Customer relationship management systems, often shortened to CRM, are clearly the hot, new technology tool for hotel companies to grow their top lines, increase return patronage by keeping more of the guests they already have and to fatten up the bottom line. Sounds like a great idea, except there is nothing new about it and the dependency is on management and philosophy, not on technology.
In Part 1, we presented five key strategic elements central to any comprehensive hotel CRM initiative.
These core aspects included:
• Guest recognition
• Data capture and maintenance
• Channel integration and consistency
• Ranking and discrimination
• Two-way personalized dialogs
Part 2 brought the conversation down to ground level and talked about specific tactics for endowing your hotel company’s CRM program with those strategic elements.
Borrowing from marketing 101’s familiar four Ps of marketing, we introduced the four Ps of CRM for hotels:
• Profiles
• Preferences
• Precision data input
• Property management systems
Part 3 introduces the basics of change management, essential to the successful adoption of a CRM initiative in a hotel or hotel company of any size.
Many observers consider CRM projects high-risk undertakings. A popular statistic offered up by Gartner, Inc. is that 55 percent of customer relationship management programs fail. More optimistically, CRMGuru.com reports only a 35 percent failure rate. With numbers like that, your first reaction is, “Why bother trying this stuff? It could be bad for my career!” When you reflect on the matter a little bit, you realize the stakes are so high that you can’t afford not to try. Then the question becomes why do some CRM initiatives fail and others succeed? Hint: When a CRM project fails, it isn’t because the technology didn’t work.
A survey of the CRM literature and our own experience lead to some basic conclusions why some CRM projects have huge benefits across the enterprise and others become costly orphans spurned by the marketing, technology and operations departments alike. Some of these factors include:
• A strong, persistent and personal commitment from top management for the initiative
• A coherent vision for what CRM is going to do for the organization
• A structured plan to introduce and manage staff resistance to changes in processes and systems required to adopt CRM as a business strategy throughout the organization
• Inadequate or inappropriate training of line Personnel
One or more of the above factors is usually missing from a CRM project gone bad. All of them are often discussed under the broader topic of change management. The hypothesis is that any effective CRM implementation requires broad adoption across the enterprise, thus demanding strong execution of change management techniques. Let’s examine the fundamentals of this under-appreciated management art.
Many change management practitioners like to wrap the concept up in complex structures with names like general systems theory. We prefer to see it as common sense benefiting from experience. We know that most organizations and the people that make them up typically resist change at conscious and subconscious levels. The challenge for the change manager is to move the people past resistance to acceptance and finally to embrace the change (i.e. adopting a CRM initiative) as if it were their own.
At its heart the change management toolbox contains communication exercises. These exercises present communications about the change and its impact on the organization step-by-step. Prosci (www.changemanagement.com) has condensed these steps into a useful acronym, ADKAR1:
• Awareness
• Desire
• Knowledge
• Ability
• Reinforcement
Each step in the ADKAR model represents a communications effort to individuals and the organization, often with underlying structural changes. The change manager delivers communications relevant to each step as the project moves through a natural life cycle from identifying a business need, to conceiving a solution to the need, implementing the solution and following up on the implementation.
Let’s look at Prosci’s ADKAR model in a little more detail.
AWARENESS. Individuals cannot understand or accept a change in their environment unless they know what it is. A key part of launching your CRM initiative is making sure that everyone in the organization who will be affected by it (i.e. almost everyone including room attendants and engineers) understands what you are doing and why. Typical awareness mechanisms include posters, mottos, buttons and key rings and that perennial favorite, the all-employee meeting.
DESIRE. Being aware of the change isn’t enough. Employees need to want to support the change. With a CRM initiative, it is easy: More guests, coming back more often for more pleasant stays means more tips, more hours and more jobs. Even a general manager can understand that equation. Seriously, this is where articulate and unwavering support from the top of your organization becomes essential to change management. It’s fine if the VP of sales and marketing drives a CRM project, but the CEO needs to be the cheerleader.
KNOWLEDGE. OK…they’re aware of your program and you’ve spent a lot of money on parties and incentives to make them want to embrace the CRM initiative. But what do they do now? Depending on the structure and vision for your project, it might be simply capture and verify e-mail addresses at the point of reservation for the reservations personnel, but you need to tell them what their new task is.
ABILITY. Most of us need practice and training to do something consistently well. Knowledge alone is not enough. If the task for front office personnel is upgrade premium members of the frequency program to best-available rooms, they will need some practice.
REINFORCEMENT. This phase is crucial. Catch people doing something right and reward them when you do. Continue to reinforce the desired behavior, ideally with positive reinforcement, rewards for appropriate behavior rather than negative punishment for undesired actions.
In addition to the ADKAR model, other critical components of change management you need to consider in your CRM implementation planning include:
• Budget for change management – It takes time and costs money to do this right. Don’t be afraid to show a budget line item for change management, typically 8 percent to as much as 12 percent of the total project cost. (See “Making MAGIC in Manhattan,” Hospitality Upgrade, summer 2000 issue.)
• You often need to change the organization as well. It might mean setting up a new department at headquarters, a new position at the CRO or a new title in every hotel, depending on how your organization needs to use CRM to drive the business.
Bill Watson is the managing partner and Mark Haley is a partner of The Prism Partnership, LLC, a consulting practice servicing the global hospitality and travel industries based in Boston, Mass. They can be reached at BWatson@ThePrism Partnership.com or MHaley@ThePrism Partnership.com.
Notes
1 Appears with permission from Prosci.
Figure 1. CRM FROM THE TOP
One of our key points is that any CRM initiative demands a strong, persistent and personal commitment from top management in order to succeed. A sterling example of leadership in action is Wyndham’s Chairman and CEO Fred Kleisner. Kleisner is the No. 1 champion of Wyndham’s CRM strategy and the anchor of their leading-edge frequency program, Wyndham ByRequest. In any speaking event, internal or external, Kleisner always finds a way to bring up Wyndham ByRequest, noting, “ByRequest is the only guest recognition program that was specifically created to listen and respond to guests’ needs.”
Kleisner and his management team take great pride in the acceptance of ByRequest by both travelers and staff, noting that the roster of ByRequest members tripled in the last six months of 2002, a down year for travel but a growth year for Wyndham. “Wyndham ByRequest has become a culture for us in the last two years. It is a way of life for Wyndham employees across the enterprise rather than a computer program,” said Mark F. Hedley, Wyndham’s CTO.
ByRequest is based on complete personalization of a guest’s stay. Members manage their own detailed profile information via Web, wireless or print interfaces, which is captured on Wyndham’s proprietary technology platform. As guests make reservations, relevant profile data is pushed out to properties to enable them to personalize the stay from a laundry list of 300 personalization options. Rather than a points-based system, Wyndham ByRequest works to enhance the guest relationship throughout the system by driving the guest experience at every interaction, a textbook vision for a CRM strategy.
Just how committed are Kleisner and his leadership team to Wyndham ByRequest? When the company’s stock was recently listed on the American Stock Exchange they selected WBR as their new ticker symbol.