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Customer Relationship Management: Is Your Approach Successful?

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October 01, 2001
Customer | Relationship Management
Jon Inge - jon@joninge.com

© 2001 Hospitality Upgrade. No reproduction or transmission without written permission.

“I’m sorry, sir, could you tell me your situation one more time?”
“But I’ve called three times already, spoken to five people and have had to explain the same problem to every single person I’ve been transferred to!”

“I’m sorry, sir, our computer systems don’t pass that information on to us. What did you say your name was again?”

Sound familiar? It’s the stuff nightmares are made of, especially in a relationship-based business such as hospitality which prides itself on taking care of its guest’s every need. But it happens far too often to far too many of us in both our personal and professional lives.

CRM to the Rescue
Customer relationship management (CRM) systems aim to put a stop to it, once and for all. CRM is often defined in glowing global terms as the key to knowing everything possible about each customer’s complete history with your company. This theoretically lets you achieve the two goals of every business:

  • More repeat business by (a) anticipating and providing for each client’s known needs and preferences, and (b) giving every person with customer contact access to all customers’ histories and experiences with the company, so they can handle each inquiry in the most effective and appropriate way for both the customer and the company.
  • More new business through more accurate knowledge about who each existing client is and which of your offerings each buys, and using that (a) to pitch new offerings to precisely defined sub-groups of them, and (b) to identify and target new prospects in the rest of the population.

These are admirable goals, most certainly, with a clear attraction to the hospitality industry. But the reality doesn’t always seem to live up to the promise - and maybe that’s because the promise itself is almost impossible to achieve in the real world.

Gartner Group studies concluded that up to 51 percent of large CRM solutions implemented so far have failed to perform up to expectations, primarily due to overly complex features and operation. Nevertheless, the goal of seamless access to complete customer information is so compelling that Gartner also expects worldwide CRM system sales to triple from $23.2 billion in 2000 to over $76 billion in 2005.

Why has there been so little success so far? There are definitely technical challenges to collecting, cleaning and standardizing data, but given enough time and money these can always be overcome if the benefit is there. The fundamental issue, though, is that CRM is not a computer system; it’s a business philosophy that can be assisted by systems.

You already have relationships with every one of your customers. How you choose to manage those relationships, and how you train your staff to handle them, has far more impact than any software. With CRM as with any other computer system, if you rely on technology to fix a fundamental business problem you’ll only make it worse, faster.

Despite the challenges, a well-implemented CRM approach does have real benefits. These include:
Better response to guest and customer inquiries. When a guest calls to make a reservation, the agent can have access to all relevant details of the guest’s previous stays, at that hotel and throughout the chain. They can also see their preferences and what problems the guest has experienced in the past and what action was taken.

If the guest is calling with a problem - she needs a copy of her folio, he left something behind at the last stay, she’s checked her confirmation and the rate is different from what she was told, or he had a really bad experience and wants some compensation - whoever handles the call will be able to see the history of each event and, given an overall view of the guest’s total value to the chain, can take appropriate action.

Better-quality data. Centralizing all your client data in one database allows you to improve its quality and accuracy, from both internal and external sources. Internally, each new contact can add something to the picture of the guest and his preferences - an anniversary date, a preferred tee time and so on. Externally, addresses can be checked for accuracy as they’re being entered so that errors can be identified right away, and they can periodically be run through the National Change of Address (NCOA) register to make sure you’re not caught out when a valued client moves.
Better-targeted marketing campaigns. Careful matching of your existing guest profiles against third-party demographic databases is an excellent way of augmenting your contact list with good prospects. Along with that, of course, goes the ability to carry out much more tightly focused marketing. The more information you have on your guests and the more current it is, the better chance you have of targeting just those folks who are most likely to respond to your offers, thus saving you money and avoiding annoying the others with unwanted solicitations.

Better-informed sales teams. No salesperson should ever be taken by surprise by a customer’s question about an existing booking or past experience. Given access to all details of a client company’s previous meeting and guestroom business, they will be fully prepared by knowing the client’s preferences and what worked - and what didn’t - during the last booking. Unified messaging can also help the team in the field; having access to all their e-mail, voice mail and fax messages from one mailbox, using a phone, PDA or computer, can really help keep them fully up to date with the minimum effort.

And let’s not forget reservations agents, who are frequently your principal sales team. Full access to each guest’s history, preferences and overall value to the property and chain makes the whole booking process much more efficient and satisfying for both agent and guest. This applies especially to those regular guests booking through the Internet. Having the system recognize them automatically and offering them an appropriate selection of rooms and activities makes them feel known and helps the hotel maximize its revenue.

So What Is the Problem?
Both technical difficulties and human factors keep getting in the way. Each system that manages a particular operational area will collect valuable customer data, but is seldom purchased with an eye to how well it exchanges data with systems in other areas. You end up with similar and overlapping - but not identical - information stored in different ways in different databases. Consolidating these into one set of accurate records is difficult and tedious, although it certainly can be done.

Updating the original systems with the corrected data is another thing altogether. If someone has squeezed an international address into the U.S.-centric fields of a PMS, and you’ve managed to sort this out correctly and put each element in the right order in a centralized guest database, do you then reformat it and send it back into the original PMS fields? Or do you just tell the PMS users that the correct version is available in a different system?

Human nature being what it is, people will only enter complete and accurate data into any system, or check to see if a guest already has a record on file, if it’s simple and straightforward. If a system makes it difficult for a reservations clerk to access a guest’s history or preferences, they’ll just create a new record and get on with booking the new reservation. If the sales team doesn’t have easy access to past functions’ histories, it may seem more trouble than it’s worth to research the full picture from an obscure set of records spread across multiple systems - and so they can seem ill-prepared when trying to get more business from corporate clients. It must be easy to get to the data.

But management policies don’t always help, either, and must be reviewed to make sure they actively encourage the best customer service. In the interests of maximizing the focus of their specialists, though, some companies separate the sales and support functions, requiring the sales team to go after the next potential customer as soon as the contract is signed. The client sees a break in continuity, the implementation team has little idea of the negotiation history and which of the property’s requirements are really significant, and the sales person has no idea how the implementation went. No matter how much data you’ve recorded on the client, this isn’t a great way to build a rewarding customer relationship.

No system can replace individual personal responsibility, either, in terms of taking ownership of a problem. If you can’t get to the information right away and tell the guest you’ll have to get back to him, you have to do it or make sure someone else does, or your company’s credibility is shot. Management has to address this issue constantly, leading by example with a caring, painstaking and follow-through attitude, through careful hiring and by encouraging and rewarding accurate data entry and use.

All of these issues are critical factors in the success of a CRM operation before you even think about acquiring systems to help out. Nevertheless, the systems will always be a factor; if it’s awkward and inconvenient to get to the data, people simply have less incentive to try - and guest service suffers.

Technical Challenges
Clearly there are many ways the interfacing and consolidation of data from different sources can go wrong, but it all starts with the data itself. If you’re not collecting accurate data, all you’re going to do is draw false conclusions or act inappropriately, and probably upset your guests by making mistakes about their history and preferences.

You have the opportunity to collect data at every point where a guest interacts with your property. Traditional guest history systems have focused on assembling basic expenditure data from checked-out folios along with guest preferences, but guests do so much more than just stay in rooms. A complete picture of a guest’s experiences requires the addition of information from many other areas. To indicate the scope of the problem, let’s take a quick review of the main customer touch-points - those areas where your guests interact with your operation - and the systems that can be used to collect data about that interaction.

1. Reservations - Reservations is usually the first point of contact, whether it be via the reservation module of the hotel’s own PMS, the CRS of the flag it carries, a travel agent’s GDS screen or an Internet booking page. In all cases the same basic information will be captured - name, address, room type, rate, dates - but not necessarily in fields of the same size, or labeled with the same titles. There will need to be some translation, conversion or re-formatting to make the data consistent, and to record it consistently in the prime database, whether that’s at the CRS or PMS level.

Recognizing at each of these points that the guest has stayed with your property or chain before - and what their preferences or special rate categories are - is clearly a challenge. If there’s a good, bi-directional interface between the CRS and PMS then an automatic check against the existing history database should be a given for any modern system. However, this isn’t going to happen at the GDS or Internet level, unless you provide an entry field for a frequent-guest ID number or some other identifier that the guest will know to use. Tracking changes to the reservation is also important; knowing how often a guest usually modifies or cancels his reservation can be important information when trying to produce an accurate forecast or determine his preferences.

2. Property Management System - Clearly, the reservation record at the front desk must tell the clerk about the guest’s requirements, preferences and a simple indication of how many times she has stayed before, either in total number of visits or total revenue. But any significant changes such as a different room type, number or rate, whether made at check-in or during the stay, should also be recorded and fed back into the history database, if possible along with a note or code as to the reason. It should be a given that all of a guest’s folio charges should be captured and summarized by department to gain a picture of her typical spending pattern, though of course this will never be complete if she pays for some purchases by cash or credit card instead of on a room charge.

3. Point of Sale - Clearly, room charges from guests are good data to capture, but how about identifying those frequent diners who don’t stay at the hotel? Table reservation systems linked into a POS can track the value of these clients, but this information is seldom available to the rooms reservation staff. Keeping POS and PMS guest information in a single database would be a tremendous help. The best PMS/POS interfaces also allow for full guest check data to be available to the front desk staff, in case the guest disputes the bill. It’s possible to track the individual line items on the check, too, in order to build up a pattern of a guest’s dining preferences, but be very wary of this. It can quickly become a huge amount of information, and not always very meaningful except for a very few high-profile frequent diners.

4. Sales & Catering - Just as for individual guests, it’s obviously important to track your group and corporate client’s business, and the better sales & catering systems do consolidate bookings across multiple properties to give a view of the client’s total value to the chain. But this is seldom the complete picture, as S&C systems don’t always capture from the PMS the full room revenue and other expenditures of event attendees who stay outside the group block, and who wouldn’t have been at the property if the group event hadn’t been held there. Information on the group’s satisfaction with the event is also seldom captured in a form useful to the salesperson contacting them about future business - but it’s important to know.

5. Activity tracking (spa, golf, tennis) - In all of these areas, as for the F&B outlets, you may have frequent clients who don’t stay at the property and so don’t appear on the PMS history. Yet if they do want to book a room reservation, shouldn’t their VIP status receive automatic recognition? And when you send any guest a confirmation for their room booking, shouldn’t it include a full itinerary for every activity they’ve reserved?

6. Rapid-Response - Clearly, a guest history system will track as much of the above information from traditional systems as can be passed to it, but rapid-response systems (such as those from Espresso, GuestWare, Metromedia and others) let you add other valuable guest interaction data. If Mr. Schubach always calls down and asks for a feather pillow, that needs to be added to his central guest profile, in addition to having the system track how long it took to deliver it to him. If a guest stops a bellman or housekeeper in the corridor with a complaint, that and its resolving action should also be recorded on the guest profile, in such a way that the management can track it and the check-out clerk can verify that it was handled acceptably when the guest leaves.

7. Accounts Receivable - This isn’t exactly a client preference, but if your financial contact with the guest indicates a persistent credit problem, that needs to be fed back to the reservations and sales agents.

Data Consolidation
The problem isn’t that these systems don’t record good data you can use for the best CRM practices; it’s that they’re not designed to share it. There are almost always technical ways of passing the data from one system to another, but they require painstakingly detailed analysis, not just of the data elements themselves and the formats each system uses to hold them but also of the way each property uses the data fields.
Even in a chain where all properties use the same PMS, it does you no good to analyze the morning newspaper preferences of your guests chain-wide if some properties use the newspaper field as a language code to change the voice mail prompts. Consistency chain-wide is good, but variations such as this can be accommodated as long as they’re consistent within one location.

The two basic approaches to consolidation are: (i) convert the data in one system to a standard format (such as XML) that the other can access directly; or (ii) program a link between the two systems to re-format the data into what each expects. The former is relatively easy and inexpensive, but isn’t well-suited to complex data structures; it also leads to redundant databases being created. The latter avoids data redundancy and is very flexible, but is complex to set up and to maintain whenever changes are made to either system.
The situation is definitely improving. Modern systems developed with industry standard tools and platforms are much better at data exchange than their predecessors, although they still frequently maintain their own databases. The adoption of XML as a data exchange standard should simplify this process still further, but it will be a gradual process since so many installed systems have years of productive life left.

This shows up the significant CRM advantages enjoyed by those hotels which install the most complete, integrated systems possible, and by chains which insist on having the same systems at all their properties for consistent data collection. Why don’t more do this now? Systems that integrate two or more operational areas are out there - from Springer-Miller, Visual One, Northwind, Fidelio’s Opera and several others - and are getting better and more comprehensive all the time. Implementing them does require a strategic focus and investment at both the chain and property levels, since so many different specialized systems are usually installed already, but the improvement in data accuracy is worth it.

Where does all this point? Inevitably, toward a major CRM benefit for chains implementing a full ASP operation, where there is only one system and one database used by all properties for all operational areas - CRS, PMS, S&C, POS, spa/golf, and more. What is the problem? Even if you accept the risks inherent in the ASP model (and more people are doing so all the time), such a fully-comprehensive beast doesn’t exist yet—but we’re getting there.

So How Do I Start?
What can you do in the meantime? Begin with a careful analysis of your customer relationship needs, identify those areas where some of the individual components of CRM really would make a difference and where it can be implemented with a reasonable chance of success - they’re not always the same thing - and stay very focused on them throughout the selection and implementation process.
What are your needs? Are customers waiting too long for quotes and responses? Are different quotes going to the same customer from different channels through lack of coordination or awareness? Do you need links to Oracle or Lotus Notes? Buy only what you need, with an eye to expandability in the future. Monitor what the vendor is telling you will work, and decide if it’s realistic or even relevant to the hospitality business. Don’t ask them just to demonstrate the product, have them show you just what specific benefits it brings to your environment.

You can assemble a worthwhile marketing database that will bring in more new guests. Use it for focused marketing to identify tightly selected prospects from third-party demographic databases. Good CRM tools include campaign management software to make this as efficient as possible.

Customized guest e-mails offering new services or special discounts can be very effective, but only if they’re done correctly. A perfectly worded offer sent out to exactly the right guest isn’t going to be received well if it’s sent in your native language, not hers, or if the form of address is inappropriate. I still treasure a letter from an airline frequent-flyer program, addressed to Jon A. Inge. It opened with, “Dear Inge Jon Mr. A.: I’m sure you’d agree that personal service is one of the most meaningful things you can receive today.” Dead right.

You can build a comprehensive and useful history of your guests’ experiences, but focus it on the high-value repeat visitors, and on just that information that really makes a difference to them and that you actually will use. Don’t try to capture everything about every guest who’s ever stayed with you; it’s neither possible nor worthwhile. Tour members are a classic example of visitors whom you may never be able to identify individually - but the tour operators, and statistics on the guests and revenue they bring you, are clearly worth tracking in detail.

Collect worthwhile guest history for those guests who meet a given set of criteria, and make it as accurate as possible. If they know you’re collecting data on them - and most frequent-stay guests will assume that you are - their expectations will automatically be raised to where they expect perfect service and perfect anticipation of their needs. Unrealistic, maybe, but that’s what we constantly tell them we can provide. And if you can’t feed back the critical data to the line systems themselves, at least you can manually check future arrivals lists against this database, identify those guests you really want to focus on, and prepare for them. With CRM as with no other system, both what you have got and what you do with it are critical.

A word on collecting and re-using data - make sure it’s not illegal. The European Community has strict laws governing the re-use of personal data collected in the course of business, and any international chain with hotels must ensure that it treats its guest data appropriately.

How about Your Systems Vendors?
All of the above comments have been directed at the situation as it applies to hotels, whether they are independent or part of a chain. But the arguments in favor of CRM apply just as well to any company, including the vendors of hotel systems. Actually, vendors should have a much better chance of implementing CRM than hotels because they have a much greater control over their own environment.

General-purpose all-in-one systems can be highly applicable here, since vendors don’t have the same range of different operational areas - and hence highly diverse systems - to cope with. The most comprehensive systems are expensive, certainly, but it’s a good idea to ask your vendors about their CRM philosophy, to clarify both their approach and what systems they have in place to support it.
Scott Anderson, president and CEO of SWAN, is fond of saying that every single person in a company is personally responsible for maintaining that company’s brand image, of managing relationships with every customer they deal with to the best satisfaction of both the company and the client. He is right; every interaction counts.

But trying to automate all possible scenarios for every guest isn’t reasonable. Building a universal database of every one of your clients in full, accurate detail is just too complex and too expensive, and even the best CRM system isn’t going to help an inappropriate management style.

Being selective pays big dividends. Identify the key operational areas where you want to improve, put in the proper mix of CRM tools - both the right management approach and the right technology - and you can quickly reap very significant rewards.

Jon Inge is an independent consultant specializing in property-level technology. He can be reached by e-mail at jon@joninge.com or by phone at (206) 546-0966.

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