This study aims to investigate the implementation of customer relationship management (CRM) and its effect on relationship marketing (RM) and business performance, through an analysis of the hotel industry in Taiwan. A survey on hotels, including general and tourist hotels, and bed and breakfasts (B&Bs) was conducted, and a total of 560 questionnaires were returned. The results showed that implementing CRM has a significant and positive influence on the RM effect, positively affecting business performance for both hotels and B&Bs. However, a comparison of the influential paths of relationship models between hotels and B&Bs showed that, for hotels, the Internet service and customer support functions of the CRM strategy are the main sources of influence on the RM effect and business performance, whereas for B&Bs, the marketing support function of the CRM strategy alone influences the RM effect and business performance. To achieve higher performance, the different types of hotel enterprises should understand their main advantage before implementing key CRM strategies.
1.1. Research background and motivation
Since the implementation of the five-day work week by the Taiwanese government, short-term and diversified tours have become a new trend in the tourism industry. The Tourism Bureau of the Ministry of Transportation and Communications of Taiwan has announced new directions for the Taiwan tourism industry. It is hoped that the number of foreign tourists visiting Taiwan will increase, thus benefiting the tourism industry. Currently, it is uncertain whether the hotel industry in Taiwan will be able to integrate its resources to meet consumer needs. This has become one of the greatest challenges faced by suppliers in the hotel industry, including general and tourist hotels, B&Bs, etc.
Hotels and B&Bs are part of the service industry, owing to their direct contact with customers; therefore, their quality of service and customer relationships significantly influence their business development. For high-quality hotel enterprises, the application of customer relationship management (CRM) is a great opportunity to increase customer value, enhance customer satisfaction, and achieve business excellence and high profits (Lin and Su, 2003 and Daghfous and Barkhi, 2009). Therefore, enhancing the effect of CRM has become a key factor for the success of hotel industries. However, only a few studies explore in detail the implementation of CRM in the hotel industry and its impact on various performance perspectives, making it a unique subject for study.
Kotler et al. (1999) discuss the tourism and service industries, pointing out the importance of customer orientation. They indicate that the main purpose of an enterprise is to create and retain customers who bring profit to the enterprise. According to the 80/20 Pareto Rule, 80% of an enterprise's income comes from 20% of its main customers (Berry, 1995). Peppers and Rogers (1993) also find that the cost of developing new customers is six times that of retaining old customers. Therefore, using CRM to ensure customer loyalty and further enhance business performance is a wise strategy for hotel industry suppliers.
CRM originates from the concept of customer orientation and has gradually been applied to the tourism industry to enhance the relationship between enterprises and their customers. Suppliers in the hotel industry who set up CRM systems to find and retain their best customers and develop long-term relationships with loyal customers will acquire greater profits (Liu et al., 2007). The businesses in the hotel industry can be broadly divided into two types: hotels and B&Bs. What are their methods of implementing CRM, and what results do they achieve? Are there any differences between them? These questions are worth investigating.
Kalakota and Robinson (1999) view CRM as an organization's integrated action to develop sales, marketing, and service strategies. An enterprise needs to identify actual customer needs by integrating its processes and technology, and it needs to improve service connections to enhance customer satisfaction and loyalty (Bruhn, 2003, Buttle, 2004 and Egan, 2008). Hotel enterprises should implement CRM primarily to provide better services to meet customer needs, attract and retain customers, and establish good interactive relationships. Hotel enterprises that use CRM systems to find the best customers and serve target segments more effectively will enhance the effects of relationship marketing (RM) and reinforce business performance (Meryl, 1999 and Swift, 2001).
CRM is the core business strategy that integrates internal processes and functions and external networks to create and deliver value to targeted customers and, finally, increase profits (Buttle, 2004). The final goal of conducting CRM is to enhance business performance, and therefore, businesses need an objective performance scale to enable a detailed evaluation. The balanced scorecard (BSC) is an overall performance management system; it evaluates business performance according to the following four perspectives: financial, customer, internal processes, and learning and growth (Kaplan and Norton, 1990, Kaplan and Norton, 1996a and Kaplan and Norton, 1996b). The BSC uses both financial and non-financial indicators to evaluate business performance and gives enterprises an overall in-depth understanding of business operation and performance (Kaplan and Norton, 2004, Wu and Hung, 2007 and Wu and Hung, 2008). Thus, this study uses the four perspectives of the BSC to measure business performance.
This study focuses on hotels and B&Bs in Taiwan to explore the CRM influence on the RM effect and business performance. It also compares the differences in the influence paths of CRM strategies between hotels and B&Bs.
1.2. Research objectives
The benefits of CRM and RM and their effects on business performance have been studied extensively (Buttle, 2004 and Egan, 2008). However, few studies focus on the comparison of hotels and B&Bs or explore their differences. Thus, this study investigates the differences between hotels and B&Bs in the relationship between CRM, the RM effect, and business performance. The following are the research objectives:
1.
To investigate the correlation between implementing CRM and the RM effect.
2.
To investigate the correlation between the RM effect and business performance.
3.
To construct relationship models between CRM, RM, and business performance for hotels and B&Bs.
4.
To investigate the differences between the relationship models for hotels and B&Bs.
5.
The results of this study could help hotel and B&B enterprises understand the advantages of CRM strategies and implement effective decisions on the basis of these strategies.
6.1. Conclusions and discussion
The implementation of CRM strategies may represent the difference between success and failure (Wilcox and Gurau, 2003). The developing of a CRM system is extremely complex, requiring careful planning, modeling, and implementation to identify and analyze the main advantages. This study uses hotels and B&Bs as research targets to investigate the influence of implementing CRM on RM effects and business performance, and it analyzes the differences between them. Moreover, this study establishes relationship models between CRM, RM, and business performance and sets up efficient measurement indicators, to provide evidence for the differences that exist between the relationship models for hotels and B&Bs. The results clearly show the main influence paths and their strength from CRM to RM, in addition to business performance for hotels and B&Bs, thus offering detailed and useful information. The results present academics and the hotel industry with some important research directions and managerial concepts; thus, this study has academic and practical value.
This study determined that implementing CRM strategies will have a significant and positive influence on RM effects, thus furthering the influence on business performance, and that the most advantageous CRM strategies differ for hotels and B&Bs. The results showed that implementing the Internet service and customer support functions of CRM strategies by the hotels have a positive and significant influence on RM effects; however, B&Bs should implement the marketing support function of CRM strategies, which will significantly increase the RM effect for them. These results verify the mutually assisted concept of CRM influence on RM as proposed by Stone et al. (1996), Meryl (1999), and Swift (2001). The comparison results show different effects for hotels and B&Bs when performing different CRM functions; this is an important finding. Thus, different hotel types must select different CRM actions to meet their target customers.
However, RM has a positive influence on the four aspects of business performance for both hotels and B&Bs, namely financial, customer, internal process, and learning and growth. This result strongly verifies that the RM effect has a positive influence on business performance, thus verifying the concepts proposed by Evans and Laskin (1994) and Christy et al. (1996). Therefore, irrespective of the type of enterprise in the hotel industry, the higher the RM effect, the higher the business performance.
Comparing the relationship models between hotels and B&Bs, the influence of implementing the Internet service and customer support functions of CRM on RM is positive and significant for hotels, but not for B&Bs. However, the influence of implementing the marketing support function of CRM on RM is obviously larger for B&Bs than for hotels. Therefore, marketing support should not be the key action for CRM in hotels.
The above shows that the Internet service and customer support functions of CRM are two key sources of the RM effect on business performance for hotels; however, only the marketing support function of CRM influences RM effects and business performance for B&Bs.
6.2. Management application
This study uses an empirical analysis to analyze the relationship models between CRM, RM effects, and business performance, and it compares the operations of hotels and B&Bs. The findings of this study show that the main difference exists in the influence of different CRM functions on RM effects. This implies that hotel type is an important interference variable.
Hotel enterprises should reinforce the Internet service function of CRM strategy (such as online registration, calls via the Internet, and email responses) and customer support function (such as reservation management, customer profile management, and customer type analysis) to enhance RM effects and further enhance overall business performance. In contrast, B&Bs should enhance the marketing support function (such as new products or service promotion and market research and analysis) to support RM effects and business performance.
6.3. Research limitations and future research suggestions
Since different hotel types introduce different CRM actions, this study cannot judge the influence strength of any individual action on an individual performance aspect. Future research can further investigate the effects of individual CRM actions.
Many industries (for example, the banking and aeronautic industry) implement CRM; therefore, the results of this study might not be applicable to all industries. Future research can compare the differences between different industries using the relationship models proposed by this study to gain an in-depth understanding of the similarities and differences among them. Future studies can also verify the practicality of the measurement variables and relationship models proposed by this study.
With the exception of the development of the questionnaire and implementation of the pilot study using the “convenient sampling” method, this study has employed a mixed method to gain data through a qualitative approach and quota sampling. However, the sampling method might be too subjective; hence, the drawing of deviations from the samples must improve in the future research.
