Masters International Journal of Management Research and Development (MIJMRD)

ISSN : 2347-9043 136

Volume I, Issue II, December, 2013

CONTRIBUTION OF CUSTOMER RELATIONSHIP MANAGEMENT

IN ENHANCEMENT OF GROWTH OF HOTEL INDUSTRY IN INDIA
Ruchi
Research Scholar, C C S University, Meerut

Abstract
Customer Relationship Management (CRM) is the process of establishing, developing,
maintaining and optimizing long-term reciprocally important relations connecting customers
and organization. Best customer relationship management targets on recognizing the
necessities and needs of the customers and is accomplished by the introduction of these
requirements to the strength of the business by integrating them with the organizations
policy, manpower, know-how and dealing processes. Foundation of a perfect CRM policy is
formation of common significance for all the parties involved in the dealing process. It is
about making of a maintainable competitive benefit by being the most excellent at indulgent,
communication and delivery and to develop and keep current customer relationships in
addition to create new customers. Accordingly the notion of product life cycle gives a way to
the concept of customer life cycle stressing on the improvement of products and services that
anticipate the upcoming needs of the existing customers and creating other services that
strengthen existing customer relationships beyond dealings. CRM has an increasing
recognition and is appropriate one of the hottest scholarly and sensible topics in the business
field. Actually, due to the cutthroat competition in business environment, CRM is vital and it
has turn out to be a main function for organizations performance. Though, there is inadequate
research work that discloses the connection between CRM scopes and hotel performance.
Therefore, this paper makes an effort to present a worthwhile conceptual model that explains
the hypothetical relations existing between CRM scope and hotel performance. In a hotel,
every customers relationship has value and supposed to be handled effectively. There is a
chance for repurchase and recommendations from all previous customers. The management of
the information about the previous guests and the successful addition of the information into
forefront guest service programs is the most important contest of CRM execution. This paper
provides not only explains the connection between CRM scope and hotel performance, in
addition clarify the arbitrary role of marketing competence in this relationship.
Key Words: CRM; Hotel industry; customer loyalty; E-CRM.

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Masters International Journal of Management Research and Development (MIJMRD)

ISSN : 2347-9043 137

Volume I, Issue II, December, 2013

Introduction
Practice of Customer Relationship Management (CRM) is a business policy intended
to cut down costs and increase profits through creation of customer loyalty. It carries together
all facts relating to a customer in hotels using software to give a holistic view of a customer.
With cut throat competition among hotels in India, clients are becoming more perceptive to
charges and their consequent services at the same time as ignoring brand loyalty, making it
necessary to put into practice a model for instance CRM. Though, an agenda for CRM
execution is seriously absent in various sectors particularly in countries such as India where
trade holders are fighting with issues like administrative know how, management practices,
supporting skill competences and coalition of the model with the trade procedures. Therefore,
accomplishment of CRM also necessitates noting underneath issues within the hotel industry.
In India, execution of CRM is generally missing in the hotel industry at medium and
small enterprises. This raises a thought whether CRM would work in a state which has not
proved extensive implementation and has a need to take on such a model to be successful in
its hotel industry.
According to the Ministry of Tourism, India, development in the industry is very
important to contribute towards Indias foreign exchange income and encourage development.
Showing the challenges in the hospitality industry i.e. the hotel business where clients visiting
over again need assurance in finding lodging appropriate to their requirements, food stuff
having the similar type of feel, amongst other service details. At the same time the nation is
working hard to make better its tourism and hospitality industry, considerable challenges
exist there in the hotel business particularly in four and five star hotels, which are moreover
not existing in large numbers or fall short to meet up scaled market standards.
This is noteworthy believe that India is progressively becoming a destination for
people seeking to gain knowledge about India as well as for international gathering and
commercial companies seeking business opportunities here. Surrounded by such a huge need
for quality service, it tells inadequacy of the country if it is incapable to meet client
requirements for somewhere to stay. To contest these challenges, CRM offers a possible
approach that Indias hotel business can use to achieve a recovery for the services offered to
get better on quality and meeting customer expectations.
Ever-increasing occupancy rates and income by improving client understanding is the
aim of modern hotel businesses. To attain these results, hotel managers require having a deep

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Masters International Journal of Management Research and Development (MIJMRD)

Volume I, Issue II, December, 2013

ISSN : 2347-9043 138

knowledge of customers wants, behaviour, likings and expectations and being vigilant of the
ways wherein the services delivered build value for the clients and then encourage their
retention and loyalty.
CRM is a broad approach for creating, sustaining and expanding customer
relationship. It provides sound co-ordination among customer service, marketing, information
technology and additional customer associated utilities. It puts together people, procedure and
technology to make best use of relationships with all the customers. It does not intend to make
closer relationship with all customers, but it suggests that organizations take initiative to
recognize the most valuable customers by looking for their life time value. CRM means
building a mutually dependent relationship with the customer in which each relies on the
other for business way outs and successes.
Computers, information technology and internet have been swapping the labor
intensive business proceedings across the various industries. In the existing market,
companies are changing their business policies from being product-oriented to being
customer-oriented. This allows organisations like banks to achieve more returns on invested
capital, add more customers, and permit for huge investment opportunities by knowing their
customer needs. Electronic business on the whole is using web technology to maintain
business processes. Customer Relationship Management (CRM) is a tactic primarily used to
optimize customer loyalty and their lifetime understanding. CRM can help companies to be
successful, where not only big multinational companies, but also a lot of small companies are
increasingly seeking to implement CRM consecutively to find a competitive advantage on
which their business strategy may base. E-CRM can be operational, systematic or
collaborative. Operational e-CRM refers to customer contact points, such as telephones, fax,
letters, e-mails etc. Systematic CRM refers to the continuous collection customers data which
necessitate technology. Collaborative CRM is a communication center that aims at making
online communities, creating business-to-business (B2B) customer exchanges, and
personalizing services.
E-CRM is a blend of software, hardware and management loyalty. This leads to an
enhancement of customer service, an increase in the relationship and withholding of valuable
customers. An e-CRM system aims to develop customer service, extend a relationship and
keep valuable customers. E-CRM has been a most important concern for various
organisations specially the hotel industry.

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Masters International Journal of Management Research and Development (MIJMRD)

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The winning execution of CRM strategy will be of immense advantage to the

organizations, by adopting it, as such organizations can meet the benefit of escalating sales
through better market segmentation, customizing products and services, getting superior
quality products, gaining access to information and employee contentment, and above all,
guaranteed lifelong customer retention and loyalty.
Moreover, some researches refer to the significance of making studies on CRM scope
in the hotel segment. As a result of that, it is rational to lead the conclusion that it is not only
very little notice has been given to the CRM scope in the hotel business, but there is also
ample opportunity to extend the literature about CRM scope and hotel performance, both in
theory and empirically.
Use of CRM Strategy in Hotel Industry
The use of CRM policy means special things for organizations in the hotel sector. In
positioning on the market, hotels require competing and developing their brand with the aim
of attracting and retaining guests, and this necessitates flexibility of software capacities with
the objective to respond to the requests in competitive market and varying conditions in
industry. CRM for hotels puts the customer in the core of business processes, the customer
who is a part of lively processes through which the company adds big competitive advantage.
CRM allows competent and considerable attracting of new guests and encourages loyalty and
satisfaction. Besides the fact that CRM improves satisfaction and guest retention, the most
familiar benefits of CRM execution in the hotel industry are:
Marketing and process incorporation in hotel business,
Planning and organizing of target operations,
Attracting fresh and retaining existing loyal guests,
Transparent reporting,
Improving effectiveness based on sales and relations marketing,
Falling costs of marketing and sales,
Improving dealing processes and productivity,
Recording of the entire contacts with guests in any segment,
Skill to define the type and segment contacts,
Historical records of communications with each guest,
Open access and regular exchange of information inside the organization,
Competition scrutiny and entering new markets.

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Short-term return on investment (ROI) is almost not measurable in money and instant
benefits tie the organization for customer oriented strategy. The benefits of CRM program and
ROI should not be combined. It is very significant to verify performance measures in the early
phases of CRM project, or even better, before the project starts, to get a clear insight in the
success of CRM project. A hotel cannot pay for costs of non-investing in CRM organism. It
may save the money, however, the competition will capture the market by implementing
CRM and it will get a huge competitive advantage. Therefore, CRM approach turns into an
essential policy matter for the organization to continue to exist in the hotel industry.
The use of CRM software for hotels has to be an important asset that facilitates
adjustment of special programs, promotions and services for guests. By staying in tune with
its guests, the hotel can get better understanding of their likings. The possession of
information also has a great value in determining the space for specific tourist groups or
individual guests. CRM tools allow aiming of specific guests or tourist groups. Demarcation
between individuals permits customizable approach to marketing efforts and data and those
efforts can extend beyond in a goal of correlated approach. CRM program for hotels is
regularly used to gather information about guests and after that information is being used for
advertising towards a definite type of guests based on the transactions and loyalty. The use of
interactive reporting tools gives an insight into the hotel's function. Matching marketing
materials and guest information with particular tools can make a big variation on impact that
advertising material has on the guest. Long-term results of CRM execution on guest
satisfaction prove that the implementation in the form of collecting information for the
personalization of services, using marketing strategies directed at individual guests,
improving services and help for guests and using IT to offer more services in the hotel, boosts
guest satisfaction, loyalty and their retention leading to improved profitability and
maximizing returns.
Regardless of the fact that CRM brings permanent benefits to organizations, as a
whole, some of them grow profits from executing it more than others; CRM brings benefits to
the organizations that produce a lot of information about customers. Service organizations for
their built-in characteristics of the production and consumption are indivisible elements
essential to build relationships with customers. Accordingly, CRM will be perfectly suited to
the hotel industry, particularly when implementing it effectively and successfully, taking into
our account that hotels acquire a lot of data about customers. Such data can be converted into

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Masters International Journal of Management Research and Development (MIJMRD)

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beneficial knowledge about them. Be adequate it to say that hotel industry, like any business
sector has to be very competitive to be able to excel in the business environment, therefore, it
is of vital significance for it to promote behavioral patterns of permanent re-purchase and to
retain customers last longer. Thus, it is apparent that such ambitious aims can only be
achieved in the course of implementing CRM, which will result in creating profitable
relationship between organizations and their customers. Moreover, it goes exclusive of saying
that growing customer- acquisition costs, increasing customer expectations, price-sensitive
tourists, more complicated clients, indecisive market and less brand loyalty are all key factors,
which stoutly support hotels to focus on CRM as a practical strategy.
The main aim of CRM is to identify and treat each and every client as an individual. It
is very necessary for any business to know how to differentiate customer behavior according
to an individuals anticipation and liking. To differentiate customer treatment, the companies
make use of personalized service and tailored products which make several customers feel
special and others purely appreciate good behaviour. It improves their purchase or service
request or complaint redressal. Personalization and customization does imply maintaining
loyalty, but also motivating higher purchases. CRM demands all aspects of interaction a
company has with its client, whether it is sales or service connected. It even uses technology
to make more efficient processes that impact customer fidelity, service delivery and quality
administration. It has developed mainstream and is being executed in different companies and
organizations such as manufacturing, financial services, consumer packaged goods,
transportation and distribution, medical products and services and others. This explosive
development of CRM reveals the connection of genuine market need and enabling
technology. And, in this development period, the momentum for CRM is shifting from an
emphasis on effectiveness, i.e., doing more things quicker with less cost, to efficiency, i.e.,
doing things better for improved revenue with an elevated "return on relationships.
Getting closer to customers and efficiently responding to their requirements is a great
way to boost up their loyalty and support deeper business relationship. The task of getting and
retaining customers necessitates even better expertise and attempt. The business needs to
make sure that the service works as the customer in fact wants it too, and the customers wish
to do business in 'their' way, not to be forced to do it in the companys way. Most companies
believe them customer-oriented and believe that as such they are servicing the customer. But
ultimately, being customer oriented implies to have a reliable, faithful and convenient

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communication with customers in every meet. CRM technologies focus on managing all
interactions that a business has with its customers, with the intention of control the data in a
variety of business functions. Where a gainful relationship already exists, CRM can specially
boost better service at a lower cost. Over and above, it helps to serve customer's unspoken
needs.
Generally speaking, the five needs of customers are:a. Service
b. Price
c. Quality
d. Action and
e. Appreciation.
A good CRM agenda will permit a business to get customers, service the customer,
add to the value of the customer to the company, retain good quality customers, and decide
which customers can be hold or given a superior level of service. A good CRM program can
develop customer service by facilitating communication in various ways:
Increases the effectiveness of customer communication through all the channels
available.
Helps the association between the client and the service provider using the web, as a
result reduction in the costs of customer relationship management.
Makes available product information, process to use product and technical support on
web sites that are open 24 X 7.
Recognizes how each one person defines quality, and then aims a service strategy for
every customer, based on these individual necessities and expectations.
Provides a fast system for managing and scheduling report on sales calls to evaluate
post-purchase cognitive difference, repurchase possibilities, repurchase period and
repurchase occurrences.
Provides a system to follow all points of contact between a customer and the company
and does it in an incorporated way, so that all the resources and the types of contacts
are integrated, and all the users of the system perceive the same observation of the
customer (decreases misunderstanding).
Supports to recognize probable problems promptly, before they occur.

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Provides an easy to use system for registering customer grievances (grievances that
are not registered with the corporation cannot be resolved, and are a main cause of
customer dissatisfaction).
Gives a fast mechanism for managing problems and grievances (grievances that are
resolved promptly can boost customer satisfaction).
Presents a quick mechanism to correct service deficits (correcting the problem sooner
than other customers experience the alike dissatisfaction).
Uses internet cookies to follow consumer interests and personalizes product offerings
for that reason.
Provides a speedy system for managing and scheduling repairs, maintenance and
continuing support (develops capability and efficiency).
Complaint Handling
Few companies, use or give attention to grievances. Who wants to take notice of what
they are doing wrong, particularly if the criticism is founded fit. It is projected that 90 percent
of disappointed customers whose problems were not resolved will never do dealing with the
retailers that sold them the item for consumption nor will they for a second time buy the
product that caused the trouble. In case of hotels, customers/guests are more expected to
change if the provided service is not suitable to their expectation.
On an individual level we all know what our mistakes are, but we get protective when
they are pointed out. We are moreover aware of limitations in our job performance, troubles
in our organizations and deficiencies in products and services. But countering to criticism is
complicated. We have a tendency to react in a defended and self-protective way, which may
avoid directly tackling the actual problem.
Priority Marketing
Priority Marketing focuses on what is imperative to the customer. What is significant
to one customer conversely, may not be as important to a different. Think of the changeable
demands placed on a hotel: An airline steward may find the 24 hour room-service really
important, a retired pair may need nutritional menu options, a tour merchant may demand low
prices, and a young female manager considers safety a main concern. Hotels should break
their services and ask customers what is vital to them. This approach can be extremely helpful
in varying customer preferences.

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Classifying groups of customers who have identical preferences or still similar tastes
(such as sharing common opinions of quality or tastes), hotels can aim promotions to take
advantage of known personalities and individualize the presentation.
Success of Customer Relationship Management
Considering CRM initiatives take hold and start to pay off is time and again a waiting
game. Its not a turn over the knob product that automatically gives results or somewhat that
will change immediately and cause profits to touch sky overnight. The mystery must be
solved and time must play its part prior to proper success will be noticed. Conversely, through
devoted and smart planning, industry should see noticeably increased profits, as satisfied
customers will repetitively visit them. Progressively, as industry get to identify their
customers, their customers get to identify them, and a closely associated affiliation is formed.
This heart-to-heart relationship is the mechanism that ignites both lifetime customer fidelity
and increased income.
It is essential that hotels occupy their guests and stay up to date with customer
perceptions of existing services. The job of perfecting the relationship between industry and
customer is constantly on-going and involves special commitment and innovation as the
markets repeatedly fluctuate and change. And sooner or later customers change, as does their
behaviour and requirements, and business must be competent enough to act in response to
that.
Being on the top of the business and for all time having a hand on pulsate of the client
is the key for success. As the CRM initiative starts to take hold, key players will soon see
patterns appear among customers, will realize what a productive approach is and what is not.
This is the spirit of a successful CRM plan; being able to know actually what will work for
your clientele, what convinces them, and what makes them loyal.
The skill to get an exact impression about the marketing campaigns, fresh products,
and the style of policies customers will react to, is priceless. This type of customer knowledge
only comes from actually mining in and being confident about how you recognize the people
that you expect will always call on the services and products of your industry. The return on
investment in this case would be convincing definitely.

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Data Analysis
Demographic Characteristics of Respondents
Sex and age of respondents
Out of the 18 questionnaires recovered from 20 administered (Hotels), 89%
respondents were males while 11% were females. This shows that males were dominant in the
hotel industry in the NCR, India than the females. This might also indicate that males are
more involved in the hotel business than females.
In terms of age, it was found that majority of the respondents were in the age bracket
of 31-40 years at the same time only few of the managers were below 30 years. More
purposely, there were 61.1 percent who were between the ages of 31 to 40; whilst 33.3% were
in the age group of 41 and 50 and about 5.6 percent being less than 30 years.
Educational and marital status of respondents
The study in addition illustrates that 83.3% of the respondents were holding a tertiary
education qualification whilst the remaining 16.7% had secondary education. This suggests
that the hotel managers have a bit of higher education and the possibility of being exposed to
advanced courses.
Years in hotel business
The study gathered that more or less all the managers have had broad experience in the
hotel business. From the study, most of the managers have worked in the trade for between
six and ten years. The results therefore pointed out that 33.3% of the managers have worked
for between 6 to 10 years. This is followed by another 27.8% who have worked for about 5
years. About 22.2% of the managers have also been in the hotel business for between 11 and
15 years whilst 16.7% have worked about 20 years in the industry. The results therefore show
that most of the managers have been in the industry for relatively long periods of time hence
are experienced.
Knowledge and practices of Customer Relationship Management
The analysis of the study revealed that 5 of the 18 respondents representing 27.8%
have not listened about customer relationship management while the remaining 13
representing 72.2% have good knowledge of it. The results therefore mean that a good
number of hotel managers have heard and therefore know somewhat about CRM which when
they practice, they will be able to get the benefits associated thereof. Moreover, the results
also highlighted the need for greater than before awareness about the concept of customer

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Masters International Journal of Management Research and Development (MIJMRD)

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relationship management as nearly 27.8% of them said they have not heard it before. All the
13 respondents who indicated that they are aware of the concept also revealed that they trust
in it.
It is said that knowing one thing is another and doing it is also another thing. When a
follow up question was posed, 66.7% of the respondent said they practice CRM whilst 5.5%
do not practice it therefore enquired whether the managers practiced CRM or otherwise. From
the results, 12 respondents indicated that they practiced CRM whilst 1 of them did not
practice it at all. As stated earlier, 27.8% who have not heard of CRM did not answer the
question as they neither had heard nor believed in it.
CRM Tools
It came out that marketing information system is the most common CRM tool used by
the managers. This is because as many as 50.0% of the respondents indicated that they used
this method. The second most common CRM tool used was the database marketing which
about 16.7% of the respondents used.
The study sought to find out from respondents whether customers continue visiting the
hotel after their first visit. The results showed that all respondents representing 100% stated
that customers continue visiting the hotel after their first visit. This implies that after the first
visit, customers are usually satisfied with the services provided and so are motivated to
continue visiting or just for ease or proximity sake to their future activity spots they continue
to visit.
Conclusion & Suggestions
The study pointed out that the hotel industry is loaded with the problem of nonavailability of staff, lack of qualified employees, lack of management assurance and skilled
personnel to manage the hotels effectively.
Even though 72.2% of the hotels have good knowledge about customer relationship
management and portray that they believe in it and practice CRM, 27.8% of them still use
manual forms of recording information which does not auger well for the industry.
The study shows that that marketing information method and database marketing are
the most common CRM tools used generally by the managers.
Opposite to the anxiety of the Minister of Tourism, the study found out from
respondents that customers continue visiting hotels after their first visit. The outcomes
showed that all respondents representing 100% declared that customers continue visiting

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Masters International Journal of Management Research and Development (MIJMRD)

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hotels after their first visit. This implies that after the first visit, customers are generally
satisfied with the services provided and as a result they are motivated to continue visiting.
Suggestions
1. The big Hotels in NCR, India should take a bold step to save the industry from
unqualified personnel.
2. The industry should make certain that persons looking for to be employed in the
management of any hotel must be skilled in hotel management and get hold of the
necessary qualification.
3.

It is also recommended that the banking sector avail themselves to grant loan facilities
to the hotels by looking at the financials within reach of the hotels together with a five
year plan at the least in association with a growth plan with the aim of release moneys
to them as against results recorded quarterly.

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References
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Hart, C.H.L., 1995. Mass customization: conceptual underpinnings, opportunities and

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Sharp, D. E. (2002). Customer Relationship Management Systems Handbook. Boca

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Sin, L.Y.M., Tse, A.C.B., Chan, H. (2006), The Effect of Relationship Marketing
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Reimann, M., Schilke, O., Thomas, J. (2010), Customer relationship management and
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Zikmund WG (2002). CRM- Integrating Marketing Strategy and Information

Technology.

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