The importance of managing an online customer relationship

Internet has now became a ubiquitous technology. It is everywhere around us, we can access it at any time with our Smartphones – 82% of European guests owned a Smartphone (Theresa Ryan’s lecture) – and it has became a extremely important tool for Travel and Tourism. Internet able to low entry market barriers, to expand market size and increase the potential of reducing costs for companies (Gurau, C., Ranchhod, A. and Hackney, R., 2003). 

Thanks to this new tool, Travel and Tourism companies have been able to build their own Information Communication Technologies (ICTs) that can be used for several reasons: tactical and strategical management, pricing policy and Yield Management, communication… The most dramatic change is seen in the distribution improvement. Web 2.0 allows companies to change Internet from a communication tool to a real distribution tool, where the customer is involved in the purchasing process. Customer should not be anymore considered as targets, but as partner that conduct their own online research, and then use self-service technologies (SSTs) to purchase (Stockdale R., 2006). It allows companies to reduce costs, but it creates for them a real challenge in terms of eImage, eVisibility, and eReputation. On top of that, we can observe an increase of new travel players, such as the emergence of Online Travel Agencies (OTAs) that represent strong competitors for tourism companies as the strategy of these OTAs is mainly based on price differentiation.

Those are the reasons why it is crucial for companies to develop online customer relationship management (eCRM). It will allow companies to increase their guest satisfaction, to increase their visibility (online and offline) and it will improve customer loyalty and retention.

Why customer loyalty is important for a company?

Internet still has an unsafe reputation for a lot of consumers. Some people are still scared by online purchasing, as there is no human contact anymore. You do not trust a merchant, a craftsman, but a website with a call centre that is not even based in your country. This is a real opportunity for big brand companies as their offline brand could generate a secure feeling that consumers can rely on. In this context, loyalty is easier to get, and trust is more important than price (Vatanasombut, B., Stylianou, A. and Igbaria, M., 2004). Thanks to customer loyalty, companies could significantly :

-       reduce their costs of communication to guests

-       reduce their administration and operational costs

-       increase their sales thanks to better market segmentation, recognition of high profit customers…

-       increase customer satisfaction (Stockdale R., 2006)

Unfortunately, customer satisfaction is not sufficient to encourage and to ensure repeat visits and purchases from customers. A real eCRM strategy is crucial for companies to optimise their customer retention (Feinberg, R. and Kadam, R., 2002)

What is a eCRM strategy ?

The constant emergence of new competitors is a real challenge in terms of price differentiation, eVisibility and eAttractiveness for travel and tourism companies. In this context, it is crucial for companies to have a real eCRM strategy to ensure customer retention in order to optimise sales. Based on Rosemary Stockdale reflection, we can now define what are the seven steps of a proper online customer relationship management strategy.

Identifying the online customer

Companies have to replace a way to replace the previous face-to-face meeting between a travel agent and the customer to establish the type of customer he is dealing with, his needs, and his habits. Online identification is based on online behaviour habits analysis and professionals have to be able to get these information.

Online Market Segmentation

Based on the analysis of the key characteristics of the customers, companies can establish relevant market segmentation. This will help them define different communication strategies depending on their target, but also to know better the needs of their online customers to propose advantages on some special good or service that will be purchased online.

Another extremely important point, as Rosemary Stockdale highlight, companies have to define the IT capability of their clients. Indeed, the retired people segment is more dependant on technical services and assistance and might not be willing to purchase online if the process is too sophisticated.

Customer Data

Companies should keep information about their customer. A relevant database might be useful for them in terms on studies, conducing researches and define communication or pricing policy strategies for instance.

Website Design

On average, customer attention to a website is around 10 seconds (Heldal, F., Sjovold, E. and Heldal, A.F., 2004). It means that the website design is extremely important as companies have 10 seconds to attract the customer and make him intent his purchasing process. As Gianforte said, companies can increase their sales by 33% procuring to customers a great website experience.

Information gathering and handling

Companies have to be aware of the importance of which data will be used, which data will be spread to the web, and which data has to be considered or not. For example, Web 2.0 abled websites such as TripAdvisor, where guests are free to share their experience with other users. In case of negative feedbacks, professionals have to show to their clients that they are taking into consideration their point of view to ensure guest retention.

Communication with customers

Communication is a key tool to maintain a link between a company and its guests. It is a way of promoting the brand, using the online market segmentation done previously to adapt the communication to specific targets in order to be more effective.

Community sites

With the emergence of websites such as TripAdvisor, customers feel involved, feel that they are part of the projects and the success of a company. Loyal guests of a company will help it improve its customer satisfaction by sharing their experience, their needs and their expectations. The challenge here for professionals is to manage their eWord-of-Mouth. Indeed, as travel or tourism goods are intangible, the word-of-mouth and the reputation of a company is extremely important in the purchasing process of a customer. Customers trust the other customers and negative feedbacks could have a strong negative impact on a brand.

To sum-up, Internet has dramatically changed the company-customer relationship, in terms of promotion, distribution… It represents for both professionals and tourists a huge improvement thanks to the potential of cost reduction, simplicity of the purchasing process and the fact that the client is considered more as a partner than as a simple target. But on the other hand, it created risks such as eReputation issues. In this context, it is crucial for companies to develop a proper eCRM strategy to benefits from customer loyalty.

References

Gianforte, G. (2003) ‘The World at Our Fingertips – How Online Travel Compa- nies Can Turn Clicks into Bookings’, Journal of Vacation Marketing 10(1): 79–86.

Vatanasombut, B., Stylianou, A. and Igbaria, M. (2004) ‘How to Retain Online Customers’, Communications of the ACM 47(6): 65 – 9.

Gurau, C., Ranchhod, A. and Hackney, R. (2003) ‘Customer-centric Strategic Planning: Integrating CRM in Online Business Systems’, Information Technology

and Management 4(2 – 3): 199 – 214, p. 200.

Feinberg, R. and Kadam, R. (2002) ‘E- CRM Web Service Attributes as Determi- nants of Customer Satisfaction with Retail Websites’, International Journal of Service In- dustry Management 13(5): 432 – 51.

Heldal, F., Sjovold, E. and Heldal, A.F. (2004) ‘Success on the Internet – Opti- mizing Relationships through the Corpo- rate Site’, International Journal of Information Management 24: 115 – 29.

Stockdale, R. (2006) ‘Managing customer relationship in the self-service environment of e-tourism’, journal of Vacation Marketing 2007; 13; 205. 

Social medias : a key new tool for customers and hospitality companies

With the fast growth of new technologies, our habits have significantly changed during the last decades. Thanks to the Internet development, we now have a large amount of different source of information. In the tourism industry, social medias have proved that they have a real impact on customer decision-making process, but do also constitute a real opportunity for companies.

On a customer point of view, Social Medias has changed the way customers search for information and determine where they will stay. During the last decade, we observed a “phenomenal increase in travellers using customer reviews on social media websites such as Tripadvisor in their search for information about hotels” (Mc Carthy L., Stock D., Verma R., 2010).

A study conducted by these three authors allows us to determine different trends. First of all, it shows us that the leisure travellers are more likely to use that information than business travellers. Indeed, business travellers often follow the choice of their companies and keep using search engines or Online Travel Agents (OTAs). It is also relevant in this study that the word-of-mouth from friends or family has a strong impact on a hotel perception in customers’ mind (see table below). Social Medias posts can be considered as extension of this word-of-mouth which could explain the importance of these new tools, which represents key information sources for leisure travellers. (Mc Carthy L., Stock D., Verma R., 2010).

Source : How travellers use online and Social Media Channels
to make hotel-choice decisions 

On top of that, the study highlights the importance of Social Media by analysing the likelihood that customers will choose a hotel depending whether it has positive or negative reviews. The study results differentiate the diverse standings of the hotels but as the results are surprisingly similar, we decide not to do so. The likelihood of guests booking a hotel that have negative reviews is under 2.5 chances out of five whereas for a hotel which has positive comments, chances are between 3.5 and 4 out of five. This makes a huge difference in term of image and companies have to maintain their good online reputation.

Finally, at the opposite of the often-repeated factoid that unsatisfied guests are more likely to comment compare to satisfied ones, the study came to the conclusion that there are three chances out of five that a customer will post a comment after his stay whether his experience was positive or negative. It creates data about hotels that companies are not able to control and that can have a huge impact on their attractiveness for potential customers. Stuart Greif said: “social media constitute a focus group of millions of people who provide information without being prompted”.

The table above also demonstrates that OTAs, travel-related websites or search engines remains the main sources of information. This is linked to the fact that customers are not able to do their bookings directly via social medias. It influences a lot the late stage of the decision-making process where customers will gravitate towards a more tightly defined set of channels where they will have the opportunity to finalize their choice (Mc Carthy L., Stock D., Verma R., 2010). There is here a real challenge for companies to optimize their use of social medias by using them as distribution channels.

Customer relationship management is already a major aspect of social media as it allows companies to improve their customer services at a modest cost. (Wooden M.). This is extremely important to respond to customers’ post and some companies like McDonald’s, have a real work to do as “someone is posting or talking about the firm every seven seconds on average” (Mc Carthy L., Stock D., Verma R., 2010).

Companies also use social medias in order to promote themselves through online campaign. For example, RCI has created YouTube “webisodes” regarding its flag-ship Oasis of the Seas, which had received 700,000 hits as of his speech in October 2010.

Social medias have changed the relationship between companies and customers. Customers have now access to new relevant sources of information in their decision-making process, while companies have to deal with non-entire controlled tools of promotion. 

Bonetto Thomas & Bunoz Nicolas

2010: Mc Carthy L., Stock D., Verma R., 2010. How travellers use online and Social Media Channels to make hotel-choice decisions, Cornell Hospitality Report