Analysis of the impact of Consumer Relationship Management process on the customers’ behaviour at Hilton HotelJanuary 17, 2022 2022-01-17 20:56
Analysis of the impact of Consumer Relationship Management process on the customers’ behaviour at Hilton Hotel
Analysis of the impact of Consumer Relationship Management process on the customers’ behaviour at Hilton Hotel
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Chapter 1: Introduction
The recent past decades have seen companies grow exponentially to become global phenomena, with companies initially founded in one corner of the world quickly growing into global organisations in other parts of the world (Werner & Chugh, 2002; Statistica 2015, PwC, 2014). However, it is not unusual that with such phenomenal growth, companies are perennially facing a big challenge. The challenge of having to deal with different cultures of different regions, as customers from every corner of the world has different perceptions of the products they want and consume (Werner & Chugh, 2002). As such, many international and local companies have been forced to work very hard in ensuring that the relationship between their organisation and the customers remain very favourable to both parties. To this end, the need to understand customer relationship management (CRM) processes and its link with customer behaviour has gained increasing vigour.
Hsieh (2009) defined CRM processes as the process by which companies can offer services to their customers with the aim of maximising their satisfaction levels. However, from time to time, the need for a stronger emphasis on the way CRM processes take place is necessary, such as the need to understand the three core CRM processes of marketing, sales and service. Additionally, Finnegan and Currie (2010) think of CRM as a process in business in which there are smaller processes that are engaged in identifying and creating the knowledge that is needed to win and retain customers. The three types of CRM processes include marketing, sales and service. Zablah, Bellenger and Johnston (2004) define marketing as the process of creating a linkage between the needs that exist in a market and the patterns put in place for responding economically. Lun, Jinlin and Yingying (2008) defined a sale as the process of exchanging commodities for services or for money in its variant forms. According to Frow (2005) the process of service refers to the process that involves activities aimed at enhancing the satisfaction levels of a customer to give them the feeling that the product they have bought meets the expected result that the customer had in mind.
Reinatz, Crafft and Hoyer (2004) lamented on the existing gap between theory and evidence, as well as the resounding lack of adequacy in research in the research on CRM. He further illustrated that organisations have had huge challenges trying to implement CRM processes, due to both the lack of proper understanding of the processes. As such, researchers and other stakeholders owed it to the business fraternity to provide further investigation into the matter (Verhoef, 2003).
Due to the rising interest in the CRM processes, Hilton Hotels and Resorts have been chosen for this case aimed to explore the impact of the CRM processes within it to customer behaviour. The company have shown remarkable growth since it was founded in 1943. Since it began its operations 7 decades ago, the company has grown into more than 75 countries and across six continents, with at least 530 hotels operating under the name (Hilton, 2013). This growth signifies the dual role of the company as one of the leading employers in the industry, as well as one of the leading organisations in its industry upon which other organisations can draw inspiration (Hilton, 2013). As such, any threat to the company’s success will have a ripple effect.
In fact, the company has done well as a global leader in the hospitality industry, showing a consistent growth in its financials over the years (Hilton, 2013). It is notable that the net income for Hilton Worldwide Holdings grew consistently from $128 million, to $253 million, $352 million and 415 million between 2010 and 2013 (Market Watch, 2015). Similarly, the hotel’s customer service and CRM processes remain positively acclaimed. The company’s CRM processes are one of the best in the industry, and this attracts more visitors in the company’s website than in the website of its biggest rivals. According to data by statistica (2015) Hilton attracted 5.5 million unique visitors, ahead of Marriott and Expedia Hotels with 5.4 and 5.1 each (Statistica, 2015). The same cannot be said for equally big Hotels such as Intercontinental Hotel, which registered positive growth in 2011 and 2012, but declined in 2013 (Market Watch, 2015b). As such, the application of the CRM processes at Hilton that makes it so efficient is of great interest to aspiring businesses as well as to CRM research enthusiasts.
1.2. Research rationale
Three guiding justifications are laid for this research. Firstly, the research is an instalment of a continually growing collection of the literature in the field. As already hinted in the above section, there is scarcity of research regarding the link between the CRM processes that organisations use and the resultant impact on the customer behaviour. In fact, the scarce literature that already exists already shows a big gap in the conclusions reached. While Frow (2005) concur with the observation that CRM processes are a prerequisite in attaining positive customer behaviour, Verhoef (2003) concluded that there is no much significance of CRM processes used to behaviours of customers. For this reason, the present research will inform the audience of the matter by presenting a carefully appraised literature on the subject.
Additionally, while organisations like Hilton Hotel and a few other have made success stories by understanding the significance of a customer, other organisations both in the hospitality industry and in other industries are still struggling with this concept, and it is causing them huge financial losses. As Zablah, Bellenger and Johnston (2004) noted, while researchers have in the past carried out a multitude of research to draw the link between various aspects of customer management and the performance of the organisation, companies have nevertheless failed to get any worthy information regarding the same. This is firstly because the existing research is written in technical jargon that does not move to solve the practical challenges faced by managers in organisations on a day to day basis. Additionally, most of the research presents only theoretical concepts without much actionable conclusions or recommendations. As such, this research presents an opportunity to add something new into their body of literature, which will be through an evaluation of a case through primary research.
1.3. The research objectives
Hartline and Ferrel (1996) were among the researchers in the tail end of the 20th century who brought to the fore the significance of CRM processes and the need to study the concept further. In their research about CRM processes and its impacts to customer behaviour, Lemon & Zeithaml (2001) opined that one of the most significant variables to be considered should be customer commitment and customer satisfaction, thereby justifying the argument that the CRM and customer behaviour are related. Verhoef (2003) posits that from the perspective of the customer equity theory and relationship marketing theory, consumer behavior is shaped by two factors, namely: the customer evaluations of the products offered by the organization, as well as their perceptions of the intrinsic quality of their relationship with the organization. His study demonstrates that CRM processes help to enhance the consumers’ affective commitment, and consumer loyalty. As already hinted above, the major CRM processes that should therefore be studied include the marketing process, the sales process and the service process. Based on these observations, the major objective for this research is to carry out an examination of the impact of Consumer Relationship Management process on the customers’ behaviour at Hilton Hotel. To this end, the specific aims are as follows:
- To analyse the evolution of CRM processes in theory and practice
- To analyse the existing customer relationship management processes in Hilton clearly and systematically.
- To analyse how the management of CRM process affects customer relationship building and remaining
- To explain the formation and development of the Hilton hotel CRM strategy and what is the CRM development plan for Hilton.
1.4. Scope of research
For this research, the study will restrict its survey to the Hilton Hotel in UK market. Moreover, a sampling from consumers, employees and management in the market will be conducted. The research will rely on primary data from the stakeholders in the company and secondary data from school library and the internet in order to accomplish this task.
1.5. Chapter synopsis
Chapter one has discussed the research problem statement, research rationale along with the research’s aims and the objectives. Chapter two will focus on the literature review for the impact of Consumer Relationship Management process on the customers’ behaviour at in general, while chapter three discusses the methodology of the research. Chapter four will delineate the analysis of findings drawn from chapter three as chapter five will include the conclusions and recommendations drawn from the research.
Chapter 2: Literature review
Hsieh (2009) defined CRM processes as the process by which companies can offer services to their customers with the aim of maximising their satisfaction levels. This is due to the fact that most organisations already have an idea what their customers want, as well as the behaviours, capabilities and needs of these customers. As such, Lun, Jinlin and Yingying (2008) aver that organisations can exploit the knowledge they have regarding their customers to gain a particular advantage, such as increasing their income or revenue streams. Literature has shown that one of the many ways through which this knowledge might be achieved is through the expansion of actionable knowledge, which includes increase bond between the organisation and the customers, and systemisation of customer-centric activities (Lun, Jinlin, and Yingying, 2008; Zablah, Bellenger and Johnston, 2004). However, from time to time, the need for a stronger emphasis on the way CRM processes take place is necessary, such as the need to understand the three core CRM processes of marketing, sales and service. Additionally, there is need to address how these processes should occur, as well as the factors of success that the organisation should consider. Central to the chapter is the objective of analysing the impact of the three stages of CRM process to the customer’s behaviours. Precisely, the literature will attempt to analyse the impact of marketing on customer behaviour, the impact of sales on customer’s behaviour and the impacts of services on customers’ behaviours.
This section seeks to present the literature review on the impacts of consumer relationship management process on customer behaviour as gathered from theory and practice. In view of this, the section firstly presents the definition of the term, as well as the overall overview, followed by the distinct types of CRM processes in practice today. Afterwards, the chapter presents the theories that define CRM processes and the empirical evidence on the same.
2.2. CRM and CRM process
2.2.1. Definition for CRM
Since 1980, there are various definitions for CRM proposed by different scholars. Don Peppers and Martha Rodgers (1999) proposed a one to one marketing framework combined with CRM marketing, which mainly includes four steps:
- Determine your potential customers and present customers.
- According to the customer needs and customer value to the company to divide the customer.
- Strengthen the interaction with a part of customers, understand their individual needs and establish a closer relationship with them.
- Customize products for each customer, services and information.
Plakoyiannaki and Saren (2006) are right when they aver that obtaining customer loyalty is one of the basic theories of customer relationship management. Gary (1996) defined customer loyalty as: Although the customer may be influenced by the external situation, and the marketing efforts of other enterprises may also lead to the occurrence of switching behaviour, the customer still gives deep commitment on its preference for the product or service and guarantee will visit and buy the products again in the future (Gary 1996). Referring to the application of customer relationship management in the hotel industry, Geoff Lancaster and Diana Luck (2010) emphasized that the globe hotel market contains many brands and partnerships, despite they have difference in star rating, most of the hotel still provide the similar core products and services. And thereby they proposed the establishment of a successful CRM system has become an important mean to acquire customers’ loyalty and to improve the management level of hotel.
As Payne and Frow (2006) had earlier noted, Gartner Group believed that CRM is a business strategy and it organizes the resources of the enterprise effectively in accordance with the classification of customers and cultivate customer centric business conduct and implement customer-centric business processes, and taking this as a means to improve the profitability of enterprises, profits and customer satisfaction. Sharing this same reservation, the point made by Pedron and Saccol (2009) can further be made, that this definition clearly pointed out that CRM is not a simple technology, but a business strategy of an enterprise, focusing on corporate profitability and customer satisfaction.
The conclusions from the empirical researches carried out by Hsieh (2009) show that CRM’s focus is to improve the business process related to the relationship with the customers, such as marketing, sales, customer service and support, and realize their automation. CRM is a set of management mechanism and is also a set of software and technology, with the purpose to reduce the sales cycle and cost of sales, to increase revenue and to make innovative products and services to enhance customer value, profitability, satisfaction and loyalty (Winer 2001, p. 95).
According to the case study by Fahei et al. (2001), the IBM Company believe that CRM it to build the long-term, stable and close relationship of mutual trust through improving product performance, enhancing customer service, increasing customer value and improving customer satisfaction, so as to maintain old customers and attract new customers. CRM focuses on improving enterprise’s every interaction with customers and strengthening the relationship between customers and enterprises by improving customer consumption experience (Kumar, 2010).
Gallup Company defines CRM as “Strategy +IT + Management”. This is a simple formula, containing a complex definition. These three aspects are indispensable and the comprehensive definition points out the connotation of customer relationship management (Lun, Jinlin and Yingying, 2008). Thus, from the above concept of CRM it can be seen that CRM is an enterprise strategy includes management idea, management mechanism and management technology.
2.2.2. Overview and definition of CRM processes
Zablah, Bellenger and Johnston (2004) defined CRM as the management of processes within the organisation in order to ensure that there is a higher level of customer loyalty and satisfaction through the dual customer-centric strategy of increasing organisational responsiveness and customisation of services (Hsieh, 2009). Additionally, Finnegan and Currie (2010) think of CRM as a process in business in which there are smaller processes that are engaged in identifying and creating the knowledge that is needed to win and retain customers. A very contrary definition is offered by Roberts, Liu and Hazard (2005), who insists that CRM refers to the technology through which an organisation may create stronger relationships between it and its customers.
Before delving into the types of CRM processes, it is important to understand that there are three levels of CRM processes, which are the customer-facing, the functional and the companywide levels (Hsieh, 2009). Finnegan and Currie (2010) observed that the customer-facing level of the CRM processes are those processes that are engaged in ensuring that the relationship between the customer and the organisation is initiated, maintained, and terminated whenever such actions are deemed necessary. Agreeing with this definition is the work of Pedron and Saccol (2009), which also notes that the process of initiating customer relationships includes such activities as customer identification, whereas the processes that are involved in maintaining a customer include product selling and, reselling as well as retention programs. In an earlier work, Kale (2004) had observed that the third part about CRM process in the customer-facing level includes the process of terminating the relationship between a customer and the organisation, most likely because the relationship is neither profitable to the organisation nor the customer. Such relationships might be a bad relationship and they must be identified firstly, and then eliminated.
On the contrary opinion, Geib et al. (2005) argue that there is a cross-functional level CRM process, which includes the five processes of strategy development, creation of value, integration, management of IT, and the assessment of performance (Geib, et al., 2005).
On the other hand, the research conducted by Payne and Frow (2005) revealed that there are customer-oriented processes, which are different from the previous level in that they emphasise the activities carried out by the customers, which are delivery, support and analysis processes of CRM. This was seconded by the findings of Plakoyiannaki and Saren (2006) which added that the delivery processes of CRM inculcate having direct touch with the customer through such activities as campaigns, sales, service and complaint management processes. However, since addressing complaints is akin to offering services, it is agreed that the management processes mainly focus on the service, sales and marketing (Payne and Frow, 2006). As Frow (2005) observes, this can be achieved for example through segmenting of customers, profiling, offering feedbacks, as well as managing the knowledge regarding customers. This level of CRM process is what forms the focus of this study, as depicted in figure 1.
Figure 1: Summary of the activities of the CRM process (Frow, 2005)
2.3. Different types of CRM processes
Focussing on the customer-oriented level of CRM, three different types or processes under CRM have been pointed out as marketing processes, sales processes, and services processes.
2.3.1. Marketing process
Zablah, Bellenger and Johnston (2004) define marketing as the process of creating a linkage between the needs that exist in a market and the patterns put in place for responding economically. As such, one of the many ways through which marketing achieves its objective includes the creation of a platform for exchange of goods and services, as well as the creation of relationships that had longer-term orientation. The carious activates involved in marketing process include the development and management of the leads, campaigns, customer segmentation, loyalty programs, and resources. These conclusions are shared by Frow (2005) who opine that an organisation has a role of ensuring that the target market is defines, campaigns for the company is carried out properly and that customers are clustered into different groups based on sampling. However, disagreeing with this consensus, Fahey, et al., (2001) had earlier noted that the organisation might consider initiating loyalty programs, such as complex reward points, administration and registration of member customers, as well as adding value on the frequency and volume of customer purchases. If these processes are observed in tandem with the prescribed methods, then the customers’ behaviours is highly likely to change for the positive, as the marketing team will have most likely targeted the customers that are aligned with the products and services of the organisation. This includes customers asking for more about the product, giving positive feedback for improvement as well as doing word of mouth marketing for the company. Additionally, good marketing process encourages the new customers to try a product for the first time, whereas bad marketing process discourages these activities that define customer behaviour (Frow, 2005).
2.3.2. Sales process
Lun, Jinlin and Yingying (2008) defined a sale as the process of exchanging commodities for services or for money in its variant forms. Normally, sales take place whenever an exchange of a title such as in the case of land, or the settlement of a price, such as in the case of a car, has been done. Whereas it involves monetary exchange, sales are said to have occurred just after an agreement has been made, and not when the money is actually received, as sales can be direct, pro-foma-based, agency-based, business-to-business, and electronic sales, among others (Payne and Frow, 2006). An organisation ought to manage the existing opportunities by using standard sales methods, administer documents of sales, as well as utilise different channels for the same. Moreover, an organisation should find it necessary to engage in contract and bids management, agreements, pipeline performance as well as plan and manage its territory very expertly. Such activities not only define the actual link between the organisation and the customer, but they also encourage the customer to be conscious of the existence of the organisation (Zablah, Bellenger and Johnston, 2004). As such, if there is poor sales process in the institution, then the negative customer behaviour is highly likely to be seen. For example, the customers may fail to consume the same product, and the customer may also fail to share about the product with other consumers. In fact, it is highly likely that the customer will speak negatively about the product, service or the organisation that offered poor sales process.
2.3.3. Service process
According to Frow (2005) the process of service refers to the process that involves activities aimed at enhancing the satisfaction levels of a customer to give them the feeling that the product they have bought meets the expected result that the customer had in mind. Though the significance of customer service changes with different industries and the kinds of products they produce, like the aforementioned two processes, customer service has a key role in ensuring that the organisation registers the required profits. In fact, Hsieh (2009) argues that the major requisites necessary under the service process of CRM include the management of service requests, which involves knowledge management and administration of services through different channels. Moreover, in the words of Hsieh (2009), customer service also involves the servicing of bids that had been administered in the sales process. It also includes pricing and recording or checking off of orders. The process or service agreements involve monitoring, new opportunities to sell products, managing any complaints from the customers through taking notes, processing and resolving of the same. This is justified by Finnegan and Currie (2010) when they argue that CRM process of service also involves evaluation of companies from customers, as well as the handling or returns, and the management of product damages and warranties. The last bit about CRM service process is the planning of staff, resources as well as the assignment of strategic customer service plans and the distribution of employees and equipment (Zablah, Bellenger and Johnston, 2004). There is no denying the input of service in the CRM process, as it forms the last but equally significant part of the three major processes. In fact, if customers are satisfied with the services offered by the organisation, their attitudes and behaviour towards the organisation is poised to take a paradigm shift. This is to mean that desirable customer behaviours is derived from the deliverance of high quality services, whereas the customers might show negative behaviours and attitudes if the organisation fails to provide the required CRM service process (Plakoyiannaki and Saren, 2006).
2.4. Theory and evolution of CRM processes
2.4.1. Contact Management
In the 80’s of last century, in order to reduce the cost of enterprise, enhance the enterprise operation efficiency, enhance competitiveness, many enterprises began to re-design and optimize their business processes (Hartline & Ferrell 1996). They combined their processes with information technology and adopt the enterprise resource planning (ERP) management. ERP enhances the enterprises’ interior operation efficiency and quality and improve the quality of external customers, but the problems of external customers involved are not solved. Finnegan and Currie (2010) observed that contact management make people began to pay more attention to external customers, which refers to the enterprise decide the time, place and the point of contact for the contact with customers or potential customers, and to achieve the expected communication goals, and start the management of customers around the customer contact process and results of the contact treatment. Acceding to evidence by Zhang, Chen, and Fu (2006), the final purpose of contact management is through effective management and customer interaction process, to obtain customer satisfaction and loyalty. This view is also move people’s focus from the market in the past to the specific person (Zhang, Chen & Fu, 2006).
2.4.2. Relationship Marketing
Pedron and Saccol (2009) presented the concept of relationship marketing, believing that “relationship marketing means to obtain, establish and maintain the long-term closely relationships between the industry and users, requiring the enterprises’ core management idea from the “product centric” to “taking the customer as the centre”. Agreeing with this point, Finnegan and Currie (2010) added that relationship marketing focuses on the two-way communication with customers, to win the customer trust and loyalty and it stresses the maximum customer lifetime value by maintaining long-term relationships with customers rather than the customer value in a single transaction. Adding emphasis, Kotorov (2003) had earlier recognised that relationship marketing has laid a solid theoretical foundation for CRM.
2.4.3. Customer Care
In 1990th Century, contact management evolved into customer care including telephone service centre, customer database and customer service with the function of data analysis (Bakker, Demerouti & Schaufeli 2003, p. 397). It covers all aspects of business, including: customer service (to provide customers with product information and service), product quality (to comply with the relevant standards and to ensure the safe and reliable), quality of service (the customer experience in the contact process with enterprise), after-sales service (including query, complaints, maintenance and repair of after-sales service) (Sturdy, 1998, p. 34).
2.4.4. Call Centre
In the middle of 1990th, some enterprises began to combine SFA and CS&S systems together, plus marketing planning, field service, and the integrated technology of computer telephone integration (CTI), to form a set of call centre including both sales and service (Zhang, Chen and Fu, 2006). According to Hsieh (2009), this is a total solution with the interactive function combining the enterprise interior data processing, sales tracking, external market and customer service and so on to provide comprehensive and timely customer information for enterprise’s marketing and sales staff. By this solution, Finnegan and Currie (2010) noted that an enterprise can clearly understand the customers’ demand and purchase situation and provide customers with targeted services and products.
In their conclusion, Pedron and Saccol (2009) noted that the above evolution process has showed that the transformation of marketing system and application mode of enterprises from the “product centric” to “customer-centric”. With the development of practice and technology promotion, Gartner Group formally put forward the concept of CRM and it then was highly valued and recognized by enterprises, theoretical field and government, and was quickly improved to the level of enterprise management philosophy and enterprise strategic (Kale, 2004). According to Payne and Frow (2005), the purpose of CRM is to build a system, which can help the enterprise become an entity consonant in enterprises customer service, marketing and decision and help enterprise to form the lasting competitive advantages.
2.5. Impacts of CRM processes on consumer’s behaviour
Earlier studies on the discipline of CRM were unanimous that the impacts of CRM on customer behaviour were primarily determined by the type of industry in which firms operate, and were thus variable across industries, since CRM processes and technologies were largely framed and understood as being industry-specific (Lemon & Zeithaml, 2001; Amoako et al., 2012). Therefore, various studies focusing on different industries arrived at different conclusions regarding the impact which CRM processes have on customer behavior. However, since the seminal study of Thomas & Kumar (20s04), the predominant thought prevailing up to now is that the impacts of CRM are consistent, regardless of industry or culture.
Some of the customer behaviours which have been specifically targeted by most studies in the area include: purchase intentions, cross-buying, usage levels, customer satisfaction, and customer commitment (Verhoef, 2003). Within the specific confines of the hospitality industry, the impact of CRM processes on customer behaviour has been widely investigated. Focusing on the Ghanaian hospitality industry, Amoako et al. (2012) administered questionnaires to 45 customers of the Golden Tulip Hotel in Accra, and evaluated their responses using descriptive statistics. The researchers found that some of the barriers which hinder desirable and positive customer behaviours include poor customer service, and bad products, among others. Effective CRM processes (e.g. faster delivery) help to overcome these barriers and in the process, elicit higher levels of repurchase behaviour, customer satisfaction, and customer loyalty. Moreover, Amoako et al (2012) established that effective CRM processes motivate customers to refer the organization to other prospective customers (i.e. increases positive customer word of mouth), and improves customer trust.
In another study, Lo, Stalcup & Lee (2010) used a modified version of Buttle’s CRM value chain to evaluate the impact of CRM on customer behaviour at the property level. This study focused specifically on hotels situated within Hong Kong. Among other findings, this research demonstrated that CRM is very useful in creating and nurturing long-term relationships with hotel customers. These long-term relationships help to nurture trust and to enhance customer satisfaction. Ultimately, it motivates repeat purchases, where the customer frequents the specific hotel in question, reducing customer churn rates and increasing customer retention.
However, according to Ejaz, Ahmed, & Ahmad (2013), although effective CRM processes tend to enhance customer satisfaction, confidence, and commitment, there exists no empirical evidence to sustain the argument that CRM processes contribute to higher levels of customer loyalty. Focusing on the Taiwanese commercial banking sector, Yao & Khong (2011) adopt a causal research design, and incorporate the use of both secondary and primary data. The primary data is collected via structured questionnaires, based on the five-point likert scale, which are administered to some 31 managers of 42 Taiwanese banks. Variability of their data s tested using the factor analysis method, data reliability is assessed by means of the Cronbach alpha, and the analysis is done using the regression method. Based on the strength of their findings, the researchers aver that there is a strong and positive correlation between CRM processes and customer satisfaction.
More specifically, Yao & Khong (2013) show that effective CRM processes increase customer switching costs, reduce service costs, and leads to more customized offerings. The net effect of these is that it reduces the tendency of the consumers to try different brands (increases brand loyalty). The researchers also demonstrate that effective CRM processes increase cross and up-purchasing behavior by customers.
According to Mithas, Krishanan & Fornell (2005), CRM processes help to increase customer satisfaction in a number of ways. Firstly, CRM applications enable the organization to amass valuable information regarding their customers. With this information, firms are able to customize all the elements of the marketing mix to suit the specific and unique tastes, needs, and preferences of each customer. Customers who are presented with a marketing mix that appropriately answers their unique needs are likely to end up being more satisfied. Moreover, customization enhances perceived quality, which is a significant driver of customer satisfaction. Consequently, customization affects customer satisfaction indirectly through perceived quality.
Secondly, CRM processes depend largely on the use of information and communication technology (ICT). Through the use of these ICT tools therefore, CRM facilitates the degree of reliability related to the consumption experiences of the consumer. This is because CRM is in a position to enable faster processing of the orders placed by customers, their accounts, as well as requests. CRM is also able to leverage on ICT tools to ensure service quality consistency across all operations of the firm, thus enhancing the consumption experience and ultimately, customer satisfaction (Mithas, Krishanan & Fornell (2005).
According to Rababah, Mohd and Ibrahim (2011), this process of adapting market responses to suit the specific customer characteristics aligns with the information management process of CRM where the elements of the specific CRM process include: ICT systems, a database, front office applications, back office applications, as well as analytical tools. Rababah, Mohd and Ibrahim (2011) also aver that one of the processes of CRM is the customer-facing level processes, which consists of three distinct processes, namely: the initiation, maintenance, and termination of the relationship. In their study, Mithas, Krishanan & Fornell (2005) also demonstrate that these three customer-facing level CRM processes have the effect of enhancing the satisfaction and loyalty. Finally, Verhoef (2003) posits that from the perspective of the customer equity theory and relationship marketing theory, consumer behavior is shaped by two factors, namely: the customer evaluations of the products offered by the organization, as well as their perceptions of the intrinsic quality of their relationship with the organization. His study demonstrates that CRM processes help to enhance the consumers’ affective commitment, and consumer loyalty.
2.6. Chapter summary
This chapter has investigated a plethora of theoretical literature as well as information from empirical researches. It has been seen that various definitions can be given to conceptualise CRM, CRM processes and the levels and types of CRM strategies. Additionally, a number of theories have been seen to impact CRM processes in various industries. From the theory, it has been found that the three core processes include marketing, sales and service provision. However, other perspectives have shown that the processes might include initiation, sustenance and termination of the relationship with the customers. While different approaches to determining the process of CRM abound, there is consensus that the proper implementation of these processes lead to positive customer behaviour, such as increased purchases, positive feedback and word of mouth to other potential customers. On the other hand, poor implementation of these processes by the organisation may lead to unwanted customer behaviour such as customer complaints, negative feedbacks, declining sales among others.
Chapter 3: Methodology
This chapter will conduct an analysis on the methods used for the research regarding the Consumer Relationship Management (CRM) process on the customers’ behaviour at Hilton Hotel. On that note, the following research methods will be analysed; research philosophy, research approach, research strategy, research instruments, data collection and analysis methods, validity and reliability, research ethics and limitations of this research.
3.2 Research philosophy
There are two major paradigms used in research philosophy according to Bryman and Bell (2007), these include; positivismand interpretivism. Saunders et al. (2009) highlight that positivism philosophy encompasses the natural scientific approachof data processing and acquisition which assumes that findings in a business environment can be achieved through observations and experiments to obtain reliable data. Eriksson and Kovalainen (2008) stated that this philosophy brings forth the considerations of hypothesis testing that relies on the existing theories. Moreover, more research by Lecompte and Schensul (2010) and Gaeta (2012) depict positivist researchers to have been embedded in the worldly shared laws that make the world static with a view of all existing phenomenon illustrated by the shared laws.
On the other side, Collis and Hussey (2003) argue that interpretivism approach perceives the business environment as vibrant and with multi-dimensional with no ties to actual law since the laws may fade away with time. In achieving the research objectives and analysing the CRM process on the customers’ behaviour at Hilton Hotel, this research will adopt the positivism philosophy to bring out the desired frameworks to understanding the customer trends and behaviour.Hoyle et al. (2002) agreed that positivism approach will be more viable as it minimizes the variations hence making the study reliable in its experiments and applications. Additionally,Saunders et al. (2007) affirms that this philosophy that can work well in this case because the variables in research are feasible and can aid development of hypothesis and test them.
3.3 Research approach
Lecompte and Schensul (2010) state that the main research approaches are inductive and deductive approaches. In understanding customers’ behavioral patterns and the impact of the effectiveness of different CRM processes in Hilton Hotel to consumer behaviours, the deductive approach was espoused. This approach is valid to critically scrutinize models and probe into detail the research information. Grum (2009) says that this approach narrows down from the broad and generalized look to a specific information that can be evaluated to either positively or negatively affect the research theories and outcomes. Using positivism that is a quantitative research approach, this research will easily achieve its objectives and focus on the research questions to bring forth the customer behavioral trends in a CRM process(Hatch and Cunliffe, 2006). Conversely, Collis and Hussey (2003) noted that deductive approach gives the researcher room to evaluate and test the existing theories in hypothesis development with an objective of negating or authenticating each theory.
3.4 Research strategy
Baum andLampel(2010)define research strategy as the generalized manner in which the researcher responded and tackled the research question in accordance to the objectives. According to Curwinand Slater (2007) several research strategies can be adopted among them; case study, ethnography, action study, experiment, survey. Taking into consideration analysis and studying the process on the customerbehaviourin Consumer Relationship Management (CRM) at Hilton Hotel, survey approach will be ideal. Primarily, according to Mukhopadhyay& Gupta (2014), survey is hinged on the fact that through this strategy more regular and reliable data will be collected with a wide range of individuals and educational settings. In this research the sample was collected from selected individuals in Hilton Hotelthrough their responses in according to the questionnaire (Hatch and Cunliffe, 2006). Additionally, the aspect of survey being broad perspective, versatile and efficient in terms of responses makes it a suitable strategy to adopt in this study (Humphrey & Lee (2008). Contrary, according to Mik (2006) survey has challenges in that data collection process is not adequate because of its nature and poor sampling frame.
The research collected data from the employees and the customers of the Hilton Hotelwho were coming into the hotel and had used the hotel at least once before, and convenience sampling was done where customers leaving the hotel were approached and asked to participate in the research. This method was used because it was cheap and very time saving compared to alternative methods. The sample size is 150 respondents from customers. Besides, 40 managers and common employees were also chosen, as they are more familiar with the process of the customer relationship management in Hilton hotel and can provide more precise and useful information for the researcher.
3.5 Research design
3.5.1 Research instrument
Research instruments can be defined as any tool which a researcher can use to collect data from respondents as supported by Teresa (2006). Research instrument is highly dependent on the strategy which has been implemented in the study an aspect further affirmed by Julie (2007). Therefore in this case whereby the strategy implemented is survey, the most ideal instrument is the questionnaire. As illustrated by Saunders et al (2009), the main reason behind this choice is the fact that the survey strategy is normally implemented when the respondents involved are very many. In return, for such a large sample questionnaires will tend to be the most ideal instrument to be administered to the respondents. This is so since the respondents will not need personal supervision while administering the questionnaires (Teresa, 2006). In so doing, the researcher will see to it that time will be saved in collecting data from this large group of respondents.
3.5.2 Questionnaire design
The questionnaire used in this research is based on the standards set by previous researchers. Firstly, the questionnaire has the warm up questions, followed by the main questions and tailed by the demographic information. In the main body of the questionnaire, questions were coded using a Likert’sfive-point scale ranging from “strongly disagree” to “strongly agree”. The scale is used to gather representative data that discusses the research question, whereas the demographic part is used to gather information about the researcher.
The main questions sought to understand the impact that customer relationship management processes have on the behaviour of customers. Previous researcher input in the following aspects contributes to the development of questions in the following aspects.The questionnaires for customers of Hilton will be designed around customer service, segmentation of customers and customer relationship using choice questionsin order to learn of how the hotel’s relationship management affects customers’ behaviours
i: Customer service
Hsieh (2009 ) and Finnegan and Currie (2010) argue that service that the management of the hotel offer to their customers impact on how they behave as well as their satisfaction levels. Plakoyiannaki and Saren (2006) think that if the customer is satisfied with the service, they will reciprocate by making regular visits to the hotel. Amaoko et al (2012) on the other hand observes that customer service could be evaluated by finding feedback on why customers preferred a certain company over others and their service or products. Mithas, Krishnan &Fornell (2005) observe that the company has to observe the both the cost and quality of their products they offer to their customers. This study therefore sought to answer the following four questions (1) how many times the respondents have visited Hilton? Why they choose Hilton, is it (2) fast service (3) high quality service (4) cheapness of the services
ii Segmentation of customers
Lemon & Zenithal (2001) argue that in order to better serve their customers, firms should segment their customers and tailor makes their products to suit their customers. Frow (2005) argues that in so doing, the firm is able to link the needs of the customer with the products or service that they offer. Based on this research input, the research questions are designed as (1) Do you feel the hotel has segments for its customers (2) Do you think the hotel offers tailored services for specific customers (3) Do you think you are treated more specially than the others?
iii: Customer relationship
Pedron and Saccol (2009) argue that relationship marketing as revolutionized marketing from being product centric to customer centric. There is more information exchange between the firm and the customer that has enhanced customer relationship, satisfaction and commitment of customers (Ejaz, Ahmed, & Ahmad, 2013, Mithas, Krishanan&Fornell, 2005). Based on this research input, the research questions were designed as (1) The hotel communicate to its customers about any changes in its services? (2) Do you feel the company has enough information about your needs? (3) The organisation has defined formal processes and standards for customer management (4) Customer management practices are aligned with best practices (5) Theorganisation providescustomised interface on e-channels for existing customers based on their profile
As for managers and employees of Hilton hotel, the questionnaire design will be around the measurement of the process of customer relationship management and its influence on customer behaviours using Likert’sfive point scale. The outline can be shown as follows:
Table 3-1 Questionnaire outline for managers and employees of Hilton
|Evaluation system of target customers||Pedron and Saccol (2009), Ejaz, Ahmed, & Ahmad (2013)||(1) The hotel communicate to its customers about any changes in its services (2) The organisation has defined formal processes and standards for customer management (3) The organisation provides customised interfaces on electronic channels for their customers as per the customer profile|
|Customer acquisition||Ejaz, Ahmed, & Ahmad (2013)||(4) The organisation uses multiple channels to deliver products and services (5) The organisation understands the costs of using various channels to serve its customers|
|Regain||Pedron and Saccol (2009)||(6) The organisation has ways in which it handles complaints received from the various channels. (7) The organisation regularly updates customers of the proceedings following their complaints|
|Customer relationship maintenance||Ejaz, Ahmed, & Ahmad (2013)||(8) The organisation fully understands the relationship of customers with various business functions within the hotel. (9) Guidelines and standards have been set that ensure there is coordination across channels (10) The hotel business function has the capacity of managing the multiple relationships in tandem with each other (11) The organisation coordinates with different departments, and external parties to create the strategy to maintain customers (12) Customer feedback reflects that consumers are satisfied with the services delivered via e-channels (13) The Hotel regularly informs customers of the progress of their complaints or service requests|
|Influence of the customer relationship management on customer behaviours||Mithas, Krishanan&Fornell (2005)||(14) Customers are satisfied with the responsiveness of the organisation (15)The organisation has attracted more new customers as a result of satisfying he existing customers (16) The management system in the company is effective in helping remaining customers|
3.5.3 Data collection and analysis
Data collection refers to the ways used to consolidate primary and secondary evidence from which the deductions and recommendations of the study are made (Sapsford and Jupp, 2006). To facilitate the collection of data, a researcher needs to use research instruments which are numerous but have been narrowed down to two main instruments by Yin (2013), that is, interviews and questionnaires. Data collection instruments offer a structured way for gathering evidence and thusly create validity and reliability for a research (Gratton and Jones, 2004). Primary data was collected by the use of close ended questionnaires that offered limited responses on the respondents’ end. This enabled the researcher to eliminate the complexity in analysis that arises from divergent responses attributed to open ended questions. The questionnaires were structured in parts with the first part gathering data on demographics and the rest on CRM and its relation with customer behaviour. The questions for managers and employees were coded using a five point likert scale ranging from strongly disagree to strongly agree. The questionnaires were handed out 150 respondents who are customers at Hilton Hotel with the purpose of getting at least 120 valid samples. Besides, the questionnaires were handed out 40 managers and employees of Hilton in order to get at least 30 valid samples. Secondary data was collected using in-depth research into the existent literature and used to complement primary data. The collected data was analysed using content analysis and statistical methods and packages such as MS excel and statistical packages for social sciences (SPSS).
3.6 Validity and reliability
Research reliability offers the researcher with an assurance of the credibility of the instruments that were used to gather data. Basically, reliability helps to determine whether similar results can be consistently replicated in other related studies using the same instruments. On the other hand research validity involves the effectiveness of research instruments in measuring the particular elements they are supposed to measure (Gratton and Jones, 2004). Thusly, it is factual to posit that validity and reliability are imperative in according a study general credibility. In this particular research, reliability was ensured through a conduct of a pre-study test. In this case, the research did a pilot study that enabled elimination on ambiguity apparent in the questionnaires. Further, the researcher was able to improve the remaining questions as well as add relevant questions that had been omitted. On validity, the researcher focused on internal validity – establishing a causal and effect relationship as defined by Mitchel and Jolley (2012). This was achieved by aligning the study questions to the objectives of the study.
3.7 Research ethics
While conducting a research, data collection is paramount and inevitable and coincidentally it involves the interaction with respondents to the questionnaires. The manner in which a researcher interacts and obtains data from the respondents determines the ethical aspects of a study. Hammersley and Traianou (2012) posit that for any research to be qualified as ethical then issues regarding privacy, consent and respect need to be factored in the collection of data. As such, the researcher engaged the aforementioned issues. For starters, before the administration of the questionnaires, the researcher informed the respondents of the study and intended use of the questionnaires. Further, the researcher sought the consent of each party that was available for filling in the questionnaires. The researcher assured all the parties to the questionnaires of total discretion in handling their data and that it would be solely used for the purposes of the study. Lastly, the researcher observed anonymity in administering the questionnaires attributing to the fact that no names and contact details were exchanged.
3.8 Research limitations
In the process of conducting the study, the researcher encountered a number of challenges as following. Firstly, the researcher being a student had limited time at disposal and thus securing enough time to conduct the study was a challenge. Although the use of questionnaire saved up time, their issuing to respondents and collection proved to be time consuming. Additionally, the respondents were mostly rushing to other destinations and thus the researcher had limited time of interaction. This was solved by use of convenience sampling whereby the researcher focused only on the available and willing parties. Mostly, the respondents veered off topic and that necessitated more time. Another challenge the researcher experienced was financial inadequacy. For example, the researcher was not able to single-handedly distribute the questionnaires and needed the help of fellow students who had to be paid. Additional costs were also incurred in matters surrounding the questionnaire such as transport to the study site. Lastly the researcher lacked experience in conducting research and thus faced issues such as ambiguous questions; however such were cleared by referring to previous literatures and theories as well as consulting experts in the field.
Chapter 4: Data findings and Analysis
In this chapter, the researcher intends to present the findings of the study and discuss the crucial elements. The analysis is done in light of the main aim and objectives of the study. Further the analysis is done in consideration of sentiments averred in extant literature. The chapter begins with a discussion of the respondent demographics including gender, age, length of stay at Hilton, education level and employment level for those in management positions. The chapter proceeds to analyse the elements of CRM in view of customers and of employees at Hilton Hotel. Lastly, the chapter summarises with a discussion of the satisfaction of customers and offers a synopsis of all the aspects in the chapter.
4.2. Profile of respondents
The characteristics of respondents, majorly the demographic information on respondents, have an impact on understanding customer relationship management in institutions (Zulkifli and Tahir, 2012). Thusly the analysis of demographic information is significant in this study.
4.2.1. Analysis of respondents’ gender
The researcher analysed a total of 118 questionnaires, and 66 of the respondents were female and 52 male. The researcher deemed this representation of both genders as proportional and thus fit for the study. This is also considering that women have always outnumbered men in the UK over the years (Townsend and Westcott, 2012).
4.2.2. Analysis of respondents’ age
As depicted in figure 4.2.2 above, the majority of the respondents – 39 – fell into the 26-35 years age bracket. The least of the group were people aged 61 years and above. This distribution of age is in accordance to research that shows the millennial generation (aged 18 to 34 years) are the new majority customers in the hospitality industry (Solomon, 2014).
4.2.3. Employee level
In regard to the employment level, 85 of the 118 interviewed respondents were ordinary level employees whilst 33 were at management level. This distribution can be attributed to the large number of ordinary level positions in comparison to management positions.
4.2.4. Length of working at Hilton Hotels and Resorts
A great number of respondents – 44 – indicated to have worked for Hilton for between 2-5 years. As such, the distribution seems appropriate as the employees have enough experience to understand the CRM practices of Hilton Hotels.
4.3. Customer acquisitions
According to Zablah, Bellenger and Johnston (2004), marketing as an element in CRM is responsible for targeting the ideal customer and establishing mutually beneficial relationships with the customer. The core of the marketing process therefore lies in acquiring and maintaining of customers. Frow (2005) views marketing as establishing a long-term orientation with the customers. This is through development and maintenance of market leads, resources, market segmentation and loyalty aspects. In addition Fahey, et al., (2001) notes that establishments of complex reward initiatives such as customer loyalty points, membership programs and value addition services can improve on customer behaviours. Essentially, the process of studying the target market and establishing the initial contact with customers appears as important as the processes of maintaining the customers. Research also indicates it is important to consider aggressive marketing techniques and campaigns in winning over customers. The following figure 4.3 shows the analysis of the customer acquisition processes at Hilton Hotels and Resorts.
The analysis of as to whether the firm understands the costs of using the various channels to serve customer reveals a mean of 3.08. This means that most of the respondents were indifferent regarding this question. In the view of Zablah, Bellenger and Johnston (2004), it is important that an organisation uses the standard methods of sales to service its customers but it would also be crucial to seek additional channels. The benefit of such is that it creates an actual link between the customer and the organisation. This is despite the fact that multiple channels may have dire cost implications.
According to Frow (2005) a good marketing system is essential in getting new customers to try out new products and services by a firm. The ultimate goal of a firm in sales also is to reach all the potential customers. Thusly, it is important to make us of all available channels to get to the customers. In the hospitality industry, this may mean the strategic location of hotels or using positive customer reviews to reach to new customers. According to Frow (2005) the use of word of mouth advertising impacts customers’ behaviour either negatively or positively. Asked as to whether the Hotel uses multiple channels to reach its customers, a majority of the respondents indicated the affirmative with the mean for this question being 3.69. Similarly, the findings indicate that a majority of the customers believe that Hilton offers customised channels on electronic interfaces. Customising products appears as one important step in a CRM marketing framework (Peppers and Martha Rodgers, 1999).
A case study by Fahei et al. (2001) on CRM at IBM concluded that the main achievement of CRM is improving customer service, adding customer value, enhancing product performance, customer satisfaction et cetera. All this enable a firm to maintain and acquire new customers. Therefore, the formalisation of CRM service processes accrues noble benefits. At the Hilton Hotels, most of the respondents indicate that there are formally recognised customer management processes and standards. Also the mean for the question regarding whether the firm notifies the customers of changes in its services leans to the affirmative – 3.2. As such it is conclusive to say that Hilton has a good CRM practices. In the words of Kumar (2010) CRM, if observed well, establishes firm relationships with customers and improves customer experiences.
4.4. Management of customers’ complaints
In the perspective of Pedron and Saccol (2009) while discussing issues surrounding relationship marketing, the emphasis is place on a constant flow of communication between the firm and the customer. Essentially, this communication aspect creates customer loyalty and establishes a two way trust chain. Inclusive in such communications, according to Bakker, Demerouti and Schaufeli 2003 and Sturdy (1998), are details informing the customer of product and service elements, communicating standard procedures, ensuring quality of service and after-sales services. These after-sales services are identified as queries, complaints and other service requests. Finnegan and Currie (2010), in regard to the importance of communication in CRM, note that being in regular touch with the customer offers the firm a maximum customer value by maintaining long-term relationships as opposed to single-transaction customer value.
In the analysis of the evolution of CRM practices as in the literature review section, it is evident that there has been constant incorporation of technology in CRM practices and that have led to the establishment of positive growth in the impact of CRM over the years. A firm showing genuine effort to relate with the customer is prone to be more successful through repeat purchases, reduction in customer churn rates, increased loyalty and customer retention (Lo, Stalcup and Lee, 2010). Contrasting this discussion with the findings of the research, Hilton appears as having effective advances in CRM in the aspect of handling customer complaints. Respondents agree that the hotel informs customers of the progress of their service requests – a mean of 3.39. As to whether the hotel informed customers on how the complaints were being handled though the mean falling on the neutral range, it leaned to the affirmative. However, the hotels seems to lack an standard way of handling complaints received through various channels as show by the mean of 2.94 on the relevant question.
4.5. Customer relationship maintenance
As maintained earlier in this chapter, research shows CRM is an invaluable process is not only establishing but maintaining long-term customer relationships that are the core of every business enterprise (Finnegan and Currie 2010; Fahei et al. 2001). As such it is apt to infer that adopting CRM should be coupled with effective practice of CRM provisions. In the view of (Yang and Peterson, 2004), customer maintenance which is synonymous to customer loyalty can only be achieved by customer satisfaction. Although some studies have tried to disapprove the any relations between CRM and customer satisfaction – Ejaz, Ahmed and Ahmad (2013) – a research by Yao and Khong (2011) proves otherwise by establishing the relationship. Therefore, it is apt to point out that maintenance of customers by a firm is significantly related to how the firm handles CRM practices. In addition, according to Zablah, Bellenger and Johnston (2004), the coordination and planning of various resources (employees and equipment) and their distribution serves towards enhancing positive customer behaviour towards the organisation. Finnegan and Currie (2010) add to this by noting coordinating various activities such that they point at the customer as the central goal is crucial in achieving positive customer behaviour. This coordination is majorly through understanding how each function relates to the customer such as the relationship of customer service with spotting new sale opportunities, noting customer queries and responding to the et cetera (Hsieh, 2009).
As shown in table 4.5, Hilton hotel excels in terms of the standards set to ensure that there is coordination of CRM activities across channels – the relevant mean is 3.42. Additionally, respondents believe the firm coordinates different parties to ensure a strategy exists for maintaining customer relationships – the relevant mean is 3.11. However regarding hotel industry being able to coordinate several relationships in tandem with each other, most of the responses were negative – a mean of 2.9. The responses on the ability of the hotel to link business functions with customers also showed the same – a mean of 2.94. Therefore, although Hilton has a well managed CRM system, it is underperforming in others.
4.6. The influence of CRM on customer behaviours
Extant literature regarding the influence of CRM on customer behaviour reveals that there is a direct link between customer satisfaction and the effective implementation of CRM practices. According to Yao and Khong (2011) effective CRM processes increase customer switching costs, reduce service costs and leads to more customized offerings. The resultant effect is that customers are less likely to try different brands and in doing so they become loyal. On the same issue Mithas, Krishanan and Fornell (2005) notes that CRM helps in gathering customer information that is useful in customizing elements of the marketing mix that in turn target specific customers. Satisfied customers have also the tendency of spreading the benefits through word-of-mouth which as mentioned earlier can lead to acquisition of new customers.
On a different perspective Rababah, Mohd and Ibrahim (2011) and Mithas, Krishanan and Fornell (2005) agree regarding the ability of CRM to leverage its performance on ICT and in the process ensure quality service delivery across all the platforms. In this regard, the customer experience of the product ends up being superior. In the analysis of the respondents from Hilton Hotel, a majority of the responses – with a mean of 3.49 – indicated that the feedback from the customers revealed satisfaction with the level of services on e-channels. The same can be observed in the responses as to whether customers are satisfied with the organisation – the relevant mean being 3.27. However, as to whether the management has been effective in satisfying the rest of the customers the responses show indifference – a mean of 3.1. Though this, the analysis also shows that CRM has acquired new customers.
4.8. Chapter summary
This chapter intended to discuss the findings and analysis in light of the primary data collected and using sentiments in secondary data. Essentially, the major conclusion is that CRM has an impact on customer behaviour. Firstly, the acquisition of customers is largely dependent on CRM activities including relational marketing as well as customer service. Secondly, the maintenance of customers depends on a variety of action plans such as service delivery, customer communications et cetera. This also extends to management of complaints by customers. As aforesaid, these processes culminate on CRM and thus prove that indeed CRM is influential to the customer behaviour. Hilton Worldwide has managed to excel in most of these activities though there are some areas indicated by the findings as weak.
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