Customer Relationship Management and Hospitality Industry in Nigeria 1

8/11/2019 Customer Relationship Management and Hospitality Industry in Nigeria 1

1/35

Customer Relationship Management and Hospitality

Industry in Nigeria: A Study of Le Meridien Hotel

Limited (Ogeyi Place), Port Harcourt

By

Newman Chintuwa Enyioko (MNIM, MBA. B.Sc)

Email: [email protected],

Affiliation: Medonice Management Consulting and Research Institute, Port

Harcourt, Rivers State, Nigeria.&

Chibuike Onwusoro (LLB, BL, PGD, M.Sc. CITN)

Email: [email protected]

Affiliation: Marine Policy and Strategy Institute, Port Harcourt, Rivers State,

Nigeria.

AbstractThis study was set out to investigate Customer Relationship Management and

Hospitality Industry in Nigeria, Le Meridien Hotel Limited (Ogeyi Place), Port Harcourt

was used as the case study. Quantitative and qualitative data were generated from 565

respondents comprising 214 Employees (General), 246 Customers and 105 Management

Staff. The study employed SPSS statistical software packages in the analyses. Thefinding reveals that, Relationship Building exists as a moderating variable in the CRM-

BP relationships of the Nigerian hotel industry companies. This study is equally an

attempt to explain the Customer Relationship Management and Hospitality Industry inNigeria with the help of the gap model available in literature which suggests that gaps

in service occur at various instances. The study explains that the gap model is a useful

tool to explain the militating factors partly. There is more to the militating factors likeprivacy issues, unwillingness of customers to build a relationship with the service

provider and changing tastes and preferences of the customer. Using Le Meridien Hotel

Limited (Ogeyi Place), Port Harcourt as a classic example of superior service quality to

the customers is appropriate in this study. Some simple measures to reduce the militatingfactors have been mentioned, which addresses the third research question. The relevant

existing theory has been reviewed and the subject has been explored, using the gap

model (Parasuraman et al 1998) mainly. Based on the research findings and analysis,

recommendations have been given to reduce the militating factors at Le Meridien HotelLimited (Ogeyi Place) and luxury hotels in general. The study recommends that hotel

industry companies in todays business environment must be technologically compliantin order to have competitive edge and build a meaningful and lasting relationship with

their customers.

Keywords: Customer, Relationship, Management, Hospitality Industry, Nigeria


2/35

1

1. 1 Introduction

In the mid-twentieth century, mass production techniques and mass marketing

changed the competitive landscape by increasing product availability for consumers.

However, the purchasing process that allowed the shopkeeper and customer to spend

quality time interacting with each other was also fundamentally changed. As a result,

customers lost their uniqueness becoming an account number. Shopkeepers lost track

of their customers individual needs as the market became full of product and service

options. Many companies today are striving to re-establish their connections to new as

well as existing customers to boost long-term customer loyalty (Chen and Popovich,

2003).

Any business begins and ends with the customer (Sugandhi, 2002). Thus, service

organizations are shifting their focus from transactional exchange to relational

exchange for developing mutually satisfying relationship with customers. Extended

relationships are reported to have a significant impact on transaction cost and

profitability, and customer lifetime value. Serving the customers, in true sense, is the

need of the hour as the customer was, is and will remain the central focus of all

organizational activities.

The study explores Customer Relationship Management and Hospitality Industry in

Nigeria with specific emphasis on hotels using the gap model of Parasuraman et al

(1985) and suggests generic strategies to reduce the forces militating against the effective

use of CRM in the sector.


3/35

2

1.2 Objectives of the study

The aim of this research is to highlight the Customer Relationship Management and

Hospitality Industry in Nigeria using Le Meridien Hotel Limited (Ogeyi Place) as a

classic example of high service quality. The research objectives are as follows:

(i) What are the major components of relationship building influencing CRM to

yield an increased Business Performance?

(ii) Does relationship building influencing CRM reduce cost?

(iii) Does the gap model explain the militating factor of CRM?

(iv) Is there more to the militating factor of CRM than what is explained in the gap

model?

(v) How can the militating factor of CRM be reduced?

2. Literature Review

2.1 What is Customer Relationship Management?

Customer Relationship Management (CRM) is the core business strategy that

integrates internal processes and functions, and external networks, to create and deliver

value to targeted customers at a profit. It is grounded on high-quality customer data and

enabled by IT (Buttle, 2004). CRM is a business strategy to identify, cultivate, and

maintain long-term profitable customer relationships. It requires developing a method to

select your most profitable customer relationships (or those with the most potential) and

working to provide those customers with service quality that exceeds their expectations.

(McDonald, 2002)

An organizations survival depends largely on harmonious relationships with its

stakeholders in the market. Customers provide the life-blood to the organization in


4/35

3

terms of competitive advantage, revenue and profits. Managing relationships with

customers is imperative for all types and size of service organizations. A sound base of

satisfied customers allows the organization to move on the path of growth, enhance

profitability, fight out competition and carve a niche in the market place. Bennett (1996)

described that CRM seeks to establish long term, committed, trusting and cooperative

relationship with customers, characterized by openness, genuine concern for the delivery

of high quality services, responsiveness to customer suggestions, fair dealings and

willingness to sacrifice short term advantage for long term gains. Schneider and Bowen

(1999) advocated that service business can retain customers and achieve profitability by

building reciprocal relationships founded on safeguarding and affirming customer

security, fairness and self esteem. It requires that companies view customers as people

first and consumers second. Trust, commitment, ethical practices, fulfillment of promises,

mutual exchange, emotional bonding, personalization and customer orientation have been

reported to be the key elements in the relationship building process (Levitt,1986;

Gronroos, 1994; Morgan,1994; Gummesson,1994; Bejou et al,1998 ).

CRM refers to all business activities directed towards initiating, establishing,

maintaining, and developing successful long-term relational exchanges (Heide, 1994;

Reinartz & Kumar, 2003). One of the results of CRM is the promotion of customer

loyalty (Evans & Laskin, 1994), which is considered to be a relational phenomenon,

(Chow & Holden, 1997; Jacoby & Kyner, 1973; Sheth & Parvatiyar, 1995; cited by

Macintosh & Lockshin, 1997). The benefits of customer loyalty to a provider of either

services or products are numerous, and thus organizations are eager to secure as

significant a loyal customer base as possible (Gefen, 2002; Reinartz & Kumar, 2003;


5/35

4

Rowley & Dawes, 2000). Recent developments in Internet technology have given the

Internet a new role to facilitate the link between CRM and customer loyalty(Body and

Limayem,2004). It is common knowledge that a dissatisfied and unhappy customer will

share his unfortunate experience more than a satisfied customer. It is also observed that a

fraction of unhappy customers choose to complain while others simply switch their

loyalty to others service providers. Loss of customer is loss of business along with the

opportunity for business growth and profitability. Feedback collection from the customer

is essential for the supplier to ascertain customer satisfaction and scope for improvisation

(Sugandhi, 2002).

2.2 Customer satisfaction, loyalty and business performance

The rationale for CRM is that it improves business performance by enhancing

customer satisfaction and driving up customer loyalty (see figure 1). There is a

compelling logic to the model, which has been dubbed the satisfaction-profit chain

(Anderson and Mittal, 2000). Satisfaction increases because customer insight allows

companies to understand their customers better, and create improved customer value

propositions. As customer satisfaction rises, so does customer repurchase intention

(Anderson, 1994). This in turn influences actual purchasing behaviour, which has a

significant impact on business performance.
mailto:[email protected]:[email protected]:[email protected]


6/35

5

Figure 1: Customer satisfaction, customer loyalty and business performance

(Buttle, 2004)

Customer satisfaction has been the subject of considerable research and has been

defined and measured in various ways (Oliver, 1997). Customer satisfaction may be

defined as the customers fulfillment response to a consumption experience, or some part

of it. Customer satisfaction I a pleasurable fulfillment response while dissatisfaction is an

unpleasurable one (Buttle, 2004). Satisfaction and dissatisfaction are two ends of a

continuum, where the location is defined by a comparison between expectations and

outcome. Customers would be satisfied if the outcome of the service meets expectations.

When the service quality exceeds the expectations, the service provider has won a

delighted customer. Dissatisfaction will occur when the perceived overall service quality

does not meet expectations (Looy, Gemmel & Dierdonck, 2003). Sometimes customers

Customer

Satisfaction

Customer

Loyalty

Business

Performance

Understanding

customer requirements

Meet customerexpectations

Deliver customervalue

Behavioural loyalty

Attitudinal loyalty

Revenue growth

Share of

customer

Customer tenure


7/35

6

expectations are met, yet the customer is not satisfied. This occurs when the expectations

are low (Buttle, 2005).

Customer loyalty can be defines as customer behavior characterized by a

positive buying pattern during an extended period (measured by means of repeat

purchase, frequency of purchase, wallet share or other indicators) and driven by a

positive attitude towards the company and its products or services (Looy, Gemmel &

Dierdonck, 2003).

2.3 CRM and Service Quality

Service quality is essential for an organizations survival and growth. Interest in

service quality emerged in 1970s. Ever since, the topic has attracted substantial attention

among researchers and practitioners (Gronroos, 2001). Service quality is a form of

attitude representing a long-run, overall, evaluation, which is different from customer

satisfaction, a more short term, transaction specific judgment. The level of customer

satisfaction is a result of the customers comparison of the service quality expected in a

given service encounter with perceived service quality. This implies that satisfaction

assessments require customer experiences while quality does not (Caruana, Money and

Berthon, 2000).

2.3.1 Customers perception of quality:

Quality of a particular service is whatever the customer perceives it to be.Service

quality as perceived by the customer may differ from the quality of the service actually

delivered. Services are subjectively experienced processes where production and

consumption activities take place simultaneously. Interactions, including a series of


8/35

7

moments of truth between the customer and the service provider occur. Such buyer-seller

interactions or service encounters have a critical impact on the perceived service. The

Nordic Model, originated by Christian Gronroos and developed by others, adopts a

disconfirmation of expectations approach. This claims that customers have certain

expectations of service performance with which they compare their actual experience. If

the expectations are met, this is confirmation; if they are over performed, this is positive

disconfirmation; if they are underperformed this is negative disconfirmation. According

to Gronroos (1984), the quality of service as perceived by customers has two dimensions;

a technical or outcome dimension and afunctional or process-related dimension.

What customers receive in their interaction with a firm is clearly important to

them and their quality evaluation. This is one quality dimension, the Technical Quality of

the outcome of the service production process. Interestingly, other customers

simultaneously consuming the same or similar services may influence the way in which

customers will perceive a service. Thus, the consumer is also influenced by how he

receives the service and how he experiences the simultaneous production and

consumption process. This is the second quality dimension, the Functional Quality of the

process, closely related to how the moments of truth of the service encounters themselves

and are taken care of and how the service provider functions. Illustrated in figure 2, there

are the two basic quality dimensions, namely, What the customer receives and How the

customer receives it; the technical result or outcome of the process (technical quality) and

the functional dimension of the process (functional quality. on customers buying

behaviour).


9/35

8

Figure 2: Two service quality dimensions

(Gronroos, 2001)

2.3.2 The Perceived Service Quality approach

Gronroos (1982) introduced a service oriented approach to quality with the

concept of Perceived Service Qualityand the model of Total Perceived Service Quality.

This approach is based on research into consumer behavior and the effects of

expectations concerning goods performance on post-consumption evaluations. In

previous sections, the two basic quality dimensions (the whatand the how) in the minds

Total

Quality

Image (Corporate/ Local)

Technical quality of

the outcome: WHAT

Functional quality

of the process:

HOW


10/35

9

of the customers has been discussed. However, the quality perception process is more

complicated. It is not the experiences of the quality dimensions alone that determine

whether quality is perceived as good, neutral or bad. d. As illustrated in figure 3, the

expected quality is a function of factors, namely, marketing communication, word of

mouth, company/local image, price, customer needs and values. Marketing

communication includes advertising, direct mail, sales promotion, websites, internet

communication and sales campaigns. These are directly under the control of the company

unlike the image and word of mouth factors which are indirectly controlled by the

company. Image of the company plays a central role in customer perception of service

quality. Thus, it is imperative that image be properly managed. External impact on these

factors could possibly occur, but they are a basically a function of the previous

performance of the firm, supported by for instance advertising. Lastly, the needs of the

customers as well as the values that determine the choice of customers also impact on

their expectations. Thus, the level of total perceived quality is not determined simply by

the level of technical and functional quality dimensions, but rather by the gap between

the expected and experienced quality.


11/35

10

Figure 3:Total Perceived Quality

(Gronroos, 2001)

2.3.3 Gaps between customer expectations and perceptions:

There exists a gap between expected service quality and perceived service quality.

In an attempt to explain such gap, Parasuraman et al (1985), came up with a gap model

which is intended to be used for analyzing sources of quality problems and help managers

understand how service quality can be improved. The model is illustrated in figure 4.

Expectedquality

Image

Experienced

qualityTotal perceived quality

Image

Technical

quality:WHAT

Functional

quality:HOW

Marketingcommunication

Sales Image

Word of mouth

Public relations

Customer needsand values


12/35

11

Figure 4: The Gaps Model (Source: Parasuraman et al, 1988)

Translation of perception into

service quality specifications

Management perceptions of

customer expectations

Service delivery (including pre

and post contacts)

External communications to

consumers

Word of mouthcommunications Personal needs Past experience

Expected service

Perceived service

Ga 2

Ga 3

Ga 5

Ga 4

Ga 1

Customer

Company

Translation of perception into

service quality specifications

Management perceptions of

customer expectations

Service delivery (including pre

and post contacts)

External communications to

consumers

Word of mouth

communications Personal needs Past experience

Expected service

Perceived service


13/35

12

Firstly, the model demonstrates how service emerges. The upper portion of the model

includes phenomena related to customers, while the lower portion includes phenomena

related to the service provider. The expected serviceis a function of the customerspast

experience andpersonal needsand of word of mouth communication. It is also influenced

by the market communication activities of the firm. The service experienced, which in

this model is termed asperceived service, is the outcome of a series of internal decisions

and activities. Management perceptions of customer expectations guide decisions

regarding service quality specifications to be followed by the company when service

delivery(i.e. the execution of the service express) occurs. The customer experiences the

service delivery and production process as a process-related quality component and the

technical solution received by the process as an outcome-related quality component. As

illustrated, marketing communication can influence the perceived service and also the

expected service. This basic model demonstrates the steps that have to be considered

during analyzing and planning service quality. The five discrepancies (so-called quality

gaps) between the various elements of the structure are a result of inconsistencies in the

quality management process. The ultimate gap (Gap 5) i.e. the gap between expected and

perceived (experienced) service is a function of other gaps that possibly occurred in the

process. The five gaps are discussed below:

1. The Management Perception Gap (Gap1): This gap occurs when the

management perceives the quality expectations inaccurately due to inaccurate

information from market research and demand analyses, inaccurately interpreted

information about expectations, nonexistent demand analysis, bad or nonexistent

upward information from the firms interface with its customers to management


14/35

13

and numerous organizational layers which stop or change the information that

may flow upward from those directly involved in customer contacts. Necessary

action to open up or improve the various internal information channels has to be

taken in such situations.

2. The Quality Specification Gap ( Gap 2):This gap signifies that service quality

specifications are not consistent with management perceptions of quality

expectations due to planning errors or insufficient planning procedures, bad

management of planning, lack of clear goal-setting in the company and

insufficient support for planning service quality from top management. The

planning related problems vary depending on the size of the first gap. However,

even if there is sufficient accurate information on customer expectations, planning

of quality specifications may fail due to lack of real commitment to service

quality among top management. Commitment, dedication and devotion to service

quality among management as well as service providers are of highest importance

and priority in closing the Quality Specification Gap.

3. The Service Delivery Gap (Gap 3):This gap means that quality specifications

are not met by performance in the service production and delivery process due to

specifications which are too complicated and/or too rigid, employees not agreeing

with the specifications and therefore not fulfilling them, specifications not being

in line with the existing corporate culture, bad management of service operations,

lacking or insufficient internal marketing and technology and systems not

facilitating performance according to specifications. The possible problems here

are many and varied and usually the reasons for the existence of a Service


15/35

14

Delivery Gap are complicated and so are the cures. The reason for this gap can be

divided into three categories: management supervision, employee perception of

specifications and rules/customer needs and wishes, and a lack of

technological/operational support.

4. The Perceived Service Quality Gap (Gap 5): This gap signifies that the

perceived or experienced service is not consistent with the expected service

resulting in negatively confirmed (bad) quality and a quality problem, bad word

of mouth, a negative impact on corporate or local image and lost business.

However, this gap may also be positive, which leads either to a positively

confirmed quality or over-quality. If a Perceived Service Quality Gap occurs, the

reason could be any one or a combination of those discussed above or other

additional reasons. Addressing these gaps could be a basis for developing service

processes in which expectations and experience consistently meet and a good

perceived service quality will enhance.

2.4 Customers and Relationship with their Service Provider

It is clear that companies want relationships with customers, but it is far less clear that

customers universally want relationships with their suppliers. In a business to customer

context, relationships may be sought when the customer seeks benefits over and above

those directly derived from acquiring, consuming or using the service. The benefits

include recognition, personalization, power, risk reduction, status and affiliation (Buttle,

2004). Examples of each such benefit are mentioned below

Recognition: A customer may feel more valued and important when recognized

and addressed by name


16/35

15

Personalization: For example, over time, a hotel manager may understand a

customers particular preferences or expectations

Power: For instance, some of the power asymmetries in relationships between

banks and their customers may be reversed when customers feel that they have

personal relationships with their bank officers and managers.

Risk reduction: Risk may be in the form of performance, physical, financial,

social or psychological. High levels of perceived risk are uncomfortable for many

customers. A relationship has the ability to reduce, or even eliminate risk. For

example, a customer may develop a relationship with a garage to reduce the

perceived performance and physical risk attached to having a car serviced. The

relationship provides the assurance that the job has been skillfully accomplished

and the car is safe to drive.

Status: For example, customers may feel that their status is enhanced by a

relationship with an organization, say, the Hilton.

Affiliation: peoples social needs can be met through relationships. For example,

many people join particular forums or associations to be a part of a community.

2.5 CRM and Hotel Industry

The hotel sector today has been recognized as a global industry, with producers

and consumers spread around the world. The use of hotel facilities such as: room,

restaurant, bar, nightclub or health club; are no longer considered a luxury. For many

people these services have become an integral component of lifestyle. Moreover, in the

last two decades, demand for and supply of hospitality services beyond that of the

traditional services intended for travelers have escalated the growth of the hospitality


17/35

16

industry globally, leading to intense competition in the market-place. One of the greatest

challenges facing hotel organizations today is the ever-growing volume and pace of

competition. Competition has had major implications for the customer, providing

increased choice, greater value for money and augmented levels of service.

In the hotel industry, Customer relationship management (CRM) is more than the

practice of collecting guest-centric data. Its the art of using historical, personal, and

experiential information to personalize a guests stay while generating incremental

revenue opportunities. For instance, knowing a traveler is an avid sports fan creates the

opportunity to market tickets to a game; knowing a guest had a less-than-memorable

experience in the hotel restaurant gives you a chance to win them back the next time they

are in town. With the latest offerings in CRM, hoteliers can develop comprehensive guest

profiles from reservation information and demonstrate to guests that the property is in

touch with their needs, drive guest-centric data down to the transaction level, allowing

employees and guest-facing technology to deliver greater value to the guest, generate a

realistic profile on the spending and stay patterns of guests, allowing the property to

create guest-centric marketing for increased loyalty and spending, etc.(Microsoft, 2006).

2.6 Customer retention is a performance indicator that has the tendency of a customer

to stick with a brand above and beyond the objective and subjective assessments

(Sorce, 2002:10). Customers have considered the inadequacies of the classical/traditional

approach (marketing mix) in determining emerging marketing management phenomena

from the service marketing perspective. Customer retention appears to offer significant

benefits to organisations in saturated markets. Dawes and Swailes, (1999:36) posits that

successful customer retention circumvents the costs of seeking new and potentially risky


18/35

17

customers, and allows organisations to focus more accurately on the needs of their

existing customers by building relationships.

2.7 Market Share

As expressed by Ekelund,. (2009), sales figures do not necessarily indicate how a

firm is performing relative to its competitors. Rather, changes in sales simply may reflect

changes in the market size or changes in economic conditions. The firms performance

relative to competitors can be measured by the proportion of the market that the firm is

able to capture (Neely, 1998:5). Market share according to the hospitality Relationship

Building group, is the percentage or proportion of the total available market or market

segment that is being serviced by a company.

Mack (1996:32) stated that there are three steps to follow while retaining the

customers and increase market share; tailor products, prices and packaging for major

customer segments; the management structure of the organisation must change so that

regional executives play a larger role in responding to local markets and major customer

segments; And separate brand families while distribution models are deployed to serve

specific segments of the markets. Market share as an organisational performance

indicator is achieved only through customer satisfaction, retention and relationship

profitability.

2.8 Cost Reduction

Datta et al (2007:6) argued that, the longer customers are retained by an

organisation, the more obvious benefits will accrue. Most especially, as Reichheld and

Kenny (1990:20) observed that, it could cost five times more to obtain a new customer

than to keep an existing one. The costs of retention and this inequality are particularly in


19/35

18

evidence in the service sector (Ennew and Binks, 1996 and Reichheld and Sasser, 1990).

Meanwhile, IBM (2004:4) observed that hotel industry companies are facing ever-greater

competitive threats from foreign entrants. Hotel industry companies are therefore

compelled to actively seek out new revenue streams while defensively adopting a

renewed focus on efficiency and costs through Relationship Marketing Orientation.

In order to attain maximum efficiency and reduced costs in all its ramifications,

six business drivers for core systems agenda were introduced (IBM 2004:5). These are;

Operational efficiency (doing more with less); flexibility to deliver the fast time-time-

market demanded for new and innovative products (bringing differentiated new products

to market rapidly and efficiently is essential); an integrated, real-time view of the

customer i.e. cross-selling and up-selling are very important for hotel industry companies

seeking to reduce costs (customer centricity through database); Low-cost product

manufacturing, processing and distribution required by transaction-intensive retail hotel

industry companies.

3. Methodology

The study employed survey method in the choice of 565 respondents. Since the

level of analysis was the individual workers and the customers of Le Meridien Hotel

Limited (Ogeyi Place), Port Harcourt the study worked with a sample size of 565, using

the Krejcie and Morgan (1970) sampling determination method. Stratified random

sampling method was also used to select the respondents and structured questionnaire

employed to generate quantitative data. The usable returned questionnaire was 409

(72%); See table1 below for details.

Table 3.1: Questionnaire Distribution and Retrieval


20/35

19

Company staff No Administered No Retrieved Acceptable No. % of success

Employees (General) 214 163 161 28

Customers 246 177 173 31

Management Staff 105 82 75 13

Total 565 422 409 72%

Source: Desk Research Data

The in-depth interview (IDI) method and observation were used so as to generate relevant

qualitative data to shed more light on issues already contained in the questionnaire.

4. Data Analysis

A. Quantitative Analysis

Scale reliability Analysis: Table 4.1, reports the reliability of the scales of the constructs

under study based on Cronbachs Coefficient Alpha (Nunnally, 1978 and Ahiauzu, 2006).

Table 4.1: Reliability Test Results

S/No The Variables No of items Cronbachs Alpha

1 Customer Relationship Management CRM) 23 .868

2 Business Performance (BP) 9 .7523 Contextual Factors (Relationship Building) 3 .771

Source: SPSS Output

Table 2 reveals an overall Cronbachs Alpha Coefficient of 0.9 for C RM, 0.8 for

BP and 0.8 for relationship building as a contextual factor and were all higher than the

0.7 set standards. Also considering the reliability coefficient of the six sub-scales, they

are positive (Table 4).

Validity Test: The validity analysis was carried out through the SPSS software package,

using the Confirmatory Factor Analysis to test for the Multicollinearity, construct and


21/35

20

contents validity of the data. Table 3, revealed that there was no Multicollinearity,

because no variable correlated too high. The study determinants of CRM, BP and OF is

greater than 0.0001 and none of the correlation matrix value is greater than 0.8, thus no

need for elimination. The result revealed a very high KMO which is more than 0.50 to 1

and as such, we are confident that our sample is appropriate for this study and the data

adequate (Kaiser, 1974).

Table 4.2: Confirmatory results of factor analysis on CRM and BP

Dimensions of RMO Initial

Extraction

(Coefficient) Eigenvalues KMO Determinant

Test of

Sphericity

Trust 1 0.515 3.159 0.829 0.142 0.000

-52.65%Bonding 1 0.633

Communication 1 0.708

Shared value 1 0.567

Empathy 1 0.531

Reciprocity 1 0.605

Dimensions of BP Initial

Extraction


Test of

Sphericity

Market share 1 0.703 1.726 0.542 0.595 0.000

-57.55%

Customer retention 1 0.767

Costs reduction 1 0.556

Dimensions CF Initial

Extraction


Test of

Sphericity

Customer Building 1 0.633

1.266

(63.296%) 0.5 0.929 0.000

Source: Research Data

KEY:KMO= Kaisser-Meyer-Olkin (Measure of adequacy)

On the other hand, Bartletts measure of sphericity test shows significance less

than 0.05 meaning that there exist relationships between the variables. Testing construct

validity requires a summary test on Nomological and Convergent test. Nomologically,


22/35

21

there was positive and significant association between the two main constructs, also,

there was evidence of convergent validity in the C RM and BP scale as the scales showed

correlation among them and converge on the common constructs.

The analysis of the frequencies on our organizational factor which is represented

by Relationship Building with its item questions showed very high impact of moderation.

Electronic and telephone hotel industry as well as, computerization of services are

claimed to have greater influence as confirmed with a mean score of 4.56. Also,

Customer Building most especially, communication and information greatly influence

the relationships as supported by a weighted mean score of 4.53. This therefore implies

that Relationship Building is highly influential when practicing C RM in the hotel

industry sector in other to achieve business performance.

Table 4.3: Results of Contextual Factor (Relationship Building) Influence on CRM and

BP

Variables Statistical index Technology (Ho)

CRM

Zero order partial

correlation BP

0.642

Control 0.602 0.184

BP Control - 0.271Source: survey data and SPSS output window version 15.0

Note: It is significant at 2-tail level.

Relationship Building as moderating variable partially correlates C RM and BP

with 0.602 and significant at 2-tailed level. This means that Relationship Building

actually influences the relationship between C RM and BP variables. In this instance, the

moderating variable Relationship Building has lower correlations than the simple

correlation of 0.642, which is the Spearman Correlation between C RM and BP. This


23/35

22

implied that Relationship Building is a mediating variable that partly explains the

correlation between C RM and BP.

Table 4.4: Correlations between CRM and BPCRMScales Market Share Customer

Retention

Cost reduction

Trust .304** .222** .121**

Bonding .351** .519** .417*

Marketing Communication .397** .421** .376**

Shared Value .433** .521** .383**

Empathy .396** .337** .188**

Reciprocity .429** .470** .269**

**Statistically significant at the .01level

*Statistically Significant at the .05level

B. Qualitative Analysis

4.2.1 Does the gap model explain the militating factors of CRM?

The gap model attempts to explain the gaps in the service quality provided by a

service company. A customer expects a certain level of service quality from the luxury

hotel, which may not be duly met. This would be regarded as a gap in service quality.

The researcher tried to highlight the militating factors of CRM considering the gaps in

service quality as one of the main militating factors to CRM. The members of the focus

groups pointed out that there are loopholes in every system which can also be called as

gaps in the system. For the luxury segment hotels, the main constituent of the militating

factors to CRM is the gaps in service quality. The focus group members felt that it was

essential for the hotel to enquire about customer needs. The group members felt that the

hotel should know what they want and must make all efforts to know what they expect.


24/35

23

The customers expect a certain type of service quality from the luxury hotels for which

they are willing to pay a certain price. If the customers are not satisfied with the level of

service quality provided then they would undoubtedly demand an explanation from the

hotel. As one of the members of the focus group said,

To summarize, the hotel cannot afford to have service gaps in the long run for any

reason whatsoever because then it will simply run out of business.

4.2.2 Is there more to the militating factor of CRM than what is explained in the

gap model?

The focus groups conducted helped the researcher confirm that the gaps model

well explain the militating factors to CRM. However, there is more to the militating

factors of CRM than simply service gaps. The two other main constituents of the

militating factors are privacy issues and changing tastes and personal preferences of

customers.

From the discussions of members in the focus group, the researcher was able to

realise two other components to the militating factor of CRM which is mentioned above.

The members of the focus group were of the opinion that customers do not like intrusion

into their privacy at any cost, especially when they are paying for comfort. The luxury

hotels record all possible data bout the customers in order to know them well. This

according to some members could be a case of intrusion into a customers privacy and

personal space. The customers stay at the hotel for a few days to attain comfort and

relaxation not irritation. As one member commented, I would not pay a dime to get

irritated by the hotel who notes each and every interaction they have with me. This


25/35

24

shows that all customers may not prefer to allow the hotel to know them in-depth by

recording interactions.

To summarize, the researcher realises that service gaps, privacy issues, customer

preferences and the customers unwillingness to build a relationship with the hotel put

together can be called the militating factors to CRM. The hotels must know what their

customers want and not simply do what the hotel wants to do to keep the customers

happy.

4.2.3 How can the militating factor of CRM be reduced?

Research shows that there exists a militating factor to CRM. The militating factor

exists mainly due to gaps in service, customers unwillingness to build relationships with

the hotel, the customers preferences changing over time and privacy issues. In general,

when there is a problem there needs to be a solution. If the problem is not solved, it

grows in size and ultimately causes complete failure of the organization.

In the hotel industry, the militating factors to CRM need to be addressed. The

focus group members were of the opinion that service gaps can be reduced by providing

efficient service quality of a standard which shall be accepted by a wide range of

customers. The hotel must well understand the needs of individual customers and cater to

them accordingly. They must not assume about the customers which leads to a gap in

service quality. To reduce the gap, the hotel must enquire instead of assuming. The

privacy issues must be taken care of in order to reduce the militating factors. As one

member said, I dont want the hotel to peep into my pants and say that Sir, we are

simply trying to know what is in your pants. This statement well explains that customers


26/35

25

dislike their privacy being invaded into and hampered as it completely disturbs and

annoys some customers.

To summarize, the hotel cannot afford to have service gaps in the long run for any

reason whatsoever because then it will simply run out of business.

5. Discussion of Findings

This study revealed that electronic internet, telephone hotel industry and

computerization of services as components of Relationship Building have greatly

influenced CRM to yield an increased Business Performance. This was confirmed by

Zineldin (2000:12) when he claimed that, the advent of computer, internet and other IT

have revolutionized every facet of business life through the creation and development of

effective and efficient marketing relationship. Aligning with this argument, we observed

the recent transformation in the Nigerian hotel industry operations, shortly after the

reformed programmes. There was the introduction of electronic hotel industry, ATM,

telephone and computerization of services which eventually led to trust, confidence,

commitment and loyalty on the part of the customers. This study also found that efficient

information about communication systems enhances the practice of C RM in the hotel

industry industry. Glazer (1991:8) similarly remarked that companies go electronic to

communicate with their customers and create awareness of their product and services.

Consistent with these findings, Hatch (1998:662) posit that service firms realized that,

what matters most is the brain power and commitment of their employees to build trust,

empathy, communication and bond with customers in order to woo their loyalty,

commitment and advocacy.


27/35

26

The place of Relationship Building in hotel industry operations is further

appreciated by McCollum (1997: 9) submission that, the benefits of CRM-BP

correlations was moderated by Relationship Building and led to costs reduction,

efficiency, customer satisfaction and increased customers. This view is consistent with

our findings which show strong, positive and significant correlation experienced between

CRM and Business Performance as represented by increase in Market share due to

advocacy; high Customer retention due to efficient services supported with Relationship

Building and Cost reduction, through the use of Component Based Model and hotel

industry. The influence of Relationship Building goes beyond structural relationships, but

also affects the culture prevalent in the organization.

Research shows that privacy issues are an area of concern for customers. Le

Meridien Hotel Limited (Ogeyi Place) notes all requests and preferences of the customers

and interactions at all instances. The employees interviewed confirm the literature

available that each and every interaction, requests and preferences of the customers must

be noted and fed on the information system to help them serve the customers better. The

customers when interviewed did mention that privacy issues are one of their concerns.

Some customers do not want their privacy intruded into at any cost. They appreciate the

fact that their requests and preferences are met by the hotel during their stays. However,

they do not approve of the hotel noting each and every interaction and observation. One

customer said, It is irritating if someone knows too much about me. I would not want the

hotel to know each and everything about me and my personality. Some customers feel

offended when they realize that the hotel knows too much about them. This portion of the

militating factors is again minute in the case of Le Meridien Hotel Limited (Ogeyi Place)


28/35

27

because none of the members interviewed mentioned any sort of misusage of information

the hotel has about them. One customer said that the Le Meridien Hotel Limited (Ogeyi

Place) provides comfortable service to its customers but sometimes, they note too much

about the customers and it could make the customers feel insecure about their private

information being in records at a hotel.Le Meridien Hotel Limited (Ogeyi Place) notes all

possible information to serve the customers better, but it must know if the customers are

comfortable with having personal information in their records.

Another aspect of the militating factor of CRM is that tastes and preferences of

the customers change over time. It is not necessary that a customers wants will remain

uniform throughout.Le Meridien Hotel Limited (Ogeyi Place) customers said that the

hotel puts in serious effort to know what the current or updated preferences of the

customers are so that they can serve them better and meet their expectations.

The militating factor is small in case of Le Meridien Hotel Limited (Ogeyi Place),

but the militating factors in the hotel sector at large is not that small. The case of Le

Meridien Hotel Limited (Ogeyi Place) is one which should educate the other players to

follow their footsteps to help achieve better customer satisfaction. The following section

is the inference for the industry.

6. Conclusion and Recommendations

The research objective of explaining the militating factors of CRM in the hotel

sector with the help of the gap model was successfully accomplished. The gap model

does not fully explain the militating factors of CRM in luxury hotels and there is more to

the militating factors than only service gaps. Privacy issues are a major concern among

customers today. Luxury hotels must ensure that customer privacy is safeguarded. The


29/35

28

changing tastes and preferences of customers must be tracked and recorded to improve

service quality. Relationships once established must be maintained living up to the

expectations of the customers. One focus group member commented, The relationship

must be a genuine one meeting our level of expectations.

The study concludes that, to enhance desired value from both quality products and

quality services of the Nigerian hotel industry companies, relationship building is needed

to offer improve quality services to customers in order to meet their needs and put smiles

on their faces.

The hotel sector can deliver the service the customers want to avoid discrepancies

in service. However, if there is any service failure and the customers choose to

complain, the hotel sector can reduce the militating factors of CRM by simple

measures. Some of the possible ways to reduce the militating factors are as follows.

1. Accurate knowledge of what the customers want, need and expect

2. Once the management knows what the customers expect, relevant instruction

should be passed down to the members of staff to cater to the customers

expectations accordingly

3. The members of staff must carry out their tasks to fulfill the customers

expectations whole-heartedly. This helps in adding the extra personal touch.

4. The members of staff must maintain a cordial and warm relationship with the

customers, keeping in mind their individual preferences and fulfilling the same.

5. In case of service failure or dispute, the employees must act immediately to

resolve the situation and leave the customer pleased. The hotel sectormust

empower the staff to take immediate action and give them monetary allowance to


30/35

29

resolve the situation quickly without wasting time to consult senior management

like they do at Le Meridien Hotel Limited (Ogeyi Place).

6. The hotel sector can deliver the service the customers want to avoid discrepancies

in service. However, if there is any service failure and the customers choose to

complain, the hotels should consider this as a golden opportunity to restore

service quality. Literature available (mentioned earlier) suggests that only a small

percentage of the customers choose to complain. Efficient complaint handling

shall prove beneficial and advantageous to the hotel sector for its profitable

future.

7. Customers must be treated with highest regards, respect and dignity even if they

are rude. This shall prevent the situation from getting worse and service recovery

might be possible.

8. The service gaps must be closed by efficient management and supervision. The

staff should be carefully recruited and trained. Literature available confirmed by

employee interviews show that employees at Le Meridien Hotel Limited (Ogeyi

Place) undergo rigorous and detailed training to tackle situations and deliver top

class service quality. The hotels must select and recruit staff carefully and train

them to deliver remarkable service quality


31/35

30

References

Anderson, E.W. (1994), Cross Strategy variation in customer satisfaction and retention,Marketing Letters,Vol. 5, Winter, pp. 19-30

Anderson, E.W. & Mittal,V. (2000), Strengthening the satisfaction-profit chain,Journal of Service Research, Vol. 3(2), pp 107-120

Barsky, J (1992), Customer satisfaction in the hotel industry: measurement andmeaning, Cornell H.R.A. Quarterly, 7, pp.20-41

Bejou, D., Ennuw, C. and Palmer, A., (1998), Trust, ethics and relationship

satisfaction,Journalof Bank Marketing16(4), pp 170.

Bennett, R. (1996), Relationship formation and governance in consumer markets:

transactional analysis versus the behaviourist approach, Journal of Marketing

Management, 12(12), pp. 417-436.

Body, L. andLimayem,M. (2004), The Impact of Customer Relationship Managementon Customer Loyalty: The Moderating Role of Web Site Characteristics,Journal

of Computer-Mediated Communication, 9(4)

Bowen, J., Shoemaker, S. (1998), Loyalty: a strategic commitment, Cornell H.R.A.

Quarterly, 2, pp.12-25.

Burgess J. (1996), Focusing on fear,Area28 (2), pp. 130-36.

Buttle, F.A. (1998), Word-of- mouth: understanding and managing referral marketing,Journal of Strategic Marketing, 6, pp 241-54

Buttle, F. (2004), Customer Relationship Management: concepts and tools,Oxford:Elsevier Butterworth-Heinemann

Caruana, A., Money, A.H. and Berthon, P.R. (2000), Service quality and satisfaction-themoderating role of value,European Journal of Marketing, 34 (11/12), 1338-53.

Castorina, J.A. (1989), Alcances del mtodo de exploracin crtica en psicologagentica, In J.A. Castorina, S.L. Fernndez et al. Psicologa gentica. Aspectos

metodolgicos e implicancias pedaggicas. Buenos Aires: Mio y Dvi

Chen, I.J. & Popovich, K. (2003), Understanding customer relationship management(CRM): People, process and technology,Business Process Management Journal,

vol. 9(5), pp. 672-688

Chow, S., & Holden, R.(1997). Toward an understanding of loyalty: The moderating

role of trust,Journal of Managerial Issues, 9(3), 275-298
mailto:[email protected]:[email protected]


32/35

31

Creswell, J. W. (1997), Qualitative Inquiry and Research Design: Choosing AmongFive Traditions,Thousand Oaks, CA: Sage Publications

Cronin, J.J. Jr, Taylor, S.A (1992), Measuring service quality: a re-examination and

extension,Journal of Marketing, 56, pp.55-68.

Datta P.R., Cuong T, Nguyen, H.T., Nguyen H. (2007), Relationship Marketing and its

effect on Customer Retention,ABR and TLC Conference Proceedings: 6

Dick, A. & Basu, K. (1994), Customer Loyalty: Toward an Integrated conceptual

Framework,Journal of theAcademy of Marketing Science, 22(2), pp. 99-113

Ekelund, C. (2009), How to govern Relationships and Established commitments: A

Study of Standardised Products in Mature Industrial Markets. Doctorate thesis

no. 23 Copenhagen Business School, Copenhagen: 42.

Epstein, M.J. (2004), The drivers and measures of success in high performanceorganizations, in Epstein, M.J., Manzoni, J.F. (Eds), Performance measurement

and Management Control: Superior Organizational Performance, Elsevier,Amsterdam, Studies in Managerial and Hospitality Accounting, Vol. 14: 10-14.

Evans, J. R. and Laskin R. L. (1994), The Relationship Marketing Process: aConceptualisation and Application Industrial, Marketing Management 23: 438-

452.

Firpo, J. (2006), Hotel industry the UnCompanyed: Relationship Buildings Role in

Delivering Accessible Hospitality Services to the poor, SEMBA

Consulting: 5.

http://www.hospitalitynet.org/news/4004150.search?query=customer+relationship+mana

gement+in+hotel+industry, accessed on August 26, 2006

Gefen, D. (2002), Customer loyalty in e-commerce,Journal of the Association forInformation Systems, (3), 27-51.

Gronroos, C. (1982), Strategic Management and Marketing in the Service Sector,

Helsinki: Swedish School of Economics and Business Administration.


Report No. 83-104, Marketing Science Institute, Cambridge, MA.


Sweden and Chartwell-Bratt: Bromley Student Litteratu ab Lund

Gronroos, C. (1984), A service quality model and its marketing implications,European

Journal of Marketing, 18, 36-44
http://www.hospitalitynet.org/news/4004150.search?query=customer+relationship+manahttp://www.hospitalitynet.org/news/4004150.search?query=customer+relationship+mana


33/35

32

Gronroos, C. (1994), From Marketing Mix to Relationship Marketing: Towards aParadigm Shift in Marketing,Management Decision, 32 (2), pp. 4-20

Gronroos, C. (2001), Service Management and Marketing, 2nd

edition, Chichester: John

Wiley & Sons Ltd

Gummesson, E. (1994), Broadening and Specifying Relationship Marketing.Asia-Australia Marketing Journal, 2 (1), pp. 10-30.

Heide, J. B. (1994), Interorganizational governance in marketing channels,Journal ofMarketing, 58(1), 71-85

Jacoby, J., & Kyner, D.B. (1973), Brand loyalty versus repeat purchase behavior,

Journal of Marketing Research, 10(1), 1-9

Johnston, R. and Fern, A. (1999), Service recovery strategies for single and doubledeviation scenarios, The Service Industry Journal, 19(2), pp 69-82

Kahn, R. and Cannell, C. (1957), The Dynamics of Interviewing, New York: John

Wiley

Kandampully,J. and Suhartanto, D. (2000), Customer loyalty in the hotel industry: the

role of customer satisfaction and image,International Journal of ContemporaryHospitality Management, 12(6), pp 346-51

Keaveney, S.M. (1995), Customer switching behaviour in service industries: anexploratory study,Journal of Marketing, 58, pp 71-82

Kitzinger J. (1994), The methodology of focus groups: the importance of interaction

between research participants, Sociology of Health16 (1), pp.103-21.

Kitzinger J. (1995), Introducing focus groups,British Medical Journal, 311, pp.

299-302.

Kreuger R.A. (1988), Focus groups: a practical guide for applied research, London:

Sage Publications

Looy, B.V., Gemmel, P. and Dierdonck, R.V. (2003), Services Management: An

integrated approach, 2nd

edition, Essex: Pearson Education Limited

Lufthansa Airlines, advertisement in the Wall Street Journal, march 9, 1987

MacIntosh J. (1981), Focus groups in distance nursing education,Journal of Advanced

Nursing,18, pp. 1981-85


34/35

33

Macintosh, G., & Lockshin, L. S. (1997). Retail relationships and loyalty: A multi-levelperspective,International Journal of Research in Marketing, 14(5), 487-497.

Mack, T. (1996) Growing Relationship Marketings Fund Within Renault UKManaging

Service Quality Vol. 6 No. 4 pp. 32-35.

McDonald, L. (2002), Customer Relationship Management - An Overview, Availableat http://www.brillianceweb.com/betterwebdesign/tips_48.aspx, Accessed on July

30, 2006

Morgan D.L. (1988), Focus groups as qualitative research, London: Sage Publications

Morgan, R.M. and Shelby D. H. (1994), The Commitment-Trust Theory of Relationship

Marketing,Journal of Marketing, 58, pp. 20-38

Morgan, R.M. and Hunt, S.D. (1994), The commitment-Trust theory of Relationship

Marketing,Journal of Marketing Vol. 58 (1): 20-38.

Ndubisi N. O. and Evans, J. R., & Laskin, R. L. (1994), The relationship marketing

process: A conceptualization and application,Industrial Marketing Management,

23(5), 439-452

Neely, A. (1998), Measuring Business Performance why, what, and how, London,The Economist books :5.

Oliver, R.L. (1997), Satisfaction: A behavioral perspective on the consumer,Singapore: McGraw Hill

Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1985), A conceptual model of service

quality and its implications for future research,Journal of Marketing, 49, pp. 41-50

Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1988), SERVQUAL: A multiple-itemscale for measuring consumers perceptions of service quality, Journal of

Retailing, 64(1), pp 22-37

Reicheld, F.F. and Sasser, W.E. Jr (1990), Zero defections comes to services,Harvard

BusinessReview, September-October, pp. 105-11.

Reinartz, W. J.. & Kumar, V. (2003), The impact of customer relationship

characteristics on profitable lifetime duration, Journal of Marketing, 67(1), 77-

99.

Saleh, T., Hallsworth J, and Lund, V. T. (2004), From Hotel industry companies to

Hotel industry 11: The Journey has begun,IBM Business Consulting


35/35

Services, May : 3-8.

Sheth, N. J., & Parvatiyar, A. (1995), Relationships marketing in consumer markets:

Antecedents and consequences, Journal of Academy of Marketing Science,

23(4), 255-27

Sugandhi, R.K. (2002), Customer Relationship Management,New Delhi: New age

International Publishers

Wilson. J.R. (1991), Word of mouth marketing, USA: John Wiley & Sons, INC.

Zeithaml, V. A., & Binter, M.J. (1996), Service Marketing, New York: The McGraw-Hill Companies, INC.

www.interliner.nl

www.microsoft.com,[last accessed on August 25, 2006]

www.incredibleindia.org , [last accessed on September 5, 2006]
http://www.interliner.nl/http://www.microsoft.com/http://www.incredibleindia.org/http://www.incredibleindia.org/http://www.microsoft.com/http://www.interliner.nl/

Documents

Customer Relationship Management and Hospitality Industry in Nigeria 1