Beneficial Interactive Relationships with Your Customers
|By Max Starkov and Jason Price, May 2007
The Internet has transformed Customer Relationship Management (CRM) in hospitality. A large majority of your customers are planning and booking their hotel stay online. In fact more than two-thirds of them will do that this year: 1/3 of all bookings in hospitality in North America will be generated from the Internet (30% in 2006), and at least another 1/3 will be directly influenced by online travel planning. How do you nurture, grow and retain your customer base when the competition is just a click away? How do you prepare for the future in this very dynamic and transparent online environment? How do you beat the competition for the most lucrative customer segments? By building a comprehensive eCRM strategy and creating interactive mutually beneficial relationships with your customer, any hotel company can ensure its survival in this new environment.
Evolving from a simple face-to-face handshake, eCRM has become a science, often requiring large expenditures in manpower and technology. In our people-oriented service industry eCRM has become a must have for any hotel company. More often than not, the results of eCRM program implementations have been disappointing, according to a published study by IBM Business Consulting Services, called “Doing eCRM right: What it takes to be successful with CRM”. The study finds that just 15% of the companies it surveyed—both small and large—felt fully successful with their CRM programs. Only 15%!
In reality, eCRM means different things to different people especially in the hospitality and travel verticals. From a working definition, CRM and its online application, eCRM is a business strategy aiming to engage the customer in a mutually beneficial relationship. Within this context here is the best description that describes eCRM that is universal for any travel supplier or intermediary:
Electronic customer relationship management (eCRM), in the context of Internet distribution and marketing in the hospitality and travel verticals, is a business strategy supported by Web technologies, allowing travel services suppliers to engage customers in strong, personalized and mutually beneficial interactive relationships, increase conversions and sell more efficiently.
A Crash Course on eCRM
Establishing mutually beneficial interactive relationships with your customers is the ultimate goal of any eCRM initiative. Here are the main components of an eCRM strategy in travel and hospitality:
Knowing who your customers, hotel guests and website visitors are is an extremely important consideration when conceptualizing and designing your eCRM strategy and Internet presence.
How do you broaden your knowledge of your customer base and how do you expand your CRM data? It is crucial to understand that customers are a) very sensitive about privacy and sharing data, and b) willing to share data if there is a fair payoff. Therefore, customer data has to be obtained and expanded slowly and over time, in small pieces and at a “fair” price for both sides.
A very important concern in hospitality is the creation of a Single View Customer Database. Is your guest data from POS, PMS, CRS, call center and the Web channeled into a single database? Many major brands have invested millions of dollars to achieve a “single view” of customers, regardless of sales channel. The benefits are obvious:
Strengthening Customer Service in Travel and Hospitality
The Internet is the best interactive marketing channel ever invented. Therefore it is the ideal medium for reaching out to your customers and establishing interactive relationships with them.
It is important to understand that customer service is only one aspect of eCRM and is primarily a reactive function aiming to improve performance and efficiency, while eCRM as a whole is a proactive long term strategy.
On the other hand eCRM is more than just a tool to achieve and enhance customer satisfaction. The traditional CRM focus in travel and hospitality has always been “Customer Satisfaction.” The presumption is very simple: customers will appreciate good service so much they would not go to your competitor. In other words: customer satisfaction + quality of services = customer loyalty.
The truth is that customer satisfaction does not always equal customer loyalty:
In hospitality the Internet has provided hoteliers with unprecedented capabilities to interact with their customers:
Building and Strengthening Interactive Relationships with Customers
Building interactive relationships with the customer consists of three critical lifecycle stages: Nurture -- Grow -- Retain. Here are some of these action steps:
It costs 4-6 times more to attract a new customer than retaining one:
So how do travel service providers go about building loyalty online?
Reward programs are very popular with online travelers, and especially with people who book online:
The HeBS’ RUSH Report based on responses from over 35,000 visitors on major hotel brand websites findings show that 50.9% of all visitors on hotel branded web sites identify themselves as members of a hotel brand Loyalty Program. 49.1% are not members, and some of them claim that they would consider becoming members of a hotel Loyalty Program, or would be interested to learn more. These 49% of visitors are up for grabs and “available” to any proactive hotel brand or third-party intermediary. Offering a well functioning, easy to understand and manage, and well presented Reward Program on a site is an important step in obtaining these “available” visitors.
The overall customer satisfaction with the hotel website is indicative of the “retention capability” of a website. The HeBS’ RUSH Report finds that website visitors are neither very satisfied nor dissatisfied with their overall experience on the hotel brand website. Less than 19% of visitors characterize their experience as “Excellent,” while almost 17% report that they are not satisfied and qualify the experience as “Fair” or “Poor.”
Using CRM for Personalization, Customization and Relevance
Personalization is more than just providing the right information to the right person at the right time. Naturally, personalization immediately raises concerns about privacy and sharing of customer data. How much can we personalize the customer experience without infringing on the customer’s personal privacy? Very strict corporate policies have to be put in place to address this sensitive issue and avoid customer dissatisfaction and legal implications.
Personalizing the customer experience on the travel or hotel website, or in your online marketing and communications, is a powerful conversion and retention tool. Customizing your interaction with your most valuable customers (those 20% that generate 80% of your business) will provide significant long-term rewards.
In hospitality, personalization on the hotel level should start by identifying all “electronic touch points” with your customers (hotel guests, meeting planners, travel professionals, etc.) and creating an action plan. Personalize all electronic communications with your customers. Adopt a policy on how to address your guests via email (first name only, Mr/Mrs +Last Name, etc). Addressing customer segmentation issues on the property website is a logical next step. Creating a targeted email marketing campaign is another good step.
For the major hotel brands, personalization efforts are much more complex and expensive. Customization tools used by some major brands and airlines allow website users to actively personalize their website experiences using over 250 criteria. Here are some of the efforts by the major travel and hospitality companies to make the user experience more personable:
A number of results from your eCRM initiatives are tangible, while some results will always remain intangible. The tangible results of many eCRM initiatives can be measured in dollar amounts and increased customer activity on the hotel website. These results include increased conversion rates on your website from eCRM initiatives such as email marketing, pre-arrival emails with value adds and upsells, online promotions, sweepstakes, etc. Results also include customer actions on the website such as signing up for the newsletter, becoming a member of the Loyalty Program, filling out a Meeting/Event RFP form, etc.
How do you measure intangible results such as price driven loyalty (those that book only because they have found the best available rate in their destination) vs. premium driven loyalty (those customers that are loyal, repeat visitors to your hotel)? How do you measure the lifetime value of the customer? The results of all your eCRM efforts are not always immediate, but many become visible over time.
In hospitality today, where your only communication with your customers will often occur over the Internet, it is more important than ever to have a robust eCRM strategy. You do not have to spend huge amounts of money in order to start an eCRM program for your hotel. Addressing these main aspects of your eCRM program: gaining better knowledge of past and current customers, enhancing all aspects of customer service (both online and offline), and personalizing your marketing messages with information that is relevant to your customers will result in more premium-driven loyalty for your hotel product.
Consider seeking advice from an experienced Internet marketing hospitality consultancy to help you build an eCRM strategy that will increase premium driven loyalty and yield significant long-term results.
Note: Mariana Mechoso, Manager eMarketing Services at HeBS, also contributed to this article.
|Also See:||e-CRM and e-Business: How it Can Be Synergized in the Hospitality Industry / September 2005|
|Understanding the Power of Customer Relationship Management / Neil Holm / Hospitality Upgrade Magazine / November 2003|
|Customer Awareness or Customer Beware? Data Security in a CRM-Obsessed Industry / Elizabeth Ivey / Hospitality Upgrade Magazine / June 2003|
|The ABCs of CRM / Mark Haley & Bill Watson / Hospitality Upgrade Magazine / March 2003|
|Effective Customer Relationship Management (CRM) Implementations / John Schweisberger and Amitava Chatterjee, CHTP / Hospitality Upgrade Magazine / Fall 2001|