The CRM Marketplace for Hotels

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June 01, 2007
Hospitality | CRM
Mark G. Haley, CHTP

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© 2008 Hospitality Upgrade. No reproduction without written permission.

Customer relationship management (CRM) means different things to different people.  Likewise, different organizations utilize different CRM strategies and tactics according to their needs: some companies use a frequency program as the core of their CRM platform; some start with automated productivity tools for the sales force; and others consider CRM compiling a complete profile of the customer and the products/services they have bought to improve help desk operations.  The common factors tend to be heavy reliance on technology and integrating customer data from multiple sources.

Thus, it is no surprise that an examination of the CRM software marketplace finds great variety in product offerings, core competencies and value propositions. The hotel marketer searching for a solution can find it a daunting task to sort through the hype and positioning to find the best service provider for his or her hotel company’s requirements.  The previous sentence has at least two key concepts for the marketer in this situation; service provider and hotel company’s requirements. 

Application Service Provider Model
In the past, building, maintaining and utilizing a large customer database at the hotel level required buying and maintaining a dedicated server computer with the attendant costs and headaches:  hardware purchase, operating system software purchase, database software purchase, application software purchase, back-up hardware and software, staff to maintain the server and ongoing costs for software license updates.  These elements of cost added up pretty quickly, leading most hoteliers to determine that whatever was in the guest history module of the property management system (PMS) was perfectly adequate, despite the shortcomings of trying to use a transaction system like a PMS for analytical purposes. 

Over the last eight years, however, the marketplace has almost completely shifted to an application service provider (ASP) model for CRM tools.  This model allows the smallest hotel to rent space on the service provider’s hardware and spreads costs across the entire client base instead of requiring each client to make their own investments in hardware and software.  For this class of applications the ASP platform is far more efficient than a client/server approach. This efficiency has increased the number of hotels willing and able to commit to sophisticated CRM strategies and tactics.

Hotel Company Requirements
This element may be the major challenge for many organizations:  the marketer needs to invest time and effort up front to establish the property’s requirements and strategies before going to the market.  The enterprise must know what they require the application to do for them before they buy.  In that way, a selection from the two or three vendors that best fit the requirements are sought, rather than straining through the universe of vendors.  The marketer’s practice must read strategies and tactics first, while shopping is second.

Hospitality CRM Marketplace
The marketplace for hospitality CRM is both varied and robust.  A useful approach to understanding the market begins with classifying the different vendors.

Reviewing the grids (see pages 48, 50 on attached pdf) on the hospitality-dedicated database marketing and e-mail service providers, one notices the number of providers in the market.  Many of these service providers have been established in one form or another for a relatively long period.  Some of them have risen in their present form out of mergers, acquisitions, divestments or executive exits from predecessor companies.

The most important field in the grid is the key differentiators row.  Other elements to look at include the number of properties serviced and the number of employees.  Evaluate the featured clients cells closely as well.  But the key thing for the hotel marketer to remember is understand your requirements and establish your strategies before going shopping.

Mark G. Haley, CHTP is a member of The Prism Partnership, LLC, a Boston-based consultancy serving the global hospitality industry in technology and marketing.  For more information, please visit http://theprismpartnership.com or call (978)521-3600.

 

A useful approach to understanding the market begins with a rough classification of CRM vendors:

  • Vendors dedicated to the hospitality marketplace offering primarily database marketing and analytical services, many shown in the accompanying grid (pg 48 on attached pdf).
  • Vendors dedicated to the hospitality marketplace offering primarily e-mail marketing services, many shown in the accompanying grid (pg 50 on attached pdf). The grid does not attempt to capture the literally thousands of generic e-mail services available, instead presents vendors  with a deep portfolio of PMS/CRS interfaces and expertise in generating and tracking personalized content relevant to a guest’s hotel stay and interests.
  • Vendors selling a broad range of CRM applications horizontally, across many industries that have won some traction in hospitality. These would include Oracle’s Siebel Systems, Unica, Epsilon, Infor, SAP, SalesForce.com and SmartFocus, among probably countless others.
http://theprismpartnership.com


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