application, the next steps include a well-developed strategy that is effectively communicated, well-defined business objectives, a well-planned approach, identified data sources and verified data quality. This article describes the right order for effective CRM, and points out some classic mistakes that lead to failed CRM implementations. 

CRM Is a Way of Running the Business 

While the path described below is the perfect theoretical approach (avoiding the mistakes, of course), and one that we like to see clients follow, real-life experience tells us the world doesn’t always work that way.  The most typical approach to CRM has companies developing point solutions, something that solves one particular problem, out of acute necessity.  However, whether you use a consulting firm to help you implement the point solution or you go it alone, you should be sure that the key questions around direction, integration, processes and people are being asked.  Generally speaking, the questions are a lot more easily asked than answered, which leads most companies back to the need for an overarching strategy and the realization that CRM really is a way of running the business, not just the program du jour. Additionally, CRM is a way to increase revenues and/or reduce costs. Not understanding the fact that this is a bottom line strategy could lead you to make the wrong decisions in establishing your strategy.
 
The Right Approach for Effective CRM 

Everyone wants to be a CRM Hero — the desired outcome. No one wants to be a CRM Zero — the career-limiting option.  Allow us to offer five words of advice: don’t start by picking software. In addition, it would be prudent to watch for these classic mistakes:

Classic Mistake #1: Thinking that CRM is, at its heart, technology-based.  The best example of this is the client who told us, “We need to get a CRM.”  That makes no sense, for it is not the technology that makes you a hero, it is the recognition and belief by your organization that CRM is a way to operate the company.  To accomplish this, the CRM Hero must demonstrate the leadership necessary to develop a CRM strategy and get the rest of the company to come along for the ride.  At the risk of stating the obvious, too many companies we’ve seen have adroitly demonstrated that they have no clue where their CRM program is going – but, wow, look at all that data!  Never mind that they will soon be another case study in failed expectations. However, with a well-conceived strategy that highlights all aspects of the customer relationship, they would be able to clearly articulate the specific changes, tools and techniques that must be employed over time within their organization to deliver measurable results.

Classic Mistake #2: So I’ve made a strategy, let’s go get the software.  Not so fast. With clear articulation comes the second step: communicating the strategy to the rest of the company and your guests.  Not much new technology is needed for this step, either.  However, you are guaranteed to fall short of your CRM goals without effective communication throughout the company.  Meanwhile, the CRM Hero grows ever more frustrated that people don’t “get it.”  Yet, people are the most vital, and the most frequently overlooked, part of the equation.  As service providers, we all know that our frontline people have the power to make or break the relationships we enjoy with our guests, but it is stunning to note that occasionally this basic truth gets forgotten. If our people don’t understand the importance we are suddenly placing on effective relations with our guests, those relations will be anything but effective.  
Which leads us  to….

Classic Mistake #3: OK, we’ve got everybody jazzed about this CRM thing; let’s get some technology in here to help them.  Sounds great, but help them do what?  The same things they did before you got them the technology?  While those things worked really well for you under your old way of managing the business, remember that this is a new way of thinking you’re trying to impart.  With new thinking must come new ways of working, which means you will need to lead the way in helping your company look at things the same way your guests look at things.  These guest-centric business processes are simple in concept, but much more difficult to get your people to design.  Some companies have taken the radical step of inviting customers into their process design meetings to be sure they’re taking a customer-centric approach.  

Classic Mistake #4: We know what we’re trying to do, everybody’s on board and our processes are aligned with the desired guest experience – now all I need is a new POS system, a data warehouse, a campaign management tool, new call center software for my reservations agents, a good PMS built on the latest platform and a new yield management tool.  It’s finally time for technology, but if you follow this approach your systems integrators will be happy, though your IT shop won’t be when they have to keep all of these balls in the air.  Integration is the key – single points of data collection, techniques for data cleansing and easy ways of getting the right information to the right people in a way that allows for seamless, consistent, personalized service.

Keys to Successful Implementations 
 

1. The Keep It Simple, Stupid (K.I.S.S.) Principle. There are a few home truths about successful CRM implementations. The K.I.S.S. principle is highly applicable. Over-complicating the process does one thing – it succeeds in extending the duration, potentially causing budgetary overruns. In the words of Dr. Chekitan Dev, associate professor of strategic marketing at Cornell University’s School of Hotel Administration, “Do not draw up a long-winded program. It is important to have quick hits that show short-term benefits – this will help to get people on board, since they want to see results. Maintain the built-in potential to upgrade… a simple process that grows organically will be the most successful, and yield the best results.” If you must plan a gargantuan CRM program, “break it down into shorter-term, focused projects with clearly defined business benefits and success metrics”1 . This brings us to the second key to success. 
2. Actionable Measurements and Performance Metrics. It is important to ensure that adequate emphasis is placed on establishing timely and actionable measurements. It is crucial to be able to identify the bottom line impact on an ongoing basis of the program that has been established.
3. Stakeholder Ownership. If you want to ensure a successful implementation, it is important to ensure that all stakeholders are on board. It is not merely sufficient if key players buy into the process. They must take ownership of, and be actively engaged in the process. For a successful project it is important to have internal champions. 
4. GIGO. Better known as “Garbage In – Garbage Out,” this is the test of stakeholder ownership.  Realize that none of the exciting new capabilities are worth anything without good data.  In our experience, legacy systems generally have errors in roughly half of their customer records.  These could be as simple as an address that reads “road” instead of “street,” or as complicated as multiple customer records for the same customer, each with slight differences.  Yet you have countless opportunities to capture good data in the course of a guest experience.  Part of your business process work has to be to ensure effective capture and cleansing of customer data.  Effective capture implies not sticking all of the good stuff in the comments field, where it likely resides today, completely unread in the hustle and bustle of the typical front desk.
5. Consider the Value of the Customer. Successful CRM is not about providing the best service on the block; rather, the key to effective relations with your customers is in providing appropriate service.  We all know that customers are not equal.  That’s why loyalty programs were invented.  Yet far too frequently we see clients that developed sophisticated segmentation capabilities and tiered loyalty programs who have no means of differentiating the service they provide to these segments of guests.  One resort client was excited about his newfound ability to execute real-time marketing campaigns to fill short-term availabilities at the hugely popular property.  Yet he had not considered the value associated with different customer segments and was disappointed when the realization from these last-minute guests was not up to the usual standards of the resort.  Simply put, this client was ignoring all of its segmentation data and mass-marketing its limited capacity.  Thus, it is important to provide appropriate service at every interaction based upon intelligent segmentation.
6. Help Your Employees Help Your Guests. All employees, at all properties, should have the training and up-to-date information that allows them to provide seamless, consistent, personalized service to the customer. According to Jens Thraenhart, director Internet strategy, Fairmont Hotels and Resorts,  “A successful CRM and customer retention strategy in the hotel industry is dependent on the implementation at the property level. It is important to train front line employees to capture information from many offline touch points, in combination with online data capture. Training is vital to ensure consistency and cleanliness of guest information.” This information should be immediately available to front desk receptionists, call center agents, pit bosses, concierge and housekeeping staff, and so on, and should be served up at the right time. 

This is where the true test of CRM solutions takes place.  There is nothing worse for your relationships than raising expectations and then failing to meet them.  

  • Does the call center know about the e-mail campaign that marketing just sent out?  
  • Does the front desk recognize that the repeat guest standing before them remembers the way to the elevator and doesn’t need a 60-second refresher course complete with maps?  
  • Does the reservations agent realize that the potential guest on the telephone has used the onsite spa the past three times she has been at the property, and might just want to get services booked in advance?  And doesn’t want to be transferred to the spa to start over with names, dates and addresses?
Truly successful CRM implementations anticipate these kinds of issues and build the requisite business processes, employee training and integrated systems necessary to meet or even exceed growing expectations.

Continue the Relationship. Interaction with the customer does not begin when they arrive at the front desk and end when they depart for the airport – it begins before their first visit and lasts a lifetime.  Remember, a 2 percent increase in customer retention is equivalent to a 10 percent reduction in costs (Caterer & Hotelkeeper, 1994).

It’s All about Technology – Not! Technology certainly plays an important role in the implementation of a successful CRM project. However, it is not a silver bullet that will solve all problems or open all doors. It is important to remember that all technology decisions are only relevant in a business context. All the technology in the world is cool, but if your business processes aren’t set up to effectively utilize these resources, your company will be added to the statistics of failed CRM implementations. 

Conclusion

Implementing an effective CRM solution is not complex. Adequate planning, effective communication, stakeholder involvement and mistake avoidance will ensure that your initiative gets off the ground easily, and places you squarely in the exalted ranks of successful CRM implementers.

1 Kinikin, Erin. “Lack of success metrics mean that CRM failure rates will stay high,” Giga Information Group, 2001.

John Schweisberger is a partner with PricewaterhouseCoopers’ Management Consulting Services Hospitality and Leisure practice, based in Los Angeles, Calif. Amitava Chatterjee is a consultant in the practice’s Falls Church, Va. office.

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Contact:


Geneva Rinehart
Associate Editor
Hospitality Upgrade magazine 
and the Hospitality Upgrade.com website
http://www.hospitalityupgrade.com
grinehart@updateplus.com

 
Also See: Technology Dilemmas: What have IT investments done for you lately? / Elizabeth Lauer / Hospitality Upgrade Magazine / Summer 2001 
Full Circle from Centralized to ASP - The Resurrection of Old Themes and a Payment Solution / Gary Eng / Hospitality Upgrade Magazine / Summer 2001 
A High Roller in the Game of System Integration / Elizabeth Lauer / Hospitality Upgrade Magazine / Spring 2001 
CAVEAT EMPTOR! Simple Steps to Selecting an E-procurement Solution / Mark Haley / Hospitality Upgrade Magazine / Spring 2001 
Your Bartender is Jessie James and He Needs to Pay for College / Beverly McCay / Hospitality Upgrade Magazine / Fall 2000 
Choosing a Reservation Representation Company / John Burns / Hospitality Upgrade Magazine / Spring 2001 
Understanding and Maximizing a Hotel’s Electronic Distribution Options / by John Burns / Hospitality Upgrade Magazine / Fall 2000 
The Future of Electronic Payments - From Paper to Plastic and Beyond / J. David Oder /  Hospitality Upgrade Magazine / Summer 2000
Timeshare Technology Steps Up / by Elizabeth Lauer / Hospitality Upgrade Magazine / July 2000 
Biometric Payment: The New Age of Currency / by Geneva Rinehart / Hospitality Upgrade Magazine / Mar 2000 

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