Chapter 7 Building and Maintaining Customer Relationships Hudson

Chapter 7 Building and Maintaining Customer Relationships © Hudson & Hudson. Customer Service for Hospitality & Tourism

Topics Covered o Relationship Marketing o Retention Strategies o Loyalty programs o Benefits of Relationship Marketing o Targeting profitable customers

‘At Your Service’ Spotlight: Wine for Dudes Where customer service is King! o o o Full service website Quarterly newsletter social networking Word of mouth marketing ‘Dudes of Fortune Quiz Challenge’ o Personal relationships with customers • Accommodates individual needs • Customized group tours o Encourages repeat customers • Company merchandise as gifts • “Dudes Dollars” trip vouchers • Customer service recovery: • “wine heals all wounds”

Relationship marketing A form of marketing that attracts customers, retains them, and enhances their satisfaction. o Less expensive to attract repeat customers o Dramatic increases in profits • Spend twice as much gross income o Enhancing customer satisfaction includes: • • Nurturing individual relationships Making customers feel unique Making customers feel singled out for attention Loyalty programs

Customer Relationship Management Model Figure 7. 1 (Source: Based on Winer, 2001)

Levels of retention strategies Figure 7. 2 (Source: Adapted from Zeithaml and Bitner, 2000)

Industry growth in loyalty programs o Social media o Experiential benefits o Customized reward programs o Matched benefits across brands o Coalition model • Corporate-wide • Across brands o Hybrid approaches Figure 7. 2 (Source: Adapted from Zeithaml and Bitner, 2000)

2008 -2010 loyalty program memberships growth in US Table 7. 1 (Source: Based on Hlavinka and Sullivan, 2011)

Hospitality and tourism loyalty programs o Frequent flyer rewards • Repeat customers • Highest fare holders • Elite status customers o Co-branded credit cards • Issuers pay carriers for miles awarded • Significant income source o Hotel loyalty programs: • Complimentary meals, internet access • Included in franchise fees • Joint programs for smaller brands, boutique hotels o Frequent diner programs: • Rewards Cards • Non-financial incentives e. g. ‘Jump the Line’ perk • Hybrid approaches

Service loyalty classification scheme Figure 7. 3 (Source: Adapted from Dick and Basu, 1994)

Snapshot: Legend Golf & Safari Resort Getting to the heart of customer relationship management by focusing on customer preferences. o o o Corporate relationships linked to management strategies Dedicated guest relations managers and frontline employee feedback Customer Relationship Management (CRM) strategy ‘Operation Boat Float’ (OBF). ‘Most Valued Client’ Customer feedback • Attention to unique requirements • Rated response

Benefits of Relationship Marketing o Customers loyalty incentives: • High perceived value • ‘Get’ should exceed ‘Give’ • Rewards for loyalty o Company benefits: • Higher profits through retaining customers ⁻ More purchases overall ⁻ More frequent purchases • Lowers operating costs ⁻ No acquisition costs • Increases company referrals

Benefits of relationship marketing Table 7. 2

Targeting profitable customers o Building and improving upon traditional segmentation o Studying loyalty- versus defection-prone customers • Identify profitability bands • Identify customers most likely to remain loyal • Develop overall strategy around these customers ⁻ Target with retention strategies • Other customers too costly to retain ⁻ Little potential to become profitable

The 80/20 customer pyramid Figure 7. 4 (Source: Adapted from Zeithhaml and Bitnen, 2000)

Managing loyalty and profitability Figure 7. 5 (Source: Adapted from Kumar and Rajan, 2009, p. 5)

A taxonomy of casino customer segments Figure 7. 6 (Source: Watson and Kale, 2003)

Case Study: Service Excellence at Sheraton Suites …. What people really remember is the guest experience. o Service interaction key to customer loyalty • Carefully selected and trained staff • Brand-specific programs ⁻ ‘Building World Class Brands’ • Staff empowerment • Strong service culture • Awards for service o Relationship marketing • Tailored to each guest • Personable, non-intrusive attention • ‘It’s Our Pleasure’ program • Starwood Preferred Guest program • Loyalty reward point system • Social media monitoring