3/ The Customer relationship management philosophy: how
to retain
customers
3.1 Customer relationship management definition and the
Nykamp consulting group model
Customer relationship management (CRM) is one of the key
aspect of e-business and e-marketing. It is a higly and cost efficient
approach. We can even call it a philosophy which is based on the knowledge and
the relationship with customer. The knowledge and relationship with the
customer is key to maximising the sales opportunities and especially repeat
purchase. CRM impacts the structure of the organisation itself as it helps to
refocus and restructure it, it can be applied to the end-consumers or
intermediaries.
The marketing literature provides many definitions of CRM. We
decided to use the Nykamp Consulting Group definition which is as follow:
"optimising all contacts with customers or potential customers". The Nykamp
Consulting Group has also provided a very clear and helpful conceptual model
for the CRM cycle which appears below. The model can be read from the lower
right hand quadrant, beginning with the understanding of customer needs and
following by the differentiation between customers in terms of their needs,
potential value and the type of the most effective relationship. Then the cycle
moves through product, channel development and the customisation for different
segments. The cycle ends with the customer interaction, the delivery of
increased value to them, customer acquisition and retention.
CRM implies the building of in depth information about the
customers and the potential ones through contacts. The information about
customers usually includes their socio-demographic profile, interest and
activities, their past and possible future requirements. The information
collected help to provide knowledgeable and efficient servicing enquiries.
Thanks to the information, it is possible to target the best prospect customers
with products specifically appropriate to their needs. It helps to establish
the basis for a "lifetime relationship" with the customer, and maintain the
relationship even if transactions are not involved.
In order to provide the best relationship overtime, the staff
facing the customer must be enabled to use the same customer database. For the
tourism industry, the aim of CRM is to maintain the relationship with the
customer before, during and after the visit, through the Web, e-mail, call
centre, kiosk or the Tourist information Office.
It is essential to understand that CRM is not a module that
can be simply added to an organisation's activities. A customer centric culture
must be implemented within the destination organisation , otherwise the
organisations are not going to maximize the use of software and e-solutions.
That is the very reason why some organisations considered that their CRM
investments were not efficient it as they did not build their CRM as a
method of operations focusing more on the customer rather than
the product. It is obvious that in order to maximize CRM solutions the staff
must be trained and highly motivated.
The staff must be ready to fulfil the needs of specific
customer segments. Their targets should be in terms of customer acquisition,
retention, value and profitability, as well as satisfaction. These objectives
will require excellent monitoring systems, together with creative and focused
market research. As described above, the Internet provides good means for
instant research on customer requirements through e-mail or surveys linked to
Website usage. It is possible to get knowledge of the customer requirements,
interests, activities, attitudes and satisfaction. In addition, traditional
market researches must be conducted from time to time.
Remaining competitive in the tourism industry means that the
interaction with customers is the key of success. That is the reason why the
tourism destinations have started to implement CRM programmes and techniques in
order to match the consumer needs and to customise the offer. For instance the
EITO3 (2001) has found that booking holidays at the last minute
accounts for 10% of all holiday bookings.
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