CRM in tourismx by pengxiang


									CRM in tourism: examples, special issues
Huan-Hai Chou, Johannes Hörst, Guido Masbender, Yang Liu

Introduction CRM
During the 80s manufacturing and distribution were function and fabrication oriented. On today’s
market the customers are dominating. There is much more supply than demand (supply surplus),
resulting in a competitive pressure. Moreover the competition is much harsher and rough leading to
the company’s necessity for more customer satisfaction in order to achieve loyalty.[1]

CRM implies the care and the
buildup of deeper customer
relationships, targeting a higher
volume of sales through the
existing clients, thus the
customer lifetime value

                                         Illustration 1 –The difference between Mass Marketing and CRM

CRM is not a single product, but rather a strategy with the customer in the middle of the perspective.
The client is not longer seen as a one-time customer, but as a longtime part of the company. The idea
                                                  is to optimize the identification of and
                                                  communication with the customer, explicit shown in
                                                  the figure on the left.

                                                        The company profits from this strategy, due to the
                                                        fact that the client is bound, and also the client
                                                        benefits caused in the deep relationship (products
                                                        and services are adjusted).

                                                        In these days CRM is a critical factor of success and
                                                        survive, it requires an integration of a customer
                                                        database, significant is data in good quality.[3]

  Illustration 2 – Companies focus on the customer

CRM in tourism and special issues
The situation in 2002 after 9/11 and Djerba in April 2002 was not good for the tourisms’ industry: The
number of bookings had crushed, quoted companies at the stock exchange lost about eleven percent
and there were no earnings for the whole branch in 2003.

As a reaction the companies increased prices and opened new fields of activity, e.g. no-frills airlines,
moreover CRM became a central relevance in the tourism branch. [4]
 Especially small holiday places or areas, which are not well known national and international, also
 rarely represented by travel business and organized all-inclusive tours, have a legitimate interest in
 CRM. New guests are not coming automatically, instead of that they have to be won with
 comparatively great investments. On the basis of this fact it is much more reasonable to bind regular
 guests, anymore this habitués can generate new guests with word-of-mouth advertising.[5]

                                                                  An important driver for tourism in
                                                                  general is the internet, major factor
                                                                  for example the anytime access,
                                                                  updatability and search. The
                                                                  illustration on the left shows the
                                                                  importance of the internet even for
                                                                  CRM in tourism.
                                                                  The Integration of Web2.0, social
                                                                  media, customer feedback,
                                                                  conversations and very actually
                                                                  transparency are special issues the
                                                                  tourism industry is currently working
                                                                  on. [6]

Illustration 3 – Used booking options in 2008

 Example: Travel Company „Thomas Cook“
 With 97 aircrafts, 2926 stores, 32722 employees and over 19.1 million annual customers, the Thomas
 Cook group is the second largest travel company in Europe and therefore the necessity of a good
 customer relationship management is obvious.[7]In order to achieve more customer satisfaction, the
 Thomas Cook group tried and has always been trying to improve their customer treatment in many
 different fields leading to the fact that they are considered as Germany’s pioneer in case of customer
 service when they were the first travel company certificated with the “TÜV SÜD-Siegel” based on ISO

 Due to the fact, that the Thomas Cook group consists of many smaller companies like “Condor Airlines”
 or “Neckermann”, a lack of appropriate CRM was unavoidable as long as there is no central place to go
 for customer data and customer complaints. Therefore Thomas Cook established a road map in order
 to improve customer relation. First of all, a central database with customer information was installed
 in 2002 followed by the implementation of a standardized customer’s complaints management system
 which is connected to the database supporting the corresponding workflow in 2003. Moreover, in
 2004 and 2005 respectively, the quality management and the campaign management were launched
 as separate sections of the company.[9]

 With the help of the CRM tool “Personal Travel Page” by Traveltainment, Thomas Cook provides
 potential customers with individualized information and personalized offerings. After gathering some
 information about favorite destinations, the customer receives a personal E-Mail with a link to a
 specific website where he is welcomed by name and is provided with several offerings which all fit his
 individual preferences. In addition, the website features corresponding pictures or videos of hotels and
 the destination’s surroundings as well as information about local car rental services and travel
 packages. The chosen tour can be ordered online or via phone call. [10]
Example: Airline Company “Lufthansa”
Lufthansa, as Germany’s aviation flagship company, currently is one of the biggest member and also
founder of the Star Alliance, the world’s most important airline cooperation, which consists of over 20
airlines and offers customers worldwide reach and a smooth travel experience, more than 18,100 daily
flights to 975 destinations in 162 countries. [11]

Lufthansa’s activities in terms of customer relationship management (CRM) in the private passenger
segment focus especially on Miles& More Program (M&M below) which was introduced 15 years ago.
Frequent flyers and business customers can benefit from the large partner network-programs, which
contains e.g. luxury hotel brands like Sheraton, Hyatt and Hilton, car rental companies like AVIS &
Hertz, telecommunication companies like T-Mobile, and lots of other companies in the fields of
finance, insurance and shopping etc.. Customers can collect miles or points when they take the flights
with the Star Alliance members, rent the cars at AVIS, stay at the hotels or even make a call. When the
miles accumulated reach a certain level, they can spend the miles on flights, hotels and shopping etc.
There are four states of M&M memberships: MILES & MORE MEMBER for normal, FREQUENT
TRAVELLER for silver, SENATOR for gold and HON CIRCLE MEMBER for platinum. Members can enjoy
different levels of services referring to their current membership status. [] Lufthansa efficiently and
successfully runs its frequent flyer program “Miles & More” as one of the first airlines which
established a customer loyalty program. In the aspect of CRM, the company attracts lots of customers
through its M&M program. In the aviation business, the loyal customers generate the major part of the
company’s revenue as return resulting in a great importance for the company’s success. After the
terror attacks in 2001 and also due to increasing cost of fuel, airlines more than ever before recognized
and appreciated the value of a relationship to its important profitable customer segments. Thus CRM
strategies have become increasingly relevant for Lufthansa and other airlines. Lufthansa’s CRM
strategy in the business passenger segment is concentrated within the Miles & More program.
Different states of memberships are designed to reflect customer’s needs throughout the stages of
customer’s lifetime and therefore represent the value of the customer for the company. Beneath the
Miles & More surface, an accurate value chain is required consisting of Lufthansa´s customer portfolio
analysis, IT and database integration, value proposition development and customer lifecycle
management. Combining these factors enable Lufthansa to create a state of the art CRM system. [14]

Example: Hotel Company “Lindner Hotels AG”
The hotel business has always been dependent on customer loyalty since guests are the most essential
and indispensable factor for profit. Complete customer satisfaction should be integrated to the basic
principles of every single employee of the establishment, cleaning staff to management. For this
reason a big data pool of host data, starting with the preferred traveling destination to other booked
additional demands or eating habits, is potentially available. The fact that several of these data are not
saved by most hotels and since most of these data aren’t even allowed to be saved without consent
stand in contrast to the way of full satisfaction of one’s needs.

Nevertheless the Lindner hotel chain shows how such an obstacle can be mastered. The group has
been repeatedly awarded in the field of data privacy and security.[15]

In this country customers do not have the obligation to give full particulars and they lack the
commitment to do it. Yet there is enough information already given to lay down an extensive data
pool. These consist mainly of voluntary additional specifications and only saved after having consulted
the customer. For example it is possible for a customer to get his favorite juices in the mini bar or his
3rd pillow in Berlin as well as in Düsseldorf.[16]

In addition, in the early 90s the Lindner-Group specialized themselves in multimedia-based comfort
and convenience thus appealing to business people and companies, who would need internet in their
hotel rooms. Together with the Fraunhofer institute they are doing some research for new technology,
e.g. a virtual robot-butler.[17-19]

Taking everything into account, Lindner is an innovative organization who cleverly uses CRM. Their
functional strategy and data security account for customer satisfaction and display the competence.

   Fachhochschule Heilbronn, Hochschule für Technik und Wirtschaft, Studiengang Tourismusbetriebswirtschaft
(TB): CRM: Individualisierungsstrategie im Tourismus. Call date: 2008-11-21.
  abi - solutions GmbH: Kundenlebenszeitbetrachtung Customer Lifetime Value. Call date: 2008-11-29.
Studienergebnisse. Call date: 2008-11-21.

Ref. 3 is a case study developed by Dr. Marion Pfeiffer and Dr. Armin Hoffmann, both members of the IBM
Unternehmensberatung GmbH, delivering a good insight into CRM in the tourism branch. First of all the situation
in 2002 for travel and leisure is analyzed, before the tourism sector is determined on the base of other studies. On
the background of experiences and researches central thesis are posted and checked up in the next chapter,
where also the CRM-Readiness-Value, gathered in this study, is integrated. Later on detailed information about
the study are published, also answers and summarized results are worked up graphical, which is not really
interesting to develop this essay.
In the last part of this case study the company presents their self in a very explicit way giving an overview about
their portfolio, demonstrating some projects and references circumstantial. Also this information is not very
usefully for our essay, but showing the motives of this study. As seen on page 110 the IBM
Unternehmensberatung GmbH is trying to gain ground in the top management consulting firms in Germany and
is giving lots of causes for possible clients to assign this company.
On these facts the whole study has to be evaluated in a very critical way, nevertheless especially the first two
chapters can be seen as a good introduction in customer relationship managements in the tourism. Furthermore
the quality of this study is confirmed caused by implementing lots of other studies from different resources like
universities, advertising agencies and other consulting firms.

   TEWI Technologiezentrum Wirtschaftsinformatik: Kundenbeziehungsmanagement bei
Tourismusdestinationen und ihren Leistungsträgern. Potenziale des IT-Einsatzes beim
Kundenbeziehungsmanagement im Tourismus. Call date: 2008-11-21.
  Rieder, K.; Witter-Rieder, D.: Internet und Kundenbindung im Tourismus: Chancen und Erfolgskriterien. Call date: 2008-11-27.

   McKay, L.: Transparency. Web 2.0, social media, customer feedback, conversations. Transparency is the new
currency in CRM—but are you really ready to let your customer behind the curtain?.
Call date: 2008-12-01
[7] Thomas Cook Group. 2008. Call date: 2008-11-21.
  Billinger, F.: Kritik als Chance. Kundenbeschwerden laufen in vielen Unternehmen ins Leere – dabei könnten sie
so viel bewirken. Hrsg.: TÜV-Süd Gruppe. 2008.
Call date: 2008-11-24.

 Friedmann, K.: Beschwerdeverwaltung mit Lerneffekt. In.: COMPUTERWOCHE. Nr. 38/2004, 2004-9-17.
Web link:

 Ref. 9 is a press article taken from “Computerwoche” which was also published on their web site dealing with the
Thomas Cook group and how they struggled to manage customer’s complaints until a unifying solution was
developed starting a broad campaign for customer relationship management. Moreover the author describes the
road map of the company and how they implemented more and more solutions for their CRM package step by
step focusing on customer’s complaints management and how technological development increases their
efficiency in case of recording customer’s data and grievances. Due to the fact that we are dealing with CRM in
tourism and managing customer’s complaints is one part of it , this source is very useful as it gives attention to
the specific example of the Thomas cook group and their past efforts to improve their CRM. In addition the
“Computerwoche” is a well-known and serious magazine and therefore a quite reliable and objective source. In
this case, we think the author tries to encourage other companies to reconsidering their efforts in customer’s
complaints management and CRM in general. Taking everything into account, the source was quite helpful in our
research as it fits to our chosen example (the Thomas cook group) enabling us to get an overview how CRM is
developing and becoming more and more important.
   Kind, K.: CRM: Individualisierungsstrategie im Tourismus. 2002/2003. Call date: 2008-11-21.

   Cologne Business School: Vielfalt für Vielflieger: Kundenbindung durch Miles & More. 2006. Call date: 2008-11-27.
[12] Call date: 2008-11-27.
[13] Call date: 2008-11-27.
  P. Schulz et al.: Customer Relationship Management: Lufthansa (ABSTRACT). 2007. Call date: 2008-11-27.

Ref. 14 gives a general introduction about the Lufthansa and its loyalty program. It also explains how important the
loyalty program is and how it affects company’s revenue in the aspect of CRM. Besides the reference also makes it
clear, what the main elements of Luhthansa’s CRM are. The information is reliable, objective, more in-depth and
complete in compare to other sources. This source is useful. It helped me understand the relationship between one
company’s CRM, not only the separate elements but also the whole sight strategy, and its success, especially for
airline companies. I could also use it as a start point to continue and expand my research to the whole tourism
   Datenschutzstudie Toedt, Dr. Selk & Coll GmbH. 2006.
   Lindner Hotels AG – Phone call with Mrs. Ulrika Brandt - Person in charge for company communication
    Goerlich, B.: Allgemeine Hotel- und Gastronomie- Zeitung – Virtueller Diener statt Personal, 2008.,801255822.html. Call date:
   Brandt, U.: Pressemitteilung Lindner Hotels & Resorts. 2008. Call date: 2008-11-27.
Ref. 18 is a press release which informs the people about a new research project in hotel business. In Cooperation
with the Fraunhofer institute Lindner Hotels &Resorts future develops new technologies. In several labs new
features or designs can be tested by probands. The given information could be used to specialize the hotels for the
future behavior-related to people preferences. This is a proactive version of CRM. Considering all the aspects of
our essay, the source helps us to get a slight imagination what CRM in the future could look like and how our
certain example is dealing with upcoming challenges. Though it is an official press release by the Lindner group
itself and therefore a more subjective but reliable source.
    Fraunhofer Institut, InHaus-Projekt 2008 Call date: 2008-11-27.

[Illustration 1 – The difference between Mass Marketing and CRM] Call date: 2008-11-27

[Illustration 2 – Companies focus on the customer] Call date: 2008-11-27

[Illustration 3 – Used booking options in 2008] Call date: 2008-11-30

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