A STUDY OF CUSTOMER RELATIONSHIP MANAGEMENT (CRM ... · This is to certify that the project report...

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A STUDY OF CUSTOMER RELATIONSHIPMANAGEMENT (CRM) PRACTICES FOLLOWED BY

THE HOTEL INDUSTRY IN LUDHIANA

Research Project Report

Submitted to the Punjab Agricultural Universityin partial fulfilment of the requirements

for the degree of

MASTER OF BUSINESS ADMINISTRATIONin

MARKETING MANAGEMENT(Minor subject: Economics)

By

Harshal Goyal

(L-2009-BS-10-MBA)

Department of Business ManagementCollege of Basic Sciences and Humanities

©PUNJAB AGRICULTURAL UNIVERSITYLUDHIANA-141004

2011

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CERTIFICATE – 1

This is to certify that the project report entitled, “A study of customer relationship

management (CRM) practices followed by the hotel industry in Ludhiana” submitted for

the degree of Master of Business Administration, in the subject of Marketing Management

(Minor Subject: Economics) of Punjab Agricultural University, Ludhiana, is a bonafide

research work carried out by Harshal Goyal (L-2009-BS-10-MBA) under my supervision and

that no part of this project report has been submitted for any other degree.

The assistance and help received during the course of investigation have beenfully acknowledged.

(Dr. (Mrs.) Gagandeep Banga)

Major Advisor

Associate Professor

Deptt. of Business Management

College of Basic Sciences and Humanities

Punjab Agricultural University

Ludhiana – 141 004

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CERTIFICATE II

This is to certify that the project report entitled, “A study of customer relationship

management (CRM) practices followed by the hotel industry in Ludhiana” submitted by

Harshal Goyal (L-2009-BS-10- MBA) to the Punjab Agricultural University, Ludhiana, in

partial fulfilment of the requirement for the degree of Master of Business

Administration, in the subject of Marketing Management (Minor subject: Economics)

has been approved by the external examiner along with internal examiner after an oral

examination on the same.

Internal Examiner External Examiner

(Dr. Y.P Sachdeva)

Head of the Department

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ACKNOWLEDGEMENT

First of all, I owe a debt to the Almighty by whose kindness; I have been able

to achieve a big goal of my life.

I express my heartfelt gratitude to my Major Advisor, Dr. (Mrs) Gagandeep Banga,

Associate Professor, Department of Business Management, College of Basic Sciences and

Humanities, for her dexterous guidance, inspiration, sustained encouragement, keen interest

and precious time given to me during the course of research project and in successful

completion of the manuscript.

I express my deep appreciation to, Dr. B.R.Garg, Senior Farm Economist,

Department of Economics and sociology for his expert guidance. I owe my thanks to Dr.

Pratibha Goyal, Associate Professor, Department of Business Management, Dr. Sandeep

Kapur, Professor, Department of Business Management for their valuable suggestions during

the preparation of this manuscript.

I express my sincere thanks to Dr. Y.P. Sachdeva, Professor-cum-Head, Department

of Business Management, and all other faculty members of Department of Business

Management for providing necessary facilities during the tenure of my studies.

Words at my command are inadequate to convey my sincere regards and respect

to my loving parents and my family members for their deep affection, infinite encouragement

and untiring moral support .Special thanks to all my friends for their ever encouraging

support, constant concern for my welfare and selfless sacrifices for my bright future.

Place: Ludhiana

Dated: (Harshal Goyal)

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Title of the Project Report : “A study of customer relationship management (CRM)

practices followed by the hotel industry in Ludhiana”

Name of the Student : Harshal Goyal

Admission No. : L-2009-BS-10-MBA

Major Subject : Marketing Management

Minor Subject : Economics

Name and Designation of : Dr. Gagandeep Banga

Major Advisor Associate Professor,

Department of Business Management

Degree to be awarded : M.B.A

Year of the award of degree : 2011

Total Pages in Project Report : 57+ annexure + vita

Name of the University : Punjab Agricultural University,

Ludhiana- 141004, Punjab, India

ABSTRACTThe present research was undertaken to study the Customer Relationship

Management (CRM) practices followed by selected hotels in Ludhiana and to study the

customer satisfaction with respect to the CRM practices followed by the selected Hotels. For

the purpose of the study, a sample of 10 hotels were selected from the list obtained from

Restaurant and Hotel Association of Ludhiana on random basis and 150 customers were

selected on basis of convenience. The managers/owners of the hotel and customers were

contacted to satisfy the objective of the study. It was found that most of the managers had a

positive attitude towards CRM practices and the most common activities undertaken were

studying the existing database of the customers and personal counseling. The benefits of

CRM are increased customer satisfaction and increased customer loyalty. The customers were

also satisfied with the CRM practices to some extent and referred the hotel to friends and

relatives.

Key Words: Customer Relationship Management, Hotel Industry, Customer Satisfaction.

Signature of Major Advisor Signature of the Student

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CONTENTS

CHAPTER TOPIC PAGE

I.

II.

III.

IV.

V.

INTRODUCTION

REVIEW OF LITERATURE

RESEARCH METHODOLOGY

RESULTS AND DISCUSSION

SUMMARY

REFERENCES

ANNEXURE

VITA

1-10

11-17

18-23

24-47

48-54

55-57

i – viii

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Chapter – I

Introduction

It is boom time for India's Tourism and Hospitality sector. A 5,000 year history,

culture, religion and alternative medicine fascinate both budget and luxury travellers alike.

Driven by a surge in business traveller’s arrival and a soaring interest in India as a tourist

destination, the year 2006 has been the best year till date, with foreign visitor arrivals

reaching a record 3.92 million, resulting in international tourism receipts of USD 5.7 billion.

The Department of Tourism’s resolve in promoting Indian tourism has strengthened as it

recognises it’s potential. Tourism in India is the third largest foreign exchange earner,

accounting for 2.5 per cent of GDP. The outlay on tourism development rose to Rs. 7,860

million in 2006/2007, from Rs. 3,500 million in 2003/2004, and continued to focus on the

“Atithi Devo Bhavah” campaign, targeted at the inbound foreign tourists in the country.

Translated literally this means “Guest is God”. The World Travel and Tourism Council

(WTTC) has named India along with China as one of the most fastest growing tourism

industries for the next 10 to 15 years. According to World Travel and Tourism Council

(WTTC) the Travel & Tourism Industry contributes 2.1per cent to India’s GDP. The industry

employed an estimated 24,349,000 people in 2007 (5.4per cent of total employment, or 1 in

every 18.4 jobs). (World Travel and Tourism Council, 2007)

The key driver for this growth in the Indian tourism industry has been a fast

growing economy for the last 3-4 years. Despite lagging in the basic infrastructure that

supports the tourism industry, Indian tourism industry has been showing an impressive

double-digit growth.

Hospitality is an industry with in the tourism industry. When most people think of

hospitality industry, they mostly think of hotel and restaurants. However, the true meaning of

hospitality industry is much broader in scope. According to Oxford English Dictionary,

hospitality means “the reception and entertainment of guests, visitors or strangers with

kindness and goodwill”. The word hospitality is derived from hospice, the term for medieval

of rest for travelers and pilgrims. Hospitality, then, not only includes hotels sectors and

restaurants but also include other kind of institutes that provide shelters, food or both to the

people who are away from their homes. This might include private clubs casinos, resorts, and

attractions and so on.

Hospitality, as an industry segment in itself, is a US$ 3.5 trillion service sector

within the global economy. As an engine for economic growth, the tourism and hospitality

sector cuts across the rural- urban divide, and bridges economic boundaries. According to the

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World Travel & Tourism Council’s 2007 Travel and Tourism Economic Research, the

travel and tourism sector in India generated a total demand of USD 53,544.50 million of

economic activity in 2007, accounting for nearly 5.3 per cent of GDP and 5.4 per cent of

total employment. The sector grew at a rate of 8.4 per cent in 2007 and is expected to grow

by 8 per cent per annum, in real terms, between 2008 and 2016 (Corporate Catalyst India,

2007).

The year 2007 also marked the fifth consecutive year during which India has

witnessed double-digit growth in foreign tourist arrivals. Along with the rise in foreign

tourist arrivals, foreign exchange earnings have shown a robust growth of 25.6% during

January-October 2007 to touch US$ 6.32 billion as against US$ 5.03 billion during January-

October 2006 (DPNC Consultants, 2007).

During 2009, the number of domestic tourist visits to the States/ UTs was 650 million

as compared to 563 million in 2008 and 527 millions in 2007. The contribution of top 10

States was about 88% to the total number of domestic tourist visits during 2009. During 2009,

the number of Foreign Tourist Visits (FTVs) to the States/ UTs was 13.7 million as compared

to 14.1 million in 2008 and 13.3 million in 2007. The contribution of top 10 States was about

90% to the total number of FTVs in the country during 2009. Foreign Tourist Arrivals (FTAs)

during the Month of January 2011 were 5.38 lakh as compared to FTAs of 4.91 lakh during

the month of January 2010 and 4.22 lakh in January 2009. There has been a growth of 9.7 %

in January 2011 over January 2010 as compared to a growth of 16.4 % registered in January

2010 over January 2009. The trend of significant positive growth in FTAs observed during

the year 2010 continued in January, 2011 also with a growth rate of 9.7 % (Ministry of

Tourism, 2011).

1.1 Hotel Industry

Hospitality not only includes hotels and restaurants but also relates to other kind of

institute that offers shelter, food, or both to people away from their homes. This might include

private clubs, casinos, resorts, attractions and so on. Hotels as one part of hospitality industry

has evolved from the very modest beginning of families and landowners who opened their

homes to travelers to the high rise of properties today which contain thousands of guest’s

rooms that these lodging facilities can be classified by location, by room and by the number

of rooms they contain.

Nowadays basic accommodation of a room with only a bed, a cupboard, a small table

and a wash stand has largely been replaced by rooms with en-suite bathrooms and more

commonly in United States than elsewhere climate control. Other features found may be a

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telephone, an alarm clock, a TV, and broadband internet connectivity. Food and drink may be

supplied by a mini-bar (which often includes a small refrigerator) containing snacks and

drinks ( to be paid on departure), and tea and coffee making facilities ( cups, spoons, an

electric kettle and sachets containing instant coffee, tea bags, sugar, and creamer or milk).

The Hotel Industry comprises a major part of the Tourism industry. Historically

viewed as an industry providing a luxury service valuable to the economy only as a foreign

exchange earner, the industry today contributes directly to employment (directly

employing around 0.15 million people), and indirectly facilitates tourism and commerce.

Hotels in India are broadly classified into 7 categories (five star deluxe, five-star, four

star, three star, two star, one-star and heritage hotels) by the Ministry of Tourism,

Government of India, based on the general features and facilities offered. The ratings are

reviewed every five years.

In the past five years, the hotel industry has witnesses many ups and downs. While

industry performance started to improve in the year 2005-06 and reached its peak in 2007-08,

the year 2008-09 and 2009-10 witnessed turbulent time.

According to Indian hotel industry survey 2009-10 in the first half of the year the

industry felt the effect of global financial crisis, coupled with the Mumbai terror attack which

took place in the year 2008. Overall, average occupancy across India declined by 3%, with

some cities witnessing decline of up to 15%. However the average rate of occupancy

witnessed an increase of approximate 8%. In the year 2009-10, rooms contributed 56%, F&B

and banquets 38% and others 6% to the total revenues generated compared to year 2007-08 it

was 62% for rooms, 33% for F&B and banquets and 5% from other sources.

From the major travelling cities, Bengaluru faced the major decline in its average rate

by -31% from the previous year average rate of occupancy. Pune faced a decline in the

occupancy and average rates by -18.8% and -20.8% where as Goa achieved a growth of 3%

and the average occupancy in the five-star deluxe and five-star categories of hotels was over

70%. The New Delhi was the only major city to have experience a recorded growth in

average rates by 14%. Simla is the most popular destination for domestic leisure travel. The

rates in the city remained relatively stable since it is sustained by domestic demand; however

the occupancies fell by -8.8% in the year 2009-10. All the major cities exception of Goa

continues to be weekday destinations, recording lowest occupancies on Fridays, Saturdays

and Sundays. Goa being a leisure destination, witnessed lowest occupancies on Mondays and

Tuesdays. The months of November, December, January and February continue to be the

peak season for the hotels across all the major cities in India. (Anonymous, 2009-10)

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The hotel industry is experiencing increased globalization, competition, higher

customer turnover, growing customer acquisition costs and rising customer expectations,

meaning that hotels performance and competitiveness is significantly dependent upon their

ability to satisfy customer efficiency and effectively. In the hotel industry the basic products

(rooms) are very similar, when comparing the same quality level the customer focuses are on

soft factor like personal treatment, personalization, one to one marketing and attention by the

hospitality professions. The hotel industry enjoys easy data access as the guests need to

register their name and address during check-in and in some countries, guests even need to

provide their passport data and more detailed private information. In addition, people are very

likely to share their personal preferences with hotel staff to make their stay more enjoyable.

The hotel can make use of this database combined with IT and give the guests a unique

experience. They can establish a close relationship with customers and meet their needs

perfectly. In order to be able to compete on a highly competitive market a hotel has to meet

every single customer’s needs and expectations. To do this it is important to understand the

aspects of business performance that persuade customers to become repeat purchasers and to

exhibit behavioral loyalty. (It costs five to ten times more to sell to a new customer than to an

old customer). To enhance profitability and guest satisfaction and loyalty, the organizations

(hotels) should focus on implementing Customer Relationship Management (CRM) strategies

that aim to seek, gather and store the right information, validate and share it throughout the

organization.

1.2 Customer Relationship Management

CRM model based upon customer-centric business philosophy and culture to support

effective marketing, sales, long term relationships and services process could be a lifesaver

for most business especially for hotel industry. CRM is about managing customer knowledge

to better understand and serve them. It is an umbrella concept that places the customer at the

centre of an organization. Customer service is an important component of CRM: however

CRM is also concerned with coordinating customer relations across all business functions,

points of interaction, and audiences. CRM can bring a lot of benefits for hotels such as

customer satisfaction and loyalty, increase in revenues, decrease in costs, and a sustainable

competitive advantage.

CRM involves the integration of technology and business processes used to satisfy

the needs of a customer. In terms of IT, CRM is defined as “an enterprise wide integration of

technologies and functions such as data warehouse, websites, intranet/ extranet, telephone

support system, accounting, sales, marketing and production”.

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CRM is an all-embracing approach and CRM as an IT term. CRM is an idea

regarding how a company can keep their most profitable customers by increasing the value of

interaction. The value is maximized through differentiation of the management of customer

relationships”. Another definition is formulated as follows, “basically, CRM is a notion

regarding how an organization can keep their most important customers and at the same time

reduce costs, increase the values of interaction to consequently maximize the profits”. CRM

can also be defined as “an information industry term for methodologies, software, and usually

internet capabilities that help an enterprise manage customer relationships in an organized

way” or be defined as “an all embracing approach, which seamlessly integrates sales,

customer service, marketing, field support and other functions that touch customers”. (Xu et

al, 2002)

1.3 History of CRM

The CRM term grew from the desire to combining the terms helpdesk, customer

support, ERP (Enterprise Resource Program) and data mining. It is not entirely cleared who

introduced the term to the business world but one can say that the term emerged from still

ongoing trial and error approaches.

In the beginning there was PIM, or Personal Information Manager- a limited use, all

purpose electronic diaries with basic database functionality, that you can use to start

organizing your names and addresses, and time amongst other things. The PIM slowly

morphed into the CMS, or Contact Management System, as a result of its increasing take on

by people in sales and marketing, incorporating a more specific set of requirements to help

them scale the pit.

Contact Management software became SFA, as in Sales Force Automation systems,

what now forms the cornerstone of modern CRM applications. CRM is short for Customer

Relationship Management, which is the industry term for the set of methodologies and tools

that help an enterprise manage customer relationships in an organized way.

The first CRM initiatives, launched in the early 1990s, focused mainly on call center

activities. Later, companies widened the focus to include sale and open additional channels.

CRM with requiring customer-centric business philosophy and culture to support effective

marketing, sales and service process can enable effective customer relationship, customer

satisfaction and customer loyalty. CRM has developed as an approach based on gain a 360-

degree view of the customer, having all the data from all touch points, maintaining positive

relationships with customers, increasing customer loyalty, and expanding customer lifetime

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value (Olsen, 1996). Understanding the needs of customers and offering value-added services

are recognized as factors that determine the success or failure of companies.

1.4 Benefits of CRM

The real value to the company lies in the value they create fir their customers and in

the value the customers delivers back to the company. Accordingly, it is important to mark

that the value does not lie in more information and in more advanced technology. The value

lies in the customer knowledge and how the company uses that knowledge to manage their

customer relationships. Knowledge is the sole of CRM. Unfortunately, few companies are

transforming the information to customer knowledge and therefore they miss the opportunity

to provide value to their customers. However, applied in the right way, CRM is the tool that

contributes to profit. If companies are transforming the customer data into knowledge and

then use that knowledge to build relationships it will create loyalty, followed by profits.

Companies can gain many benefits from CRM as given below:

1. Lower cost of recruiting customers- The cost of recruiting customers will decrease

since there are savings to be made on marketing, mailing, contact, follow-up, fulfillment,

services, and so on.

2. No need to recruit so many customers to preserve a steady volume of business- The

number of long-term customers will increase and consequently the need for recruiting

many new customers decreases.

3. Reduced costs of sales- The costs regarding selling are reduced owing to that existing

customers are usually more responsive. In addition, with better knowledge of channels

and distributors the relationships become more effective, as well as the costs for

marketing campaigns is reduced.

4. Higher customer profitability- The customer profitability will get higher since the

customer wallet-share increases, there is increase in up-selling, cross-selling and follow-

up sales, and more referrals comes with higher customer satisfaction among existing

customers.

5. Increased customer retention and loyalty- The customer retention increases since

customers stay longer, buy more and more frequently. The customer also takes the

initiatives, which increases the bounding relationship, and as a result the customer loyalty

increases as well.

6. Evaluation of customer profitability- The company will get to know which customers

are more profitable, the ones who never might become profitable, and which ones that

might be profitable in the future. This is very important since the key to success in any

business is to focus on acquiring customers who generate profit, and once you have found

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them, never let them go. All customers are not valuable; some may even pose danger to

business. This occurs when the customers use the company’s time, energy and resources

without generating enough business to make them worth the effort. (Mc Kim, 2002)

Hence, a company should perform CRM efforts where they will get the best possible

return, which means focusing on customers who already are or will become the company’s

most profitable customers.

1.5 Objectives of CRM in service industry

The services that an organization provides to their customers have an impact on the

customer’s perspective to an organization. The CRM objectives for service applications are

stated below:

1. Service should reduce costs and increase profitability- Create a profit center out of a

service organization using operational and customer information to reduce costs and

generate more revenues.

2. Service should improve service delivery- Create an efficient and effective service

business using integrated enterprise-wide information available in other front office and

ERP applications.

3. Service should help organizations to delight customers- Provide enhanced customer

care, service and customer information management across the organization to improve

customer satisfaction and loyalty.

4. Service should help organization to differentiate their product- Distinguish business

by offering services as a differentiator using multiple channel communications with

customers, full enterprise wide view of customer information.

1.6 4P’s of CRM in hotel industry

The CRM toolbox contains its own four P’s that are required for a successful CRM initiative

in any hotel company (Haley and Watson, 2003). These are profile, preference, precision and

property.

Profile

It is about capturing relevant information about the guests and their behavior, both observed

and reported, identifying the data elements to capture and retain represents a major tactical

decision in a hotel CRM initiative. Some of the key elements to consider in defining your

profile data include: multiple addresses and telephone numbers, payment methods, prior visit

history, some ranking measurement indicative of value to the brand, family composition,

comments, and correspondence history.

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Preferences

Preference data may be either observed or reported. One challenging thing about preferences

is that a single guest’s preferences vary according to the purpose of a given trip and the

destination. The vacationer’s preference for a room near the pool does not apply on a business

trip. The trick for the hotel is to identify what are the global preferences versus the local ones.

Precision

Precision of data input is crucial element for any CRM effort in any industry. The address and

comment fields should be scanned for accurate and standardized data input. It is almost

certain to find wild variations in abbreviations, addressing and formatting. The variation

cripples a CRM effort that attempts to match new stays with prior guest’s visits. It becomes

almost impossible for system to match the new records with the old one even if the difference

between the two records is very small. So the standardized data input is required to avoid

these variations.

Property

Many hotel enterprises use a third-party system or service as the heart if their CRM initiative.

Some of these systems are specific to the hospitality industry; others are modules of

horizontal CRM platforms from well-known vendors. Property Management Systems are

built to drive the operation, not perform detailed analyses or manage personalized

communications. In the hotel environment the measure of excellence in service is almost

comes down to a face-to-face interaction in the hotel with the guest. All the profiling and

preference capture in the world won’t help if a service delivery fails due to faulty or missing

information. As guest’s stay is completed, the stay details and any new master records must

get passed from the PMS to CRM platform. Likewise, scrubbed and summarized data must

get passed from the CRM system to the PMS to enhance service delivery and improve record

matching for the next transaction.

The four P’s described above is all tactical elements required for a successful CRM

initiative in any hotel company. However, there is a fifth element that overreaches all of the

others: management commitment to embracing CRM as a way of doing business, and thus

embracing the customer. Without deep and confirmed leadership, this kind of initiative will

go nowhere. Concerning about the level of commitment from the leadership of the enterprise,

and lack of confidence in the ability to drive effective change management, a company should

address those issues before funding and launching a CRM effort.

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1.7 Functional categories of CRM Technology

The CRM technology can be divided into three functional categories, operational CRM,

analytical CRM, and collaborative CRM.

Operational CRM

This category includes customer facing applications that integrate front, back and mobile

offices, with the purpose to increase the efficiency of customer interactions. This involves

automating business operations processes, such as order management, customer service,

marketing automation, sales-force automation, and field service. In order to succeed

employees must have the right skills and the company must have a customer centric focus.

Analytical CRM

This category involves applications that analyze customer data generated by operational tools.

The data is often stored in a data warehouse, which can be described as a large repository of

corporate data the data stored in data warehouse shall give the company information that will

allow them to provide value to their customers. Hence, it is crucial to capture the right data, a

process must be accomplished with great customer care and understanding.

Collaborative CRM

This category focuses on facilitating interaction between customers and companies. One-way

communication must be replaced by two-way communication, where the customer gets

involved early with issues affecting their future purchase behavior. In other words,

Collaborative CRM involves any CRM function that provides a point of interaction between

the customer and the supplier. For example, technologies such as electronic communication

are used to facilitate relevant, timely and personalized interaction with the customers.

1.8 Need for the study

Despite the extensive research on the implementation of CRM practices in the service

industry, there is lack of empirical studies on the implementation of the CRM practices in the

Hotel industry. It is a highly lucrative and flourishing market and a large number of players

are into this industry. Moreover, it is a very competitive market as well. Customers have been

more selective in terms of hygiene and facilities provided. To compete in such a market,

every hotelier should focus on maintaining good contacts with the customers and to satisfy

the customer to the fullest. The organized sector of the hotel industry has a good financial

support and resources available with them but the unorganized sector of the hotel industry

lacks all these advantages. Increasingly, organisations from different business sectors are

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using customer relationship management (CRM) systems to help boost sales and revenues.

Depending on the approach that they adopt in selecting and implementing such a solution,

they may have mixed results in terms of their sales and revenues.The present study will help

both the organized and unorganized sector to well understand the aspects of the CRM which

is to be adopted or changed by them to satisfy the customers. It will also help to check the

satisfaction level of the customers according to the CRM practices followed by the hoteliers.

The objectives of the study are as follow:

1. To study the Customer Relationship Management (CRM) practices followed

by selected Hotels in Ludhiana.

2. To study the customer satisfaction with respect to the Customer Relationship

Management practices followed by the selected Hotels.

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Chapter – II

Review of Literature

To emphasize the importance of undertaking the study, it is essential to present a brief

review of researches already undertaken. Only studies which have a direct or indirect bearing

on the present study have been reviewed in this chapter.

Reichheld and Sasser (1990) demonstrated across a variety of industries that profits

climb steeply when a company successfully lowers its customer defection rate. Based on an

analysis of more than 100 companies, in two dozen industries, these researchers found that

the firms could improve profits 25 percent to 85 percent by reducing customer defection by

just 5 percent.

Johnson et al (1995) developed and tested alternative models of market- level

expectations, perceived product performance, and customer satisfaction. Market performance

expectations are argued to be largely rational in nature yet adaptive to changing market

conditions. Customer satisfaction is conceptualized as a cumulative construct that is affected

by market expectations and performance perceptions in any given period and is affected by

past satisfaction from period to period.

Ennew and Binks (1996) examined the link between customer retention/defection and

service quality in the context of the U.K. banking sector and the bank’s relationships with

small business customers. They developed a framework for examining satisfaction and

retention and presented the result of some empirically research. They found support for the

hypothesis that loyalty/retention is influenced by service quality and customer relationships,

and they found that trust in the banking relationships has the largest impact on potential

defection.

Garbarino and Johnson (1999) analyzed the relationships of satisfaction, trust, and

commitment to compute satisfaction attitudes and future intention for the customer of a New

York company. For the low relational customers (individual ticket buyers and occasional

subscribers), overall satisfaction is the primary mediating between the component attitudes

and future intentions. For the relational customers (consistent subscribers), trust and

commitment, rather than satisfaction, are the mediators between component attitudes and

future intentions.

Kharbanda and Dasgupta (2001) emphasized on an increasing coverage of CRM, e-

Commerce and ERP systems on the net, it has become imperative for organization to achieve

12

a totally different view of the customer to create their greater responsiveness and satisfaction.

Companies now extract previously unknown information about their customer from this

databank, collected over long duration of their operations, to better predict customer

requirements and trends. This insures better services for the customer needs. This is where

Data Mining practices create a lot of value for organization by extracting the required

information for the data stores. This study looks at the different applications designs and the

underlying technology for Data Mining applications, and also describes the different

architecture details of Data Mining application and the underlying processes that classify any

analytical process carried out on data collection as a Data Mining Process.

Parvatiyar and Sheth (2001) in their conceptual framework said that the two most

important process of Customer Relationship Management include proactive customer

business development and building partnering relationships with the most important

customer.

Shainesh (2001) described CRM as an enterprise wide initiative. According to him

CRM involves all areas and functions of the organization. It requires that all areas of the

organization to be working together in harmony towards the common goal of stronger

customer relationships. He also stated that CRM is different from traditional marketing. He

stressed that to retain customers, businesses need to customize their offerings by customizing

all elements of marketing mix. He also stated that the use of Information Technology is

imperative to bring about interaction between the customer and the organization.

Thomas (2001) emphasized that customer acquisition and retention both are

interdependent processes. He said that managers often made the customer relationship

management decisions based only on a data analysis of acquired customers. He also preset

modeling approach to estimate the length of a customer’s lifetime. Using this model, he

showed the financial impact of not accounting for the effect of acquisition on customer

retention. In addition to the model he also gave a methodology for linking customer retention.

He was of the opinion that analyzing customer retention is important for enhancing the

customer equity of the firm.

Wulf et al (2001) investigated and found that retailer-customer relationship has three

distinct intended contributions: (1) It shows that different relationship marketing tactics have

a differential impact on consumer perceptions of a retailer’s relationship investment; (2) it

demonstrates that perceived relationship investment affects relationship quality, ultimately

leading to behavioral loyalty; and (3) it reveals that the effect of perceived relationship

investment on relationship quality is contingent on a consumer’s product category

involvement and proneness to engage in retail relationships. They empirically cross-validate

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the underlying conception model by six consumer samples in a three country, transatlantic,

comparative survey that investigates two industries.

Chatterjee and Prasad (2002) addressed that the innovative way of doing business is by

focusing on customer orientation. They executed a project of engineering consultancy

industry in context of customer orientation. In their research, they concluded that the

businesses need to run with customer rather than after him. They also stated that there should

be deep commitment of employees towards customer concerns. Further, they said that the

concept of customer orientation should be key part of the overall business strategy. In their

study, they have given a framework for creating customer orientation. They have also said

that customer selectivity is very important in CRM.

Dash (2003) stressed that CRM that seeks to build, identify and maintain customer

network through interactive, individualized and value-added contents over a long period has

gained tremendous importance. He examined various aspects of marketing and practices of

Customer relations in Indian marketing context.

Reinartz and Kumar (2003) developed a framework that incorporates projected

profitability of consumers in the computation of life-time duration. Furthermore, they

identified factors under a manager’s control that explain the variation in the profitable lifetime

duration. They also compared other framework with the traditional methods such as the

recency, frequency, and monetary value framework and past customer value and illustrated

the superiority of the proposed framework. Finally, they develop several key implications that

can be of value to decision makers in managing customer relationships.

Rigby et al (2003) emphasized that while choosing a CRM technology, the

organization and processes must realign to fit the customer strategy. According to the authors,

tailoring the technology to the company's business processes and culture is just as important

as tailoring the business processes to the strategy.

Verhoef (2003) investigated the differential effects of customer relationship

perceptions and relationship marketing instruments on customer retention and customer share

development over time. Customer relationship perceptions are considered evaluations of

relationship strength and a supplier’s offering, and customer share development is the change

in customer share between two periods. The results show that affective commitment and

loyalty programs that provide economic incentives positively affect both customer and

customer share development, whereas direct mailings influence only customer share

development. However, the effect of these variables is rather small. The results also indicate

14

that firms can use the same strategies to affect both customer retention and customers share

development.

Bowman and Narayandas (2004) demonstrated how adaption and extension of the

Service-Profit Chain (SPC) to business markets can provide vendors with insights into the

process that culminates in individual customer management profitability and useful guidelines

for adapting their customer management efforts at the individual account level with an aim to

improve account profitability. The result showed the importance of accounting for decreasing

returns to customer management efforts at a given account reinforced the notion of customer

delight.

Reinartz et al (2004) conceptualized a construct of the CRM process and its

dimensions, operationalized and validated the construct, and empirically investigated the

organizational performance consequences of implementing CRM processes. Their research

questions are addressed in two cross-sectional studies across four different industries and

three countries. The first key outcome is a theoretically sound CRM process measure that

outlines three key stages: initiation, maintenance, and termination. The second key result is

that the implementation of CRM processes has a moderately positive association with both

perceptual and objective company performance.

Cao and Gruca (2005) stressed that adverse selection is an important problem for

marketers. To reduce the chances of acquiring an unprofitable customer, companies may

screen prospects who respond to marketing offers. Prospects who respond are often not

approved. At same time, prospects that are likely to be approved are unlikely to respond to a

given marketing offer. Using data from a firm’s customer relationship management system,

he showed how to target prospects that are likely to respond and to be approved. This

approach increases the number of customers who are approved and reduces the number of

applicants who defect after being turned. This method can be extended to new customer

acquisition and more effective targeting of costly promotions to migrate customers to higher

levels of lifetime value.

Lewis (2005) emphasized that the calculation of customer value without regard to

marketing policy is problematic because the value of managerial flexible and the impact of

consumer learning are neglected. He developed a structural dynamic programming model of

consumer demand that includes marketing variables and consumer expectations of

promotions. He used the estimated parameters to conduct policy experiments that yield more

accurate forecasts of customer value and to study the impact of alternative marketing policies.

15

Payne and Frow (2005) developed a conceptual framework for CRM that helps broaden

the understanding of CRM and its role in enhancing customer value and, as a result,

shareholder value. They explored definitional aspects of CRM and identified three alternative

perspectives of CRM. They emphasized the need for a cross-functional, process-oriented

approach that positions CRM at a strategic level. They identified five key cross-functional

CRM processes: a strategy development process, a value creation process, a multichannel

integration process, an information management process, and a performance assessment

process. They developed a new conceptual framework based on these processes and explored

the role and function of each element in the framework. The synthesis of the diverse concepts

within the literature on CRM and relationship marketing into a single, process-based

framework provides deeper insight into achieving success with CRM strategy and

implementation.

Ryals (2005) demonstrated that the implementation of CRM activities delivers greater

profits. Using calculations of the lifetime value of customers in two longitudinal case studies,

he found that customer management strategies change as more discovered about the value of

the customer. These changes lead to better firm performance. The contribution of this study is

to show that CRM works and that a relatively straightforward analysis of the value of the

customer can make a real difference.

Srinivasan and Moorman (2005) argued that a firm’s strategic commitments may be an

overlooked organizational factor that influences the rewards for a firm’s investments in CRM.

Using the context of online retailing, they considered the effects of two key strategic

commitments of online retailers on the performance effect of CRM: their bricks-and-mortar

experience and their online entry timing. They tested proposed model with a multimethod

approach that used manager ratings of firm CRM and strategic commitments and third-party

customer’s rating of satisfaction from 106 online retailers. The findings indicated that the

firms with moderate bricks-and-mortar experience are better able to leverage CRM into

superior customer satisfaction outcomes than firms either low or high bricks-and-mortar

experience. Likewise, firms with moderate online experience are better able to leverage CRM

into superior customer satisfaction outcomes than firms with low or high online experience.

These findings helped resolve disparate results about the value of CRM, and they established

the importance of examining CRM within the strategic context of the firm.

Sun et al (2006) discussed a two-step procedure comprising “adaptive learning” and

“proactive” Customer Relationship Management decisions. He also discussed three key

components for customer-centric Customer Relationship Management: adaptive learning,

forward looking and optimization. He formulated Customer Relationship Management

16

interventions as solutions to a stochastic dynamic programming problem under demand

uncertainty in which the company learns about the evolution of customer demand as well as

the dynamic effect of its marketing interventions.

Urbanskiene et al (2008) analysed client relation management system by disclosing the

role and place of relation marketing in formation of Customer Relationship Management

theoretical foundations. It reveal the support of customers and suppliers relationship based on

trust, cooperation, power distribution, communications, commitment, dependence and other

features as well as the development of customer’s loyalty.

Cailleux et al (2009) argued that luxury brands have so far been reluctant to adopt any

of the classical tools of mass marketing. One of these is customer relationship management

(CRM). Prestigious brands are, however, now starting to examine the benefits of the ‘lifelong

customer value’ approach, beyond building the social prestige of their names. The authors

examined why the luxury brands need to apply CRM systems and ‘what’ they could achieve

by doing so, and addresses ‘how’ this could be applied with the necessary adaptations if these

brands wish to keep their luxury status intact.

Ngai et al (2009) indicated that the area of customer retention received most research

attention. They related one-to-one marketing and loyalty program and also gave classification

and association model as the most commonly used models for data mining in Customer

Relationship Management. Their analysis facilitates knowledge accumulation and creation

concerning the application of data mining techniques in Customer Relationship Management.

Appiah and Kingsley (2010) stated that as the world economy becomes globalized,

competition has intensified and the differences in products have faded. Consequently,

businesses have become fixated on customer relationship management (CRM) as it has

become a central orienting point in academia and business environment with organizations

increasingly focusing on managing customer relationships as a strategic capability to achieve

market leadership and profits. In spite of the commercial significance of the concept, CRM

has been demonized by critics as a marketing or managerial fad destined to failure. This

article examines ways to improve the success and effectiveness of CRM through the

conceptualization of a framework known as CRM pyramid and to stimulate debate and

research on how to improve the success of the concept.

Dominici and Guzzo (2010) said that to be successful in the market it is not sufficient

to attract the new customers; managers must concentrate on existing customers implementing

effective policies of customer satisfaction and loyalty. In hotel industry customer satisfaction

is largely hooked upon quality of service. According to him a management approach focused

17

on customer satisfaction can improve customer loyalty, thus increasing the positive image of

the touristic destination. Hence, exploring the importance for customers of hotel attributed in

hotel selection is indispensable. The research on the topic of guest satisfaction, translates the

consideration of whether or not customers will return to a hotel or advice it to other tourists is

pivotal to success of the hospitality business. They performed a qualitative analysis of large

hotels in sicily and evaluated the overall customer satisfaction level for the hotel and for each

service supplied. They concluded by proposing improvement in customer satisfaction

management of the hotel.

A lot of work has been done relating to Customer Relationship Management, but much

review is not available to emphasize the implication of CRM and the customer satisfaction

with respect to Hotel Industry. The present research is an attempt in this direction.

18

Chapter - III

Research Methodology

This chapter describes in detail the methodology adopted for conducting study on the

Customer Relationship Management (CRM) practices followed by the Hotels in Ludhiana.

The chapter has been divided into following heads.

3.1 Research Design

3.2 Population

3.3 Sample design

3.4 Method of data collection

3.5 Data Analysis

3.6 Limitations of the study

These sections are discussed below.

3.1 Research design

A research design was formulated which guided the collection and analysis of data.

Exploratory research design was followed and survey was carried out with the help of

structured non-disguised questionnaire.

3.2 Population

The population for the first objective consisted of all the Hotels of Ludhiana. As

Ludhiana is an important industrial town and business hub and is developing at a fast

pace, a number of hotels are coming up in the city. Thus the study was restricted to Ludhiana

city. The population for the second objective consisted of all the customers of the selected

Hotels.

3.3 Sample design

A list of Hotels was taken from the Hotel and Restaurant Association of Ludhiana.

From the list, the hotels were categorised into two categories i.e. high/medium tariff category

hotels and low tariff category hotels based on the single room tariff. A sample of 10 hotels

were selected from the list of hotels on the basis of single room tariff, five hotels each from

high/ medium tariff and low tariff category based on random sampling. Five hotels selected

19

from high/medium tariff from the list obtained were Majestic Park Plaza, Hotel Mahal,

Nagpal Regency, Friends Regency and Dhodha Regency. Five hotels selected from low tariff

on the basis of random sampling from the list obtained were Novena Hotel, Vikrant Hotel,

Hallmark regency, Dyal Palace and Shampion-2000 Hotel. The managers of these hotels were

contacted and interviewed. Further, 15 customers from each of these hotels were contacted on

basis of convenient sampling, making a total of 150 customers.

3.4 Method of data collection

For fulfilling both the objectives, hotel managers and their customers were

interviewed. The primary data was collected with the help of structured, non-disguised

questionnaire. In order to satisfy both the objectives, two separate questionnaires were

prepared. The questionnaire was designed on the basis of the Customer Relationship

Marketing Model, given in figure 3.1 (Dash, 2003).

For the first objective, the data was collected with the help of structured non

disguised questionnaire from the managers/owners of the selected hotels. Questions were

asked relating to CRM practices like customer need assessment and acquisition, customer

development through personalization and customization, customer retention, new customer

referrals and benefits from CRM approach, etc.

A separate questionnaire was prepared for the second objective and 15 customers of

each hotel, total 150 customers, were contacted from the database provided by the hotels on

convenience sampling basis. The data was collected from these customers using a structured

non disguised questionnaire. Questions were asked relating to satisfaction with respect to

CRM practices followed by the hotels.

The secondary sources were in the form of journals, books, magazines and relevant

websites. Secondary data has been used wherever necessary to improve the understanding of

the concepts of CRM.

3.5 Data analysis

After collection of data, master tables were constructed which facilitated

tabulation of data in desired form and analysis of collected data was done by constructing

suitable tables and using percentage methods. Other statistical techniques used include mean

scores, single mean t-test, two mean t-test and two mean Z-tests. The questionnaire contained

closed-ended, multiple choice and ranking questions. Attitude and satisfaction were measured

on a five-point scale.

20

INPUT PROCESSING UNIT OUTPUT

Fig. 1: Customer Relationship Marketing Model

Mean score was calculated for the questions asked on a 5-point Likert scale. In case

of five-point scale, the respondents were asked to indicate their degree of satisfaction. The

scales ranged from strongly agree to strongly disagree and the scores given were as follows:

1 – Strongly disagree

2 – Disagree

3 – Neutral

4 – Agree

5 – Strongly agree

Another scale was used which ranged from great extent to least extent and the scores were

given as follows:

1-Least extent

2-Less extent

Customer Retention

& Referral New

Customers

Customers need

Assessment &

Acquisition

Customer Development

through personalization

& customization

High customer

satisfaction

Increased marke t

share

High customer

loyalty

High customer

retention index

Life time customer

Addition of value with

product & service

Contact &

Involvement

Intimacy & One to one

relationship

Price offers

Special facilities/

Services

Information sharing

Relationship Marketing

Commitment

Recognition

Respect

Reward

Reciprocation

Transparency

Share values

21

3-Neutral

4-Some extent

5-Great extent

Frequencies were multiplied with their respective weights and aggregate values were

found. Mean scores were found out using the following formula:

5

Mean Score = ∑( wi * fn) / n

i=1

i = 1 to 5

Where,

wi = weight attached for degree of agreement or satisfaction.

fn = associated frequency

n (10) = number of respondents in case of managers/owners

n (150)= number of respondents in case of customers

If the mean score was more than the middle point of the scale it was concluded that

respondents buy and largely tend to be satisfied with the statement or hold important the

attribute.

For the comparison between the mean of selected samples of customers from

high/medium tariff hotels and low tariff hotels, Z-test was applied. The value of Z was

calculated as follows:

Where,

22

= weighted mean score of sample 1

= weighted mean score of sample 2

S.E. = standard error

1= standard deviation of sample 1

2= standard deviation of sample 2

N1= number of respondents of sample 1

N2= number of respondents of sample 2

For the comparison between the mean obtained from managers of selected samples of

high/medium tariff hotels and low tariff hotels, t-test was applied. The value of t was

calculated as follows:

Where,

= mean of first sample

= mean of second sample

N1= number of observations in the first sample

N2= number of observations in the second sample

S= combined standard deviation

The value of S has been calculated by the following formula:

The degree of freedom = (n1 + n2 – 2)

3.5 Limitation of the study

Any study based on customer survey through a pre-designed questionnaire suffers from

the basic limitation of the possibility of difference between what is recorded and what is

23

truth, no matter how carefully the questionnaire has been designed and field

investigation has been conducted. This is because the consumer may not deliberately report

their true preferences and even if they want to do so, there are bound to be difference owing

to problems in filters of communication process. The error has been tried to be minimized by

conducting interviews, even though the research followed from following limitations:

1. The managers may not deliberately report their true attitude towards the CRM

practices followed by their companies and even if they do so, there are bound to be

differences owing to problem in filters of communication process.

2. Only ten hotels were chosen, large number could have added more

extensiveness to this research.

3. The study was to be completed in a short time thus the time

constraint reduces the extensiveness of the research.

4. The unsupportive attitude of the respondents while responding to some of the

questions requiring qualitative information may have affected the final results and

outcomes.

5. The scope of study was limited to Ludhiana only.

24

Chapter - IV

Results and Discussions

This chapter includes the analysis of the primary data collected from the

owners/managers and respondents in order to study the Customer Relationship Management

practices followed by the hotel industry in Ludhiana and the customer satisfaction with

respect to the Customer Relationship Management practices on the customers provided by the

hoteliers in Ludhiana. The chapter has been divided into four sections. The first section

presents the profile of the hotels. The second section presents the views of the

managers/owners regarding the Customer Relationship Management practices. The third

section presents the level of customer satisfaction with respect to the Customer Relationship

Management practices followed by the hotels in Ludhiana city. The fourth section presents

the discussion.

4.1 Profile of Hotel

In this section the information about the profile of the hotels is recorded. The

information given below is regarding year of establishment, number of hotels in the chain,

any other business belonging and single room tariff of the hotels.

Table 1: Profile of Hotels

Parameters Number of

respondents

(n=10)

Percentage Name

Year of establishment

Before 1990

1990-95

1995-2000

2000-05

After 2005

2

3

2

3

0

20%

30%

20%

30%

0%

Dhodha Regency, Novena Hotel

Majestic Park Plaza, Dyal Palace, Vikrant Hotel

Hallmark Regency, Shampion-2000

Hotel Mahal, Nagpal Regency, Friends Regency

Number of hotels

1

2

3

4

>5

9

0

1

0

0

90%

0%

10%

0%

0%

All hotels except Hotel Mahal

Hotel Mahal

25

Other business

holding

Yes

No

8

2

80%

20%

All hotels except Hotel Mahal and Hallmark

Regency

Hotel Mahal, Hallmark Regency

Single room tariff

<1000

1000-2000

2000-3000

3000-4500

>4500

5

3

1

1

0

50%

30%

10%

10%

0%

All low tariff hotels

Dhodha Regency, Friends Regency, Nagpal

Regency

Hotel Mahal

Majestic Park Plaza

Table 1 show that 90% of the hotels have only one hotel in their business except

Hotel Mahal that has three hotels in India. Also 80% of the hoteliers are involved in other

business holdings too. The single room tariff for all the low tariff category of hotels is below

Rs. 1000 and in high/medium tariff category hotels it is 30% between 1000-2000 and 10 %

between 2000-3000 and 3000-4500 each.

4.2 CRM practices of Hotels

This section contains the information about the CRM practices followed by the

selected hotels in the Ludhiana city.

4.2.1 Awareness about CRM

Now a day’s CRM is a very important tool which is used by several business groups

for the maintenance of the customer base and the progress of the industry. So in this section

the awareness of the CRM among various Hotels in Ludhiana is given below.

Table 2: Awareness of hotel mangers about CRM

Awareness High/medium tariff

hotel (n=5)

Low tariff hotel

(n=5)

No. of respondents

(n=10)

Yes 5 5 10

No 0 0 0

Total 5 5 10

26

In the Table 2 the awareness among the hotel mangers regarding CRM is very good.

All the respondents were aware about the CRM practices.

4.2.2 Opinion toward CRM approach

In this section the opinions of the hotel managers/owners towards the CRM approach

is given below. The respondents were asked to rate the statements on the scale from 1 to 5

where 1 states for strongly disagree and 5 states for strongly agree.

Table 3: Opinion of managers toward CRM approach

Statement Mean Score Overall

mean

score

(n=10)

T-value p- value

High/

medium

tariff (n=5)

Low

tariff

(n=5)

It expands the customer base 5 4.4 4.7 2.45 0.07

It increases the longitivity of

customer relationship

4 4.6 4.3 2.45 0.07

It reduces the rate of

customer defection

4.6 3.8 4.2 1.79 0.12

It helps in increasing the

number of profitable

customers

3.8 3.8 3.8 0.00 1.00

It helps in easy introduction

of new product/services

4.4 3 3.7 3.50* 0.008*

It enhances the potential

worth of individual customers

in terms of their lifetime

value to company

3.4 3.8 3.6 0.89 0.40

It offers better value to

customer’s money by

constantly improving the

quality of services offered to

them

3.8 3.2 3.5 1.41 0.21

It benefits customer

selectivity approach

3.8 3.2 3.5 1.41 0.21

*Significant at 5% level of significance (t=2.56)

27

In Table 3 managers opinion towards CRM approach was that “it expands the

customer database” the most. For high/medium tariff category hotels the mean score was

highest for “it expands customer database” (=5). For the same category the next highest mean

scores was for “it reduces the rate of customer defection” (=4.6), “it helps in easy introduction

of new product/service” (=4.4) and for “it increases the longitivity of customer relationship”

(=4.0). The lowest mean score in the same category was for “it enhances the potential worth

of individual customer in terms of their lifetime value to the company” (3.4). For low tariff

category hotels the mean score was highest for “it increases the longitivity of customer

relationship” (=4.6). For the same category the next highest mean scores was for “it expands

customer database” (=4.4), “it reduces the rate of customer defection” (=3.8), “it helps in

increasing the number of profitable customers” (=3.8) and for “it enhances the potential worth

of individual customer in terms of their lifetime value to the company” (3.8). The lowest

mean score in the same category was for “it helps in easy introduction of new

product/service” (=3.0).

On the overall basis the overall mean score is highest for “it expands the customer

database” (=4.7). The next highest mean scores was for “it increases the longitivity of

customer relationship” (=4.3), “it reduces the rate of customer defection” (=4.2) and for “it

helps in increasing the number of profitable customers” (=3.8). The lowest mean score on the

overall basis was for “it benefits customer selectivity approach” (=3.5) and “it offers better

value to customer’s money by constantly improving the quality of services offered to them”

(3.5).

The t values were calculated and tested at 5% level of significance. In the above table

only one statement “it helps in easy introduction of new product/services” is found to be

significant i.e. whose value was more than 2.56. This means that there is minor difference of

opinion in the high/medium tariff and low tariff hotels.

4.2.3 Activities undertaken for customer need assessment

It is very important to work according to the customer and to know the needs of

the customers. For this the data is recorded to know the activities followed by the hotels for

the customers need assessment.

28

Table 4: Activities undertaken by hotels for customer need assessment

Statement High/ medium

tariff (n=5)

Low tariff (n=5) Total (n=10)

No. of respondents

(%)

No. of respondents

(%)

No. of respondents

(%)

Study existing

customer database

5 (100%) 5 (100%) 10 (100%)

Personal counseling 5 (100%) 3 (60%) 8 (80%)

Survey of

competitors

customer’s

3 (60%) 0 (0%) 3 (30%)

Survey of existing

customers

1 (20%) 1 (20%) 2 (20%)

Survey of potential

customers

1 (20%) 0 (0%) 1 (10%)

*Multiple choice responses

Analysis of Table 4 shows that in high/medium tariff hotels “study existing customer

database” and “personal counseling” both contributes 100% towards the activities undertaken

by the hotels for customer need assessment and “survey of competitor’s customers” is done

by 60% of the hotels. In low tariff hotels, all hotels adopt “study of existing customer

database”, 60% of the hotels believe in going for “personal counseling” for the evaluations of

customer need assessment. On overall basis i.e. in both the high/medium tariff hotels and low

tariff hotels the best method of customer need assessment is the “study of existing customer

database” as this is the method that is adopted by all the hotels.

4.2.4 Activities undertaken for acquiring customers

Once the needs of the customers are known it is equally important to use that

information for acquiring the customers. So the data is collected by the hotel

managers/owners to know what are the activities undertaken by them for the acquisition of

the customers. The respondents were asked to rate the statements over a scale from 1 to 5

where 1 states for least extent and 5 states for great extent.

29

Table 5: Activities undertaken for acquiring customers


mean

score

(n=10)

t- value p- value

High/

medium

tariff

(n=5)

Low

tariff

(n=5)

Maintain Contact and

involvement

4.6 4.4 4.5 0.58 0.58

Maintain intimacy 4.4 3 3.7 3.5* 0.008*

Information Sharing 4 3.4 3.7 2.45 0.07

Addition of value with product

or service

4 3 3.5 2.24 0.06

Providing special facilities/

Services

3.6 2.6 3.1 2.89* 0.02*


In Table 5 the activity undertaken by hotels for acquiring customers was to “maintain

contact and involvement” the most. For high/medium tariff category hotels the mean score

was highest for “maintain contact and involvement” (=4.6). For the same category the next

highest mean scores was for “maintain intimacy” (=4.4), and for “information sharing”

(=4.0). The lowest mean score in the same category was for “providing special

facilities/services” (3.6). For low tariff category hotels the mean score is highest for “maintain

contact and involvement” (=4.4). For the same category the next highest mean scores was for

“information sharing” (=3.4), and for “maintain intimacy” (3.0). The lowest mean score in the

same category was for “providing special facilities/services” (=2.6).

On the overall basis the overall mean score is highest for “maintain contact and

involvement” (=4.5). The next highest mean scores was for “maintain intimacy” (=3.7), and

for “information sharing” (=3.7). The lowest mean score on the overall basis was for

“providing special facilities/services” (=3.1).


only two statements “maintain intimacy” and “providing special facilities/services” were

found to be significant i.e. whose value was more than 2.56. This means that there is minor

difference of opinion in the high/medium tariff and low tariff hotels.

30

4.2.5 Activities undertaken for customer development through personalization and

customization

In this section the information is collected about the activities undertaken by the

hotels for customer development through personalization and customization. The respondents

were asked to rate the statements on the scale from 1 to 5 where 1 states for least extent and 5

states for great extent.

Table 6: Activities undertaken for customer development through personalization andcustomization


mean

score

(n=10)

t-value p- value

High/ medium

tariff (n=5)

Low tariff

(n=5)

One to One Relationship

Marketing

4.4 4.4 4.4 0.00 1.00

Commitment towards providing

better services to customers

4.6 3.6 4.1 2.89* 0.02*

Give personal recognition to

customers

4 3.6 3.8 1.00 0.35

Transparency about company’s

policies and procedures

3.8 3.8 3.8 0.00 1.00

Reciprocation 3.8 3.2 3.5 2.12 0.07

Give rewards to customers 3.6 2.8 3.2 1.79 0.12


In Table 6 the activity undertaken by hotels for acquiring customers was to “one to

one relationship” the most. For high/medium tariff category hotels the mean score was

highest for “commitment towards providing better services to customers” (=4.6). For the

same category the next highest mean scores was for “one to one relationship” (=4.4), and for

“give personal recognition to customers” (=4.0). The lowest mean score in the same category

was for “give rewards to customers” (3.6). For low tariff category hotels the mean score is

highest for “one to one relationship” (=4.4). For the same category the next highest mean

scores was for “transparency about company’s policies and procedures” (=3.8), and for

“commitment towards providing better services to customers” (3.6). The lowest mean score in

the same category was for “providing special facilities/services” (=2.8).

31

On the overall basis the overall mean score is highest for “one to one relationship”

(=4.4). The next highest mean scores was for “commitment towards providing better services

to customers” (=4.1), and for “give personal recognition to customers” (=3.8). The lowest

mean score on the overall basis was for “providing special facilities/services” (=3.2).


only one statement “commitment towards providing better services to customers” was found

to be significant i.e. some values were more than 2.56. This means that there is minor

difference of opinion in the high/medium tariff and low tariff hotels.

4.2.6 Opinion towards activities relating to customer retention

Once we know the needs of the customers and the customer has been acquired, it is

very important to retain the customer for the future as it is known that it takes double the cost

to acquire new customer than the old one. So here, the information is collected about the

views of the hotel managers/owners upon the activities that result in customer retention. The

respondents were asked to rate the statements on the scale from 1 to 5 where 1 states for

strongly disagree and 5 states for strongly agree.

Table 7: Opinion of managers towards activities undertaken for customer retention


mean

score

(n=10)

t- value p- value

High/

medium tariff

(n=5)

Low

tariff

(n=5)

Customer complaint handling in an

effective manner

5.0 5.0 5.0 1.00 0.38

Membership of the hotel 4.8 4.6 4.7 0.63 0.55

Effective room service 4.6 4.6 4.6 0.00 1.00

Soft behavior of staff/personnel 4.6 4.4 4.5 0.58 0.58

Customized services 4.0 4.6 4.3 1.50 0.17

Sending wishes on various occasions 3.8 4.0 3.9 0.55 0.61

Special greet by the hotel

management

3.8 3.8 3.8 0.00 1.00

Accepting cancellation of

reservation by the hotel

4 3.6 3.8 1.00 0.35


32

In Table 7 the opinion of managers for activity undertaken by hotels for customer

retention was “customer complaint handling in an effective manner” the most. For

high/medium tariff category hotels the mean score was highest for “customer complaint

handling in an effective manner” (=5.0). For the same category the next highest mean scores

was for “membership if hotel” (=4.8), “effective room service” (=4.6) and for “soft behavior

of staff/personnel” (=4.6). The lowest mean score in the same category was for “special greet

by the hotel management” (3.8) and “sending wishes on various occasions” (=3.8). For low

tariff category hotels the mean score is highest for “customer complaint handling in an

effective manner” (=5.0). For the same category the next highest mean scores was for

“customized services” (=4.6), “effective room service” (=4.6) and for “membership of the

hotel” (4.6). The lowest mean score in the same category was for “accepting cancellation of

reservation by the hotel” (=3.6).

On the overall basis the overall mean score is highest for “customer complaint

handling in an effective manner” (=5.0). The next highest mean scores was for “membership

of the hotel” (=4.7), and for “effective room service” (=4.6). The lowest mean score on the

overall basis was for “accepting cancellation of reservation by the hotel” (=3.8) and “special

greet by the hotel management” (=3.8).


no statement was found insignificant i.e. no statement has value more than 2.56. This means

that there is no difference of opinion in the high/medium tariff and low tariff hotels.

4.2.7 Activities undertaken for customer retention

In this section the information is recorded about the activities undertaken by the

hotels for the purpose of customer retention.

Table 8 shows that several activities were undertaken by the hotels for the customer

retention. According to the table above three activities “Greeting the customer and paying

them due respect”, “Participating in a two-way communication, listening and recording the

customer problem” and “Provision of customer service and complaint desk” are followed by

all the hotels for the customer retention. “Talking in terms favorable to customers” is an

activity followed by 90% of the hotels and “attending customers properly” is followed by

80% of the hotels. The least followed activities were “Sending cards/wishes on special

occasions like Birthday and Anniversary” (=30%) and “Membership for the regular customers

and business houses” (=30%).

33

Table 8: Activities undertaken for customer retention

Statement High/ medium

tariff (n=5)


No. of

respondents (%)

No. of

respondents (%)

No. of

respondents (%)

Greeting the customer

and paying them due

respect

5 (100%) 5 (100%) 10 (100%)

Provision of customer

service and complaint

desk

5 (100%) 5 (100%) 10 (100%)

Participating in a two-

way communication,

listening and recording

the customer problem

5 (100%) 5 (100%) 10 (100%)

Talking in terms

favorable to customers

5 (100%) 4 (80%) 9 (90%)

Attending customers

promptly

5 (100%) 3 (60%) 8 (80%)

Providing customized

services to the

customers

3 (60%) 1 (20%) 4 (40%)

Membership for the

regular customers and

business houses

3 (60%) 0 (0%) 3 (30%)

Sending cards/wishes

on special occasions

like Birthday and

Anniversary

3 (60%) 0 (0%) 3 (30%)


34

4.2.8 Benefits obtained from CRM approach

In this section the information regarding the benefits obtained from the

implementation of the CRM approach is recorded. The respondents were asked to rate the

statements on the scale from 1 to 5 where 1 states for strongly disagree and 5 states for

strongly agree.

Table 9: Benefits obtained from CRM approach


mean

score

(n=10)

t- value p- value

High/

medium

tariff

(n=5)

Low

tariff

(n=5)

Increases customer satisfaction 4.4 3.6 4 2.31 0.05

Increased customer loyalty 4 3.4 3.7 1.50 0.17

Profitability increases 3.8 3.6 3.7 0.63 0.55

Increases market share 3.8 3.2 3.5 1.41 0.21

Enhances lifetime value of

customers

3.6 3 3.3 1.50 0.17


In Table 9 the maximum benefit obtained from CRM approach was “increased

customer satisfaction”. For high/medium tariff category hotels the mean score was highest for

“increases customer satisfaction” (=4.4). For the same category the next highest mean score

was for “increased customer loyalty” (=4.0). The lowest mean score in the same category was

for “enhances lifetime value of customers” (3.6). For low tariff category hotels the mean

score is highest for “increases customer satisfaction” (=3.6) and for profitability increases

(=3.6). The lowest mean score in the same category was for “enhances lifetime value of

customers” (=3.0).

On the overall basis the overall mean score was highest for “increases customer

satisfaction” (=4.0). The next highest mean scores was for “increased customer loyalty”

(=3.7), and for “profitability increases” (=3.7). The lowest mean score on the overall basis

was for “enhances lifetime value of customers” (=3.3).


no statement was found insignificant i.e. no statement has value more than 2.56. This means

that there is no difference of opinion in the high/medium tariff and low tariff hotels.

35

4.2.9 Information maintained about customers

It is very important to maintain the proper information about the customers and in the

hotel industry it is even a compulsion from the Government of India to maintain the records

of people visiting the hotel. So managers were asked about what kind of information about

the customers is recorded by the hotels in Ludhiana city.

Table 10: Information maintained about customers by the Hotels

Information of

customers

High/ medium

tariff (n=5)


No. of

respondents (%)

No. of

respondents (%)

No. of

respondents (%)

Information about

customer and his

dwelling

5 (100%) 5 (100%) 10 (100%)

Information about

customer’s attitude

towards the hotel

staff and offerings

5 (100%) 1 (20%) 6 (60%)

Database about

customer’s lifestyle

and likes/dislikes

3 (60%) 0 (0%) 3 (30%)

Information about

change in

customer’s interest

1 (20%) 0 (0%) 1 (10%)


Table 10 shows that overall, all the hotels maintain the information about customer

and his dwelling and 60% of hotels also maintain information about customer’s attitude

towards the hotel staff and offerings. In case of high/medium tariff hotels also the information

about the customer’s attitude towards the hotel staff and offerings (100%) is maintained but in

low tariff hotels only 20% of respondents maintain information.

36

4.2.10 Methods for handling the complaint

Handling the customer complaints is very important in the service industry as it

results in customer satisfaction. Here the information about the complaint handling by the

hotels is recorded.

Table 11: Methods for handling the complaint

Methods High/ medium

tariff (n=5)


No. of respondents

(%)

No. of respondents

(%)

No. of respondents

(%)

Personal counseling 5 (100%) 5 (100%) 10 (100%)

Through complaint box 2 (40%) 3 (60%) 5 (50%)

Through phone 5 (100%) 2 (40%) 7 (70%)

Through direct mail 3 (60%) 0 (0%) 3 (30%)

Through intranet 0 (0%) 0 (0%) 0 (0%)


In the Table 11 the responses were collected about the methods used by the hoteliers

for the handling of the customer complaints. It was found that all the hotels carry out personal

counseling to handle the customer complaints in both the high/medium tariff hotels and in

low tariff hotels. The other method of handling customer complaint in high /medium tariff

hotel is through phone that again comes out to be 5(100%) which means it is the technique

used by all the high/medium tariff hotels and in case of low tariff hotels it is through

complaint box (60%). The least used method is intranet (0%) which is not used by any of the

hotel to handle the customer complaint.

4.3 Customer Satisfaction with respect to the CRM practices followed by the Hotels

In this section the responses were collected on various parameters to check their level

of satisfaction with respect to the practices followed by the various hotels in the Ludhiana

city.

4.3.1 Demographic profile of customer

In this the demographic profile of the customers is given below. It consists of the

information regarding the occupation, age group, family income and the gender of the

customers.

37

Table 12: Demographic profile of customers

Parameters High/ medium

tariff (n=75)


No. of respondents

(%)

No. of

respondents (%)

No. of respondents

(%)

Occupation

Business

Salaried

Professional

Others

36 (48%)

11 (15%)

24 (32%)

4 (5%)

14 (19%)

40 (53%)

12 (16%)

9 (12%)

50 (33%)

51 (34%)

36 (24%)

13 (9%)

Family income per annum

(Rs. In Lacs)

<2

2-5

5-10

>10

0 (0%)

19 (25%)

17 (23%)

39 (52%)

29 (39%)

37 (49%)

9 (12%)

0 (0%)

29 (19%)

56 (37%)

26 (17%)

39 (26%)

Age

<20

21-30

31-40

41-50

>50

0 (0%)

8 (11%)

36 (48%)

28 (37%)

3 (4%)

4 (5%)

16 (21%)

32 (43%)

17 (23%)

6 (8%)

4 (3%)

24 (16%)

68 (45%)

45 (30%)

9 (6%)

Gender

Male

Female

51 (68%)

24 (32%)

59 (79%)

16 (21%)

110 (73%)

40 (27%)

38

Table 12 shows that 48% of respondents in high/medium tariff hotels are

businessman and 32% are professionals and 53% of respondents in low tariff hotels are from

salaried class. Majority of respondents in high/medium tariff hotels belong to more than 10

lakh income groups and in low tariff hotels majority of the respondents belong to 2-5 lakh

income categories. The age group of the respondents in both the categories was almost same

(48% and 43% respectively) and belonged to the 31-40 age groups. Majority of the

respondents in both the group were males (68% in high/medium tariff hotels and 79% in low

tariff hotels).

4.3.2 Awareness of customers about CRM

In this section the awareness of the CRM among respondents in Ludhiana is given

below.

Table 13: Awareness of customers about CRM

Awareness High/medium tariff

hotel (n=75)

Low tariff hotel

(n=75)

No. of respondents

Yes 73 (97%) 35 (47%) 108 (72%)

No 2 (3%) 40 (53%) 42 (28%)

Total 75 (100%) 75 (100%) 150 (100%)

In the Table 13 the awareness among the customers regarding CRM is quiet nice. 108

respondents’ (72%) of the total respondents have knowledge about CRM. Further customers

of high/medium tariff hotel have more awareness (97%).

4.3.3 Satisfaction with CRM practices followed by hotels

In this section the satisfaction of the respondents with respect to the CRM practices

followed by the hoteliers in Ludhiana city is checked. The respondents were asked to rate the

statement over a scale from 1 to 5 where 1 stands for strongly disagree and 5 stands for

strongly agree.

39

Table 14: Satisfaction with CRM practices followed by hotels


mean

score

(n=150)

Z- value p- value

High/

medium

tariff

(n=75)

Low

tariff

(n=75)

Quick response to calls 4.3 4.0 4.2 3.23* 0.001*

Having membership of hotel

encourages customer to stay in

that hotel

4.4 3.7 4.0

5.40* 0*

Staff/Personnel appropriate

behavior

4.1 3.6 3.9 4.47*

0*

Attending customer complaints 4.0 3.7 3.9 2.09* 0.037*

Meeting the requests of guests

with in suitable time

4.2 3.6 3.9 4.84*

0*

Receiving a complimentary

juice/tea as a refreshment at

the time of check-in

4.0 3.8 3.9 1.16

0.246

Paying the bills by credit cards 4.2 3.5 3.9 4.62* 0*

Advertising about discounts and

special prices of each season

4.2 3.5 3.9 4.94*0*

Providing customized services at

the time of check-in and during

stay

3.8 3.9 3.8 0.50

0.618

The hotel should have a user

friendly website

3.8 3.7 3.7 1.081

0.28

Offering city tour to interested

customers

3.8 3.5 3.7 3.24*

0.001*

Filling out the feedback form via

internet provides more

convenience

3.8 3.6 3.7 0.93

0.352

40

24 hours online reservation 3.8 3.5 3.7 2.61*

0.009*

Accepting cancellation of

reservation by the hotel is of

special importance

4.0 3.4 3.7 3.25*

0.001*

Reservation via internet

increases the probability of

hotel selection

3.8 3.4 3.6 3.16*

0.002*

Having baby sitter service is

necessary for the hotel

4.0 3.2 3.6 4.33*

0*

Access to hotel information via

internet

3.6 3.5 3.6 1.19

0.235

Sending welcome note from

hotel management to rooms

3.6 3.3 3.5 2.38

0.02

Applying special services like

film/music on demand

3.5 3.5 3.5 0.62

0.54

Seeing a personal welcome

message on room’s TV after

checking in

3.5 3.4 3.4 0.66

0.51

Internet services in room 3.4 3.5 3.4 0.12

0.90

Access to room service via

intranet

3.3 3.5 3.4 1.03

0.31

Sending wishes for new year,

birthday and wedding

anniversary results in more

satisfaction

3.7 3.1 3.4 3.69*

0.00*

*Significant at 5% level of significance (Z=1.96)

In Table 14 customer satisfaction with respect to the CRM practices was measured

and it was found that “quick response to calls” and “membership of the hotel” is major factors

41

that result in customer satisfaction. For high/medium tariff category hotels the mean score

was highest for “having membership of hotel encourages customer to stay in that hotel”

(=4.4). For the same category the next highest mean score was for “quick response to calls”

(=4.3), “meeting the requests of guests with in suitable time” (=4.2) and for “paying bills by

credit cards” (=4.2). The lowest mean score in the same category was for “access to room

service via intranet” (=3.3). For low tariff category hotels the mean score was highest for

“quick response to calls” (=4.0). For the same category the next highest mean scores was for

“providing customized services at the time of check-in and during stay” (=3.9), “attending

customer complaints” (=3.7), and for “the hotel should have a user-friendly website” (3.7).

The lowest mean score in the same category was for “sending wishes for new year, birthday

and wedding anniversary results in more satisfaction” (=3.1). This means that there is a major

difference in the customer satisfaction with respect to CRM in the high/medium tariff and low

tariff hotels. The Z values were calculated and tested at 5% level of significance. In the above

table many statements were found to be significant i.e. whose values were more than 1.96.

On the overall basis the overall mean score is highest for “quick response to calls”

(=4.2). The next highest mean scores was for “having membership of hotel encourages

customer to stay in that hotel” (=4.0), “it reduces the rate of customer defection” (=4.2) and

for “staff/Personnel appropriate behaviour”, “attending customer complaints”, “meeting the

requests of guests with in suitable time”, “receiving a complimentary juice/tea as a

refreshment at the time of check-in”, and “paying the bills by credit cards” each (=3.9). The

lowest mean score on the overall basis was for “seeing a personal welcome message on

room’s TV after checking in”, “internet services in room”, “access to room service via

intranet” and “sending wishes for new year, birthday and wedding anniversary results in more

satisfaction” each (=3.4).

4.3.4 Opinion about the benefits of CRM

In this section the opinion of respondents (customers) was recorded for the benefits of

CRM. Again, the customers were asked to rate the statement over a scale from 1 to 5 where 1

stands for strongly disagree and 5 stands for strongly agree.

In Table 15, according to customers the maximum benefit obtained from CRM

approach was “increased customer satisfaction”. For high/medium tariff category hotels the

mean score was highest for “increases customer satisfaction” (=4.1) and for “increased market

share” (=4.1). For the same category the next highest mean score was for “profitability

increases” (=3.9) and for “enhances lifetime value of customers” (3.6). The lowest mean

score in the same category was for “increased customer loyalty” (=3.8). For low tariff

category hotels the mean score is highest for “increases customer satisfaction” (=4.5). The

42

lowest mean score in the same category was for “increases market share” (=4.0) and for

“profitability increases” (=4.0). This means that there is no difference of opinion in the

high/medium tariff and low tariff hotels. The Z values were calculated and tested at 5% level

of significance. In the above table no statement was found insignificant i.e. no statement has

value more than 1.96.

On the overall basis the overall mean score was highest for “increases customer

satisfaction” (=4.2). The next highest mean scores was for “increases market share” (=4.1).

Rest all the statements were found to have the same overall mean score of (=4.0).

Table 15: Opinion about the benefits of CRM


mean

score

(n=150)

Z- value p- value

High/mediumtariff(n=75)

Low

tariff

(n=75)

Increases customer satisfaction 4.1 4.5 4.2 1.684 0.23

Increases market share 4.1 4.0 4.1 1.389 0.22

Increased customer loyalty 3.8 4.1 4.0 1.435 0.07

Profitability increases 3.9 4.0 4.0 1.273 0.15

Enhances lifetime value of

customers

3.9 4.1 4.0 1.744

0.06

*Significant at 5% level if significance (Z=1.96)

4.3.5 Services necessary during Business Trip

In this section the customer’s requirements for various services to be availed were

identified when they are on a business trip.

Table 16: Services necessary during Business Trip

Services High/medium Tariff

(n=75)

Low Tariff (n=75) Total (n=150)

Direct line of

phone

65 (87%) 70 (93%) 135 (90%)

Internet 46 (61%) 36 (48%) 82 (55%)

Xerox machine 21 (28%) 35 (47%) 56 (37%)

Fax 30 (40%) 21 (28%) 51 (34%)

43

Answering phone 14 (19%) 16 (21%) 30 (20%)

Office equipments 13 (17%) 9 (12%) 22 (15%)

Laptop 4 (5%) 3 (4%) 7 (5%)


In Table 16, the services that the customers prefer the most when they are on the

business trip were “direct line of the phone”. For high/medium tariff category hotels the

percentage was highest for “direct line of phone” (87%). For the same category the next

highest percentage was for “internet service” (61%), “fax services” (40%) and for “Xerox

machine” (28%). The lowest percentage in the same category was for “laptop” i.e. (5%). For

low tariff category hotels the percentage was highest for “direct line of phone” (93%). The

lowest percentage in the same category was for “internet” (48%) and for “Xerox machine”

(47%). On the overall basis the overall percentage was highest for “direct line of phone”

(90%). The next highest percentage was for “internet” (55%), “Xerox machine” (37%) and

for “fax services” (34%). The lowest percentage on the overall basis was found for the

“laptop” i.e. just (5%).

4.3.6 Channels preferred for interaction

This section contains the information about the channels preferred by the customers

for an interaction between the hotels and customers.

Table 17: Channels preferred for interaction by customers

Channels High/medium Tariff

(n=75)


SMS 40 (53%) 56 (75%) 96 (64%)

E-mail 33 (44%) 32 (43%) 65 (43%)

Telephone 26 (35%) 30 (40%) 56 (37%)

Receiving Letters 24 (32%) 23 (31%) 47 (31%)


In Table 17, the channel preferred by customers the most was “SMS”. For

high/medium tariff category hotels the percentage was highest for “SMS” (53%). For the

same category the next highest percentage was for “e-mail” (44%). The lowest percentage in

the same category was for “receiving letters” (32%). For low tariff category hotels the

percentage was highest for “SMS” (75%). The lowest percentage in the same category was

for “receiving letters” (31%). On the overall basis the overall percentage was highest for

44

“SMS” (64%). The next highest percentage was for “e-mail” (43%). The lowest percentage

on the overall basis was found for the “receiving letters” (37%).

4.3.7 Technique used for reservation

This section contains the information about the techniques used by the customers for

the purpose of reservation in the hotels.

Table 18: Technique used for reservation by the customer

Technique High/medium Tariff

(n=75)


No Reservation 46 (63%) 53 (71%) 99 (66%)

Travel Agency 9 (12%) 14 (17%) 23 (15%)

Phone 14 (19%) 5 (7%) 19 (13%)

Any Other 5 (7%) 4 (5%) 9 (6%)

Internet 0 (0%) 0 (0%) 0 (0%)

Total 75 (100%) 75 (100%) 150 (100%)

In Table 18, the technique used for reservation by the customers the most was “via

phone” but in most of the cases (66%) “No reservation was done by the customers”. For

high/medium tariff category hotels the percentage was highest for “no reservation” (63%).

Other than that for the same category the next highest percentage was for “via phone” (19%)

and “Travel agency” (12%). The lowest percentage in the same category was for “internet”

(0%). For low tariff category hotels the percentage was highest for “no reservation” (71%).

For the same category the next highest percentage was for “Travel agency” (17%). The lowest

percentage in the same category was for “other means like friends, relatives etc” (5%) and

“internet” (0%). On the overall basis the overall percentage was highest for “no reservation”

(66%). The next highest percentage was for “travel agency” (15%) and “via phone” (13%).

The lowest percentage for reservation on the overall basis was found for the “internet” (0%).

Any other includes with the help of family/ friends, through company agents etc.

4.3.8 Reference of Hotel

This section contains the information about the reference of the hotel given by the

customers to other people.

45

Table 19: Reference of Hotel by the customers

Referrals High/medium Tariff (n=75) Low Tariff (n=75) Total (n=150)

No Referrals 22 (29%) 48 (64%) 70 (47%)

Relatives 30 (40%) 16 (21%) 46 (31%)

Friends 26 (35%) 10 (13%) 36 (24%)

Business

Associates

17 (23%) 13 (17%) 30 (20%)


In Table 19, the no reference of the hotel was given by the customers. For

high/medium tariff category hotels the percentage was highest for “relatives” (40%). For the

same category the next highest percentage was for “references to friends” (35%) and “no

referrals” (29%). The lowest percentage in the same category was for “business associates”

(23%). For low tariff category hotels the percentage was highest for “no referrals” (64%). For

the same category the next highest percentage was for “relatives” (21%). The lowest

percentage in the same category was for “business associates and friends” (17% and 13%)

and “internet” (0%). On the overall basis the overall percentage was highest for “no

reservation” (66%). The next highest percentage was for “travel agency” (15%) and “via

phone” (13%). The lowest percentage for reservation on the overall basis was found for the

“internet” (0%).

4.3.9 Problems faced and complaint handling

This section contains the information about the number of customers who faced the

problems during their stay in the hotel and how the complaint was handled by the hotel

management. This section consists of both the objective and subjective information.

Table 20: Problems faced by the customers and its complaint handling

Customers faced problem High/medium tariff

hotels

Low tariff hotels Total respondents

Yes 12 (16%) 7 (9%) 19 (13%)

No 63 (84%) 68 (91%) 131 (87%)

Total 75 (100%) 75 (100%) 150 (100%)

In Table 20 many of the customers did not face any problem during their stay in the

hotel. In high/medium tariff hotel category only 16% of the total high/medium tariff hotel

46

category customers faced the problem and complaint about it to the hotel management. In low

tariff hotel category only 9% of the total low tariff hotel category customers faced the

problem and complaint about it to the hotel management. In total only 13% of the customers

faced problems during their stay in the hotel and 87% customers did not faced any problem

and did not complained about anything during their stay in the hotel.

4.3.10 Future Intentions regarding staying in the same Hotel

This section contains the information regarding the future intentions of the customers

for the stay in the same hotel in the future.

Table 21: Future Intention of the customer for staying in the same hotel

Customers will stay High/medium tariff

hotels

Low tariff hotels Total

respondents

Yes 58 (77%) 71 (95%) 129 (86%)

No 17 (23%) 4 (5%) 21 (14%)

Total 75 (100%) 75 (100%) 150 (100%)

In Table 21 it was recorded that most of the customers approached the same hotel for

staying in future. In high/medium tariff hotel category, 77% of the customers agreed up on

staying in the same hotel and in low tariff hotel category, 95% of the customers wanted to

stay in the same hotel in future. On overall basis, 86% of the customers responded that they

will stay in the same hotel if it is required in the future.

4.4 Discussion

This section briefly discusses the inferences from the above three sections. The

responses of hotel owners/managers and other respondents were tabulated and results were

analyzed. The opinion of hotel managers towards CRM approach and the satisfaction of

customers with respect to the CRM were studied.

Out of the total sample of the hotels 90% of the hotels were aware about the CRM

approach. Also 72% of the total sample of customers was aware about the CRM approach. All

the managers have the opinion that CRM approach helps in increasing the customer database

and gave it the maximum mean score of 5. Also in all the hotels the study of the existing

customer database is done to assess the needs of the customers. For acquiring the customers

the hoteliers goes for maintaining contact and involvement with the customer and thus rate it

with the mean score of 4.5. For the purpose of customer retention customer complaint

47

handling in an efficient manner was done by all the hotels and they ranked it most important

by giving it a mean score of 5. Also all the hotels maintain the basic information of the

customer along with his dwelling information.

The total sample of customers consists of 73% of males and 27% of females. Most of

the customers were salaried and between the age group of 31-40. According to the customers

the best way to achieve customer satisfaction is to respond quickly to the calls and the

membership of the hotel. For customers the major benefit of CRM approach is that it

increases the customer satisfaction and thus it got the mean score of 4.2. Also it was recorded

that 64% of customers think that the best method of interaction with the customer for the

advertisement is through SMS. From the above responses it is seen that 87% of the customers

did not faced any problem during their stay in the hotel and 86% of the customers prefer to

come back to the hotel for stay in the future.

48

Chapter - V

Summary

In this chapter a brief summary and conclusion of the study have been presented, so

as to understand the implications of the findings. This chapter gives the final conclusion of

the study.

CRM model based upon customer-centric business philosophy and culture to support

effective marketing, sales, long term relationships and services process could be a lifesaver

for most business especially for hotel industry. CRM is about managing customer knowledge

to better understand and serve them. It is an umbrella concept that places the customer at the

centre of an organization. Customer service is an important component of CRM: however

CRM is also concerned with coordinating customer relations across all business functions,

points of interaction, and audiences. CRM can bring a lot of benefits for hotels such as

customer satisfaction and loyalty, increase in revenues, decrease in costs, and a sustainable

competitive advantage.

CRM is an all-embracing approach and CRM as an IT term. CRM is an idea

regarding how a company can keep their most profitable customers by increasing the value of

interaction. The value is maximized through differentiation of the management of customer

relationships”. Another definition is formulated as follows, “basically, CRM is a notion

regarding how an organization can keep their most important customers and at the same time

reduce costs, increase the values of interaction to consequently maximize the profits”. CRM

can also be defined as “an information industry term for methodologies, software, and usually

internet capabilities that help an enterprise manage customer relationships in an organized

way” or be defined as “an all embracing approach, which seamlessly integrates sales,

customer service, marketing, field support and other functions that touch customers”.

The hotel industry enjoys easy data access as the guests need to register their name

and address during check-in and in some countries, guests even need to provide their passport

data and more detailed private information. In addition, people are very likely to share their

personal preferences with hotel staff to make their stay more enjoyable. The hotel can make

use of this database combined with IT and give the guests a unique experience. They can

establish a close relationship with customers and meet their needs perfectly. In order to be

able to compete on a highly competitive market a hotel has to meet every single customer’s

needs and expectations. To do this it is important to understand the aspects of business

49

performance that persuade customers to become repeat purchasers and to exhibit behavioral

loyalty.

This study was undertaken with the following specific objectives:

1. To study the Customer Relationship Management (CRM) practices followed

by selected Hotels in Ludhiana.

2. To study the customer satisfaction with respect to the Customer Relationship

Management practices followed by the selected Hotels.

For the first objective, the data was collected with the help of structured non

disguised questionnaire from the managers/owners of the selected hotels. Questions were

asked relating to CRM practices like customer need assessment and acquisition, customer

development through personalization and customization, customer retention, new customer

referrals and benefits from CRM approach, etc.

A separate questionnaire was prepared for the second objective and 15 customers of

each hotel were contacted from the database provided by the hotels on convenience sampling

basis. The data was collected from these customers using a structured non disguised

questionnaire. Questions were asked relating to satisfaction with respect to CRM practices

followed by the hotels.

The major findings of the study have been divided into two sections. First section

deals with the study of the hotels managers/owners getting their responses about the

implementation of the CRM practices and the other section consists of the response of the

customers regarding their satisfaction level with respect to the CRM practices followed by the

hoteliers in Ludhiana city. T-test is applied to check the responses for the significance.

5.1 Major findings are:

It was seen that 90% of the hotels have only one hotel in their business except Hotel

Mahal that have three hotels in India. Also 80% of the hoteliers are involved in other

business holdings too.

The awareness among the hotel mangers regarding CRM is a good. Out of the total

respondents 90% respondents were aware about the CRM approach and practices.

Managers opinion towards CRM approach was that “it expands the customer

database” the most. For high/medium tariff category hotels the mean score was highest

for “it expands customer database” (=5). The lowest mean score in the same category was

for “it enhances the potential worth of individual customer in terms of their lifetime value

to the company” (3.4). For low tariff category hotels the mean score was highest for “it

50

increases the longitivity of customer relationship” (=4.6). The lowest mean score in the

same category was for “it helps in easy introduction of new product/service” (=3.0). On

the overall basis the overall mean score is highest for “it expands the customer database”

(=4.7). The t values were calculated and tested at 5% level of significance and were found

to be significant. This means that there is minor difference of opinion in the high/medium

tariff and low tariff hotels.

In high/medium tariff hotels “study existing customer database” and “personal

counseling” both contributes 100% towards the activities undertaken by the hotels for

customer need assessment. In low tariff hotels, all hotels adopt “study of existing

customer database”. On overall basis the best method of customer need assessment is the

“study of existing customer database” as this is the method that is adopted by all the

hotels.

The activity undertaken by hotels for acquiring customers was to “maintain contact

and involvement” the most. For high/medium tariff category hotels the mean score was

highest for “maintain contact and involvement” (=4.6). The lowest mean score in the

same category was for “providing special facilities/services” (3.6). For low tariff category

hotels the mean score is highest for “maintain contact and involvement” (=4.4). The

lowest mean score in the same category was for “providing special facilities/services”

(=2.6). On the overall basis the overall mean score is highest for “maintain contact and

involvement” (=4.5). The t values were calculated and tested at 5% level of significance

and were found to be significant. This means that there is minor difference of opinion in

the high/medium tariff and low tariff hotels.

The activity undertaken by hotels for acquiring customers was to “one to one

relationship” the most. For high/medium tariff category hotels the mean score was highest

for “commitment towards providing better services to customers” (=4.6). The lowest

mean score in the same category was for “give rewards to customers” (3.6). For low tariff

category hotels the mean score is highest for “one to one relationship” (=4.4). The lowest

mean score in the same category was for “providing special facilities/services” (=2.8). On

the overall basis the overall mean score is highest for “one to one relationship” (=4.4).

The t values were calculated and tested at 5% level of significance and were found to be

significant. This means that there is minor difference of opinion in the high/medium tariff

and low tariff hotels.

The opinion of managers for activity undertaken by hotels for customer retention

was “customer complaint handling in an effective manner” the most. For high/medium

tariff category hotels the mean score was highest for “customer complaint handling in an

effective manner” (=5.0). For low tariff category hotels the mean score is highest for

“customer complaint handling in an effective manner” (=5.0). On the overall basis the

51

overall mean score is highest for “customer complaint handling in an effective manner”

(=5.0). The lowest mean score on the overall basis was for “accepting cancellation of

reservation by the hotel” (=3.8) and “special greet by the hotel management” (=3.8). The t

values were calculated and tested at 5% level of significance and were found

insignificant. This means that there is no difference of opinion in the high/medium tariff

and low tariff hotels.

“Greeting the customer and paying them due respect”, “Participating in a two-way

communication, listening and recording the customer problem” and “Provision of

customer service and complaint desk” are followed by all the hotels for the customer

retention.

The maximum benefit obtained from CRM approach according to customers was

“increased customer satisfaction”. For high/medium tariff category hotels the mean score

was highest for “increases customer satisfaction” (=4.4). The lowest mean score in the

same category was for “enhances lifetime value of customers” (3.6). For low tariff

category hotels the mean score is highest for “increases customer satisfaction” (=3.6) and

for profitability increases (=3.6). The lowest mean score in the same category was for

“enhances lifetime value of customers” (=3.0). On the overall basis the overall mean

score was highest for “increases customer satisfaction” (=4.0). The lowest mean score on

the overall basis was for “enhances lifetime value of customers” (=3.3). The t values were

calculated and were found insignificant. This means that there is no difference of opinion

in the high/medium tariff and low tariff hotels.

All the hotels maintain the information about customer and his dwelling.

High/medium tariff hotels also record the information about the customer’s attitude

towards the hotel staff and offerings but in low tariff hotels only 20% of respondents

maintain information.

All the hotels carry out personal counseling to handle the customer complaints in

both the high/medium tariff hotels and in low tariff hotels. In high /medium tariff hotel

complaint is recorded through phone by all the hotels and in low tariff hotels it is through

complaint box (60%). The least used method is intranet (0%) which is not used by any of

the hotel to handle the customer complaint.

In high/medium tariff hotels 48% of respondents are businessman and 32% are

professionals. 53% of respondents in low tariff hotels are from salaried class. Majority of

respondents in high/medium tariff hotels belong to more than 10 lakh income groups and

in low tariff hotels majority of the respondents belong to 2-5 lakh income categories.

The age group of the respondents in both the categories was almost same (48% and

43% respectively) and belonged to the 31-40 age groups. Majority of the respondents in

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both the group were males (68% in high/medium tariff hotels and 79% in low tariff

hotels).

The awareness among the customers regarding CRM is quiet nice. 108 respondents’

(72%) of the total respondents have knowledge about CRM.

For high/medium tariff category hotels according to the customers the customer

satisfaction with respect to the CRM the mean score was highest for “having membership

of hotel encourages customer to stay in that hotel” (=4.4). The lowest mean score in the

same category was for “access to room service via intranet” (=3.3). For low tariff

category hotels the mean score was highest for “quick response to calls” (=4.0). The

lowest mean score in the same category was for “sending wishes for new year, birthday

and wedding anniversary results in more satisfaction” (=3.1). On the overall basis the

overall mean score is highest for “quick response to calls” (=4.2). The Z values were

calculated and tested at 5% level of significance and were found to be significant. This

means that there is a major difference in the customer satisfaction with respect to CRM in

the high/medium tariff and low tariff hotels.

According to customers the maximum benefit obtained from CRM approach was

“increased customer satisfaction”. For high/medium tariff category hotels the mean score

was highest for “increases customer satisfaction” (=4.1) and for “increased market share”

(=4.1). For low tariff category hotels the mean score is highest for “increases customer

satisfaction” (=4.5). On the overall basis the overall mean score was highest for

“increases customer satisfaction” (=4.2). The Z values were calculated and were found to

be insignificant. This means that there is no difference of opinion in the high/medium

tariff and low tariff hotels.

The services that the customers prefer the most when they are on the business trip

was “direct line of the phone”. For high/medium tariff category hotels the percentage was

highest for “direct line of phone” (87%). For low tariff category hotels the percentage was

highest for “direct line of phone” (93%). On the overall basis the overall percentage was

highest for “direct line of phone” (90%). The next highest percentage was for “internet”

(55%), “Xerox machine” (37%) and for “fax services” (34%). The lowest percentage on

the overall basis was found for the “laptop” i.e. just (5%).

The channel preferred by customers the most was “SMS”. For high/medium tariff

category hotels the percentage was highest for “SMS” (53%). For low tariff category

hotels the percentage was highest for “e-mail” (43%). On the overall basis the overall

percentage was highest for “SMS” (64%). The next highest percentage was for “e-mail”

(43%). The lowest percentage on the overall basis was found for the “receiving letters”

(37%).

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The technique used for reservation by the customers the most was “via phone” but

in most of the cases (66%) “No reservation was done by the customers”. For

high/medium tariff category hotels the percentage was highest for “no reservation”

(63%). Other than that for the same category the next highest percentage was for “via

phone” (19%). For low tariff category hotels the percentage was highest for “no

reservation” (71%). The lowest percentage in the same category was for “other means

like friends, relatives etc” (5%) and “internet” (0%). On the overall basis the overall

percentage was highest for “no reservation” (66%).

For high/medium tariff category hotels the percentage of references given by

customers was highest for “relatives” (40%). For low tariff category hotels the percentage

was highest for “no referrals” (64%). On the overall basis the overall percentage was

highest for “no reservation” (66%).

Many of the customers did not faced any problem during their stay in the hotel. In

high/medium tariff hotel category only 16% of the total high/medium tariff hotel category

customers faced the problem and complaint about it to the hotel management. In low

tariff hotel category only 9% of the total low tariff hotel category customers faced the

problem and complaint about it to the hotel management.

In high/medium tariff hotel category, 77% of the customers agreed up on staying in

the same hotel and in low tariff hotel category, 95% of the customers wanted to stay in

the same hotel in future. On the overall basis 86% of the customers responded that they

will stay in the same hotel if it is required in the future.

5.2 Conclusion

There has been a considerable improvement in the service delivery system of the

hotel industry and the concept of CRM has taken a new dimension and is gaining momentum

in this sector. The present study on CRM concludes that almost all the owners/managers of

the selected hotels in Ludhiana were aware about the CRM concept and are practicing it in

their respective hotels. However, high/medium tariff hotels are practicing it at a greater extent

and low tariff hotels are practicing it according to their convenience. The customers of both

the hotel categories (high/medium tariff and low tariff) were satisfied with the CRM practices

followed by the hotels of both the categories. But the customers of high/medium tariff hotel

category were more satisfied as compared to the customers of low tariff hotel. The companies

are undertaking various activities for acquiring customers, for customer development through

personalization and customization, and for customer retention.

Further, CRM practices help the hoteliers to increase customer satisfaction, win

customer loyalty and retain the customers which results in increased market share and high

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profitability. No doubt selected hotels are following the CRM practices but still there is a gap

between customers’ expectations and actual CRM practices adopted. So, efforts should be

made to match the CRM practices with customer expectations and thus enabling the hotels to

reap the benefits of the same.

5.3 Recommendations from the study

The hoteliers should increase the facility of membership of the hotels as it increases the

great demand among the customers.

The hotels should provide the customized services to the customer’s needs and

expectations.

The managers should inform the customers about the new schemes of the hotel through

SMS/e-mail.

The hotels should quickly respond to the calls of the customers and complaint handling

should be enhanced.

The hotels should maintain the database about the customer’s family, travelling needs,

previous hotel experience (if any) and customers likes, dislikes, lifestyle and needs.

Customer’s education and information sharing programs may be undertaken by the

companies at regular intervals.

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ANNEXURE IQuestionnaire for Customers

1. Name:

2. Occupation:a. Businessb. Salariedc. Professionalsd. Any other (Specify)

3. Family Income:a. Less than 2,00,000b. 2,00,001 to 5,00,000c. 5,00,001 to 10,00,000d. More than 10,00,000

4. Age:a. 1-20b. 21-30c. 31-40d. 41-50e. Above 50

5. Gender:i. Male Female

6. Which Hotel you are residing in?___________________________________________________________________

7. Are you aware about the Customer Relationship Management concept?Yes No

8. Please rate the scale from 1-5 according to your satisfaction with the CRM practicesfollowed by the hotel:S. No. Statement Strongly

AgreeAgree Neutral Disagree Strongly

Disagree1. Quick response to calls2. Meeting the requests of

guests with in suitable time3. Staff/Personnel appropriate

behavior4. Attending customer

complaints5. Access to hotel information

via internet6. Filling out the feedback

form via internet providesmore convenience

7. 24 hours online reservation8. Accepting cancellation of

reservation by the hotel isof special importance

ii

9. Internet services in room10. The hotel should have a

user friendly website11. Reservation via internet

increases the probability ofhotel selection

12. Paying the bills by creditcards

13. Seeing a personal welcomemessage on room’s TVafter checking in

14. Applying special serviceslike film/music on demand

15. Access to room service viaintranet

16. Providing customizedservices at the time ofcheck-in and during stay

17. Sending wishes for newyear, birthday and weddinganniversary results in moresatisfaction

18. Advertising about discountsand special prices of eachseason

19. Having baby sitter serviceis necessary for the hotel

20. Offering city tour tointerested customers

21. Sending welcome notefrom hotel management torooms

22. Having membership ofhotel encourages customerto stay in that hotel

23. Receiving a complimentaryjuice/tea as a refreshment atthe time of check-in

9. According to you how far CRM is important for any hotel? Please rate the following:

S.No.

Statement StronglyAgree

Agree Neutral Disagree StronglyDisagree

1. Increase customersatisfaction

2. Increase market share3. Increase customer

loyalty4. Profitability increases5. Enhances lifetime value

of customer

iii

10. If you want to travel for business what services do you prefer in your room?a. Faxb. Internetc. Laptopd. Direct line of phonee. Answering phonef. Xerox machineg. Office equipmentsh. Any Other (________________)

11. In case of follow up advertising which way you prefer better? Rank in order of

preference:

SmsE-mailReceiving lettersTelephone

12. How did you get reservation done in this Hotel?

a. Internetb. Phonec. Travel agencyd. Any Other (_______________)

13. How was this hotel introduced to you?

a. Travel agencyb. Previous experiencec. Via internetd. Other recommendations

14. Have you referred the hotel to any of the following?a. Friendsb. Relativec. Business associatesd. Any other (__________)

15. Do you need more services that are offered by the hotel? If yes please specify.Yes No

16. Have you faced any problem with regard to the hotel and its services? If yes, what?Yes No

_____________________________________________________________________

17. If yes, did you complain about it?Yes No

18. If yes, was the hotel able to handle the complaint and satisfy you?Yes No

iv

19. Do you intend to stay in this hotel in future? If no, why not?Yes No

v

ANNEXURE II

Questionnaire for Managers

1. Demographic Profile

Name of the Hotel :Business group belonging to :Number of hotels in the chain :Year of establishment :Any other business holding :Single room tariff :

2. Are you aware about the concept of Customer Relationship Management (CRM)?Yes No

3. Does your Hotel follow the CRM approach?Yes No

4. Please rate the following statements on this scale from 1-5 to show your opiniontowards the significance of CRM approach?S.No.



1. It benefits customerselectivity approach

2. It expands the customerbase

3. It reduces the rate ofcustomer defection

4. It increases thelongitivity of customerrelationship

5. It offers better value tocustomer’s money byconstantly improvingthe quality of servicesoffered to them

6. It helps in increasing thenumber of profitablecustomers

7. It enhances the potentialworth of individualcustomers in terms oftheir lifetime value tocompany

8. It helps in easyintroduction of newproduct services

5. How does the Hotel do customer need assessment for having better customer

relations?

a. Personnel Counselingb. Survey of existing customers

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c. Survey of potential customersd. Survey of competitor’s customerse. Study of existing customer databasef. Any other (Specify)

6. After carrying out customer need assessment, up to what extent the following

activities have been implemented for acquiring the customers?

S.No.

Statement GreatExtent

SomeExtent

Neutral LessExtent

LeastExtent

1. Addition of value withproduct or service

2. Maintain Contact andinvolvement

3. Maintain intimacy4. Providing special facilities/

Services5. Information Sharing

7. Up to what extent the following activities have been undertaken for customer

development through personalization and customization?

S.No.

Statement GreatExtent

SomeExtent

Neutral LessExtent

LeastExtent

1. One to One RelationshipMarketing

2. Commitment towardsproviding better services tocustomers

3. Give personal recognition tocustomers

4. Give rewards to customers5. Reciprocation6. Transparency about

company’s policies andprocedures

8. Please rate the following statements on this scale from 1-5 to show your opinion

towards the activities resulting in customer retention?

S.No.



1. Customer complainthandling in an effectivemanner

2. Accepting cancellationof reservation by thehotel

3. Soft behavior ofstaff/personnel

4. Customerized services

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5. Effective room service6. Sending wishes on

various occasions7. Special greet by the

hotel management8. Membership of the hotel

9. Which of the following activities are being undertaken for the customer retention?[ ] Greeting the customer and paying them due respect[ ] Attending customers promptly[ ] Talking in terms favorable to customers[ ] Participating in a two-way communication, listening and recording

the customer problem[ ] Sending cards/wishes on special occasions like Birthday andAnniversary[ ] Provision of customer service and complaint desk[ ] Membership for the regular customers and business houses[ ] Providing customized services to the customers[ ] Any other (________)

10. Please rate the following statements to show your opinion about the benefits of CRM

approach?

S.No.



1. Increases customersatisfaction

2. Increases market share3. Increased customer

loyalty4. Profitability increases5. Enhances lifetime

value of customers

11. Which type of data do you store about your customer?

[ ] Information about customer and his dwelling[ ] Database about customer’s lifestyle and likes/dislikes[ ] Information about change in customer’s interest[ ] Information about customer’s attitude towards the hotel staff and

offerings[ ] Any other (_________)

12. How does the company handle the complaints?

a. Personal Counselingb. Through Complaint Boxc. Through intranet

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d. Through phonee. Through Direct Mailf. Any Other (specify)

13. Which software you are using to handle CRM in your organization?____________________________________________________

Name:

Designation:

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VITA

Name of the student Harshal Goyal

Father’s name Mr. Ashok Goyal

Mother’s name Mrs. Anju Goyal

Nationality Indian

Date of Birth 01 /Nov / 1988

Permanent home address H. No. 202/B B.R.S. Nagar, Ludhiana

EDUCATIONAL QUALIFICATION

Bachelor degree

University and year of award Punjab Technical University, 2009

%age of marks 84.3%

Master’s degree

OCPA 7.12

Title of Master’s Project Report: A study Customer Relationship

Management (CRM) practices followed by

the hotel industry in Ludhiana city.

A STUDY OF CUSTOMER RELATIONSHIP MANAGEMENT (CRM ... · This is to certify that the project report...

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