This study is undertaken to examine the determinants of the practice of customer relationship management in the hotel industry in the case of Hawassa City, Ethiopia. The study employed an explanatory research design with quantitative research approach.
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EXPLORING THE RELATIONSHIP BETWEEN
DETERMINANTS OF CUSTOMER RELATIONSHIP MANAGEMENT PRACTICE
Tsegaye Mathewos Mena*
PhD Scholar, Faculty of Management, PIMR, Parul University, Waghodia, Vadodara,
Gujarat, India
Dr Bijal Zaveri
Dean, Faculty of Management, PIMR, Parul University, Waghodia, Vadodara, Gujarat, India
*Corresponding Author Email: tsegemuty@yahoo.com
ABSTRACT
Customer Relationship Management (CRM) is an enterprise strategy that attracts, retains and elevates the clients Proper implementation of this strategy will allow organizations to carry out tasks at a lower cost (Bavarsad & Hosseinipour, 2013) This study is undertaken to examine the determinants of the practice of customer relationship management in the hotel industry in the case of Hawassa City, Ethiopia The study employed an explanatory research design with quantitative research approach The required data were collected from 257 selected hotel employees by adopting a stratified random sampling technique The collected data were analyzed using both descriptive statistics (frequency, percentage, mean, and standard deviation) and inferential statistics employing correlation and multiple linear regressions The findings of the study indicated that the practice of customer relationship management at four star hotels was found to be moderate The main determinants that influence customer relationship management practice in the study area were knowledge of customer relationship management, customer management process, technology for supporting customer relationship management, and human resource knowledge
Keywords: Customer Relationship Management, Hotel industry, Tourism, Culture
Cite this Article: Tsegaye Mathewos Mena and Dr Bijal Zaveri, Exploring the
Relationship between Determinants of Customer Relationship Management Practice,
International Journal of Management (IJM), 11 (3), 2020,pp 16–27
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=3
1 INTRODUCTION
The highest significant achievement in any business sector is building strong customer relations Business companies have recognized that their most important assets are consumers
Trang 2and regard customer relationships as profitable transactions CRM has become one of the most controversial issues and a focal point in the business sector recently (Balaram & Adhikari, 2010) According to Darrel (2010), CRM is among the developing tools vital to organizational greatness, and the second best effective management tool after strategic planning was rated from 2006 to 2010 For the tourism industry also the idea of CRM is very relevant According to world tourism organization (WTO, 2010), there were 1.3 billion tourists traveled all over the world When compared with global average of 7%, international tourist arrivals to Africa increased by 8.6%.Similarly, the number of tourist flows in Ethiopia
is increasing from time to time As a result, the Ministry of Culture and Tourism office of the country has long term plan to triple the number of foreign visitors to be more than 2.5 million
by 2020.The hotel industry has the lion share for tourism attraction Hawassa city has got a variety of star hotels with attractive facilities In order to get loyal customers, hotels should have sustainable relationship with their customers In this regard, CRM strategy is of great benefit to the organizations However, customer relationship management practice in the hotel industry was not clearly known Previous studies conducted on CRM focused on other service sectors For example, Solomon (2014) and Akroush et al (2011) studied on banking service sector, Bavarsad and Hosseinipour (2013) studied on petrochemical company, Naveed(2012) studied on healthcare service sector, and Siriprasoetsin et al (2011) studied on academic libraries There is still a marked lack of research on CRM in hotel industry Therefore, this study tried to investigate the determinants of customer relationship management practice in the hotel industry the case of Hawassa, Ethiopia
2 LITERATURE REVIEW
CRM is a strategic approach that aims to create greater shareholder value through the creation
of effective customer relationships CRM combines the potential of marketing relationship strategies and IT to create profitable, long-term relationships with customers, and other key stakeholders CRM provides enhanced data and information utilization opportunities That requires a cross-functional integration of processes, people, operations and marketing capabilities through information, technology and applications (Gebeyehu, 2014)
However, customer relationship management is a combination of people, mechanisms and technology which helps the company better grasp its customers (Chen & Popovich, 2003) CRM can also be seen as an integrative process that constructs and maintains successful relationships with customers by delivering exceptional value and satisfaction to the customers The CRM strategy should therefore take into account the whole company and this strategy should be regularly revised (Sen & Sinha, 2011) CRM can also be seen as a consumer-centered corporate strategy integrating sales, marketing and customer service, and helping the company build and increasing the customer loyalty (Chalmeta, 2006) CRM knowledge is grappled with by individuals or organization administrators involved in policy-making and driving CRM to success Administrators are required to have management capacity; that is, they should know and understand CRM well They are required to create goals and lead the company by effectively representing CRM, assuming responsibility for implementing CRM plans, and propelling implementation through some securities that help CRM like personnel, working environment, time and technology The managers should be able to mitigate the issues, so that they do not achieve the goals they anticipated (Combe, 2004) The staff must be familiar with and appreciate the CRM and organizational approaches and goals, as well as be knowledgeable about the values of customer-oriented services and the implications of establishing and maintain good relations between customers and organization (Greenberg, 2001).Corporate culture emerged from and accrued from all supporters ' views, aspirations, behaviours and shared values All these aspects result in co-operative learning, acceptance and implementation to achieve the organizational goals and are moved from one
Trang 3generation to the next (Wheelen, & Hunger, 2000) As far as CRM administration is concerned, it can be said that the most difficult factors to achieve are organizational culture and communication, since the administrators need to change attitudes and make staff accept new concepts in CRM In addition, this involves building a key working culture, establishing cooperation agreements, building teamwork consisting of people from different disciplines with different roles, integrative cooperation and effective communication, all of which require the involvement of staff at all levels, from administrators to operators (Mendoza et.al., 2006; Stone, Woodcock, & Machtynger, 2001) The staff must be familiar with and appreciate the CRM and organizational approaches and goals, as well as be knowledgeable about the values
of customer-oriented services and the implications of establishing and maintain good relations between customers and organization (Greenberg, 2001).The processes of customer management are the most important factors supporting the introduction of CRM in organizations The process commences from getting to know customers and building good relationships with customers based on the behaviors of targeted groups (Nykamp, 2001) An organization needs to make a customer inventory as the foundation for relationship building through the construction of complete customer databases that are accessible by the organization Each customer account should be analyzed in order to understand his or her need and attitudes, which are the basis for good relationship building and ongoing relationships maintenance (Stefanou, Sarmaniotis, & Stafyla, 2003) The customer management processes cover recording and registering customer accounts, analyzing customer accounts for improved customer understanding, providing services to library customers, preparing for expected customers, interacting continuously with customers, and arranging other activities (Ho & Chuang, 2006; Mendoza et al., 2006) Nowadays information technology and communication are used as the tool for organizational communication, knowledge management, and strategies (Laudon, & Laudon, 2002) Likewise, CRM technology is the important strategic tool of an organization to attain success in CRM application (McKie, 2001; Stefanou, Sarmaniotis, & Stafyla, 2003) owing to the basic structure of information technology and information from customers databases (Torres, 2004) Primarily, the customer management strategy requires a center to store all customers' news and information This center must have efficient information technology architecture that is adjustable according to the changing environment (Buttle, 2004; Combe, 2004) It must contain a systematic CRM in order to communicate with customers through direct dispatching
of information to customers, a strategy for retaining customers with the organization (Steffes, 2005) Besides, the quality of information sent to customers also affects the building of good relationship with customers In this respect, application of technology can upgrade the information qualities (Zablah, 2005)
Ferrel and Hartline (2005) observe that employees are central to an effective CRM and as such companies have to manage their relationships with their employees if they have any hope of fully serving customer needs and this is particularly important in companies where employees are customer's eyes Consequently, Ferrel and Hartline emphasized that it is the importance of this that Bill Cooney, Deputy CEO of USAA, American property and casualty insurance company with a portfolio of over $60 billion asset management with almost 100% customer retention, and consistently ranked among the 100 best companies to work for in the United States, remarked that: "If you don't take care of the customers, they're about to take care of them We're giving employees everything they need to be happy and absolutely thrilled to be here If they're not happy, in the long run we won't have satisfied customers If
we don't we're in the wrong business, we have to have love for customers Simns (2003) is similarly of the opinion that the success of the CRM initiative depends on the involvement of staff in designing it at an early stage, rather than simply imposing it on them The following conceptual framework has been constructed based on the literature review to show the
Trang 4relationship between dependent and independent variables of the study Accordingly, there are five independent which were included These are knowledge of customer relationship management, organizational culture, customer management process, technology for supporting customer relationship management, and human resource knowledge The dependent variable of the study is customer relationship management practice
2.1 Hypothesis
H1: Knowledge of CRM has significant effect on customer relationship management
H2: Organizational culture has significant effect on customer relationship management H3: Customer management process has significant effect on customer relationship management
H4: Technology has significant effect on customer relationship management
H5: Human resource knowledge has significant effect on customer relationship management
3 RESEARCH METHODOLOGY
The study employed descriptive and explanatory research design This research was based on quantitative research method which deals with summarizing and examining the customer relationship variables and its determinants Stratified sampling technique was used to select representative sample of employees from each hotel Hawassa city had five four-star hotels and the target groups of the study were hotel employees Accordingly, Central international hotel had 250 employees, Ker-awud hotel had 60 employees, Lewi hotel and resort had 120 employees, Haile resort had 180 employees, and South Star hotel had 110 employees There searcher used Yamane’(1967)formula to calculate sample size and the representative sample size of the study from a total population of 720 was 257
257
Table 1 Number of permanent employees in selected hotels
Source: Human Resource Office Report from Respective hotels, 2019
This study employed both opened and closed ended questions as an instrument for data collection A five-point scale, ranging from strongly disagree (1) to strongly agree (5) was used in designing the questions Finally, the data were analyzed using both descriptive and inferential statistics Descriptive statistics such as frequency and mean, as well as inferential statistics such as correlation and multiple linear regression were applied to achieve the research objective
Where, n = the sample size
N = the total population
e = margin of error
Trang 54 RESULT AND INTERPRETATION
This section presents the results of the study and its interpretation relating to customer relationship management and its determinants among hotel based on the data collected from four star hotels employees in of Hawassa city, Ethiopia The data were collected through questionnaire, analyzed by the help of SPSS software, and the results were presented using tables and figure
4.1 Descriptive Summary of Study Variables
Under this topic, the questions that were collected using Likert scale items were analyzed To make the analysis easy, the researcher used Al-Sayaad, Rabea and Samrah (2006) proposed techniques of mean score ranges The ranges of values were presented as disagreeing if the mean score is between 1.00 and 2.60, neutral if the mean score is between 2.60 and 3.40 and agree if the mean score is above 3.4 Based on these classifications, the interpretations of both the dependent and independent variables of the study were presented as follows:
Table 2 Descriptive Summary of Study Variables
Customer management
Technology for
Human resource
Source: Own survey, 2019
As Table 2 shows, respondents have a neutral response on knowledge of CRM (M =2.91,
SD = 0.715), organizational culture (M =2.92, SD = 0.598), customer management process (M =2.91, SD = 0.584), and CRM practice (M =2.91, SD = 0.569) Other respondents were tended to the idea of disagreement on technology for supporting CRM (M =2.59, SD = 0.844)
and tended to the idea of agreement on human resource knowledge (M =4.09, SD = 1.526)
4.2 The Relationship between Study Variables
The possible values of correlation coefficients range from –1 (a perfect negative relationship)
to +1 (a perfect positive relationship) or a direct relationship between two variables A value
of 0 indicates no linear relationship between two variables (Kothari, 2004) In this section, the independent variables were analyzed one by one using correlation analysis in order to identify their individual relation with the dependent variable before conducting the regression analysis
Table 3 Correlation Analysis Result
Trang 6CRMP 615** 425** 873** 685** 755** 1
**Correlation is significant at the 0.01 level (2-tailed) Source: Own survey, 2019
The results of Table 3 shows that knowledge of customer relationship management has a positive and statistically significant association with the customer relationship management practice (r = 0.615, p<0.01) This indicated that the knowledge of customer relationship management has a significant relationship with the customer relationship management practice Likewise, organizational culture has positive and statistically significant relationship with customer relationship management practice (r = 0.425, p<0.01) In the same manner, customer management process has positive and statistically significant relationship with customer relationship management practice (r = 0.873, p<0.01) Similarly, technology for supporting customer relationship management has positive and statistically significant relationship with customer relationship management practice (r =0.755, p<0.01) Equally, human resource knowledge has positive and statistically significant relationship with customer relationship management practice (r =0.471, p<0.01) The result implies that the independent variables have weak and moderate correlation to each other, but they have moderate, strong, and very strong relationship to the dependent variable
4.3 Determinants of Customer Relationship Management
In this study, multiple linear regression analysis was applied since it facilitates the evaluation
of the level of effect that multiple independent variables that cause on a particular dependent variable Before applying regression analysis to test the determinant factors affecting customer relationship management practice, normality and multicollinearity tests are made for identifying misspecification of data if any so as to fulfill research quality as follows:
4.3.1 Normality Test
The important diagnostic test conducted in this paper is the normality assumption Normality test is used to determine whether a data set is modeled for normal distribution or not
Figure 1 Frequency Distribution of Standardized Residual
Source: Own survey, 2019
The result of Figure 1 presentsa histogram showing the shape of a normal distribution Although there are some residuals (e.g., those occurring around 0) that are relatively far away from the curve, many of the residuals are fairly close Moreover, the histogram is bell shaped which lead to infer that the residual (disturbance or errors) are normally distributed Thus, no violations of the assumption normally distributed error term
Trang 74.3.2 Multi co Linearity Test
The other important diagnostic test conducted in this paper is the multi co linearity
assumption Under this section multicollinearity test were checked using variance inflation
factor (VIF) and tolerance in Table 4
Table 4 Multi co linearity results on the variable
Independent variables
Co linearity Statistics
Model R R Square Adjusted R Square Std Error of the Estimate
Source: Own survey, 2019
One of the information included in Table 4 is collinearity statistics, which are associated
with the extent of correlation between independent variables If there is a high correlation
between two independent variables, the regression model assumes redundancy of one of these
variables that the significance of it becomes too low and its coefficient also be negatively
affected As a rule of thumb, a tolerance of >.10 and a VIF < 10 are considered as good
enough to minimize the effect of multicollinearity (Miller and Whicker, 1999) Thus, the
result implies that the regression model is not affected by higher correlation between two
independent variables
According to the model summary of multiple linear regression analysis, the R value of the
model as per Table 5 was 0.935 which shows the highest degree of relationship between
independent and dependent variables The adjusted R2 value of the regression model was
0.871, indicating that 87.1% of variance in customer relationship management practice was
accounted by knowledge of customer relationship management, organizational culture,
customer management process, technology for supporting customer relationship management
and human resource knowledge The remaining 12.9% of variance in customer relationship
management practice accounted by other factors not stated in this study
Table 1 Results of ANOVA Output
Source: Own survey, 2019
The result of the ANOVA table (Table 5) answers the question whether the multiple linear
regression model itself is statistically significant or not significant Since the F-test found in
the ANOVA table measures the probability of chance departure from a straight line
(F=346.488, p<0.001), the overall model is significant This indicated that the regression
model is statistically significant when knowledge of customer relationship management,
organizational culture, customer management process, technology for supporting customer
relationship management and human resource knowledge were included
Trang 8Table 2 Results of Multiple Linear Regression Analysis
Model
Unstandardized Coefficients
Standardized Coefficients
Customer management process 456 035 469 12.939 000 Technology for supporting
customer management
Note: B= Regression coefficient (Estimate), Std Error = Standard Error, Dependent variable =
Customer Relationship Management Practice
Source: Own survey (2019)
As can be seen from the results of Table 6, out of five variables which were included in the model, four predictors have found to be a significant effect on the customer relationship management practice These are knowledge of customer relationship management, customer management process, technology for supporting customer relationship management and human resource knowledge
4.4 Knowledge of Customer Relationship Management
According to the results of Table 6, knowledge of customer relationship management has a positive and significant effect on customer relationship management practice The results of the regression coefficient ( 0.104,p0.001)indicates that a one unit increase in the knowledge of customer relationship management, brings a 0.104 the customer relationship management practice This indicated that having knowledge of customer relationship management increase the customer relationship management practices
4.5 Customer Management Process
In line with this variable, Table 6 shows that customer management process has a positive and significant effect on the customer relationship management practice The results of the beta coefficient ( 0.469,p0.001)indicates that a one unit increase in the customer management process, leads a 0.469 unit increase customer relationship management practice
4.6 Technology for Supporting Customer Relationship Management
In connection to this variable, Table 6 shows that technology for supporting customer relationship management has a positive and significant effect on customer relationship management practice The results of the beta coefficient and p-value ( 0.395,p0.001) increases that a hotel increase its customer relationship management practice by 0.395 as a result of a one unit increase in the technology for supporting customer relationship management The values of the beta coefficient indicated that for every unit increase in technology for supporting customer relationship management, a 0.395 unit increase in customer relationship management practice is predicted
Trang 94.7 Human Resource Knowledge
In line with this variable, the result of Table 6 shows that human resource knowledge has a positive and significant effect on customer relationship management practice The result of the beta coefficient also indicates that a one unit increase in the knowledge of human resource, leads a 0.170 unit increase in the customer relationship management practice (
) 001 0 ,
170
5 CONCLUSION
The practice of customer relationship management at the four-star hotels in Hawassa City has been no to norm Key determinants affecting customer relationship management practice in the study area were expertise in customer relationship management, customer service process, technology to help customer relationship management and human resource expertise Knowledge in customer relationship management strengthens the management of customer relationship business Knowledge of the hotel and knowledge of customer relationship management systems, customer preferences and behaviors will help improve management practices for customer relations Accepting and supporting the use of customer relationship management as well as having a clear vision and mission to use customer relationship management in the hotel's strategic plan helps with their appropriate practice Direct exposure
to the customer service process further improves management practices for the customer relationships Tracking and identification of consumer profiles, consumer review, customer recognition, individual customer service preferences, current customer engagement and customer-oriented practices affect customer relationship management practices Similarly, the main tool for customer relationship management practices are customer service support systems such as communication technology, information technology, and operational support technology Likewise, knowledge of human resources affects the practice of managing customer relations
6 IMPLICATONS TO PRACTITIONERS
In order to meet the standards of customers’ relationship management, the researcher hereby suggests the following recommendations
Hotel staff knowledge about CRM influences customer relationship management practice Hotels should therefore enhance employee awareness about customer relationship management by offering reliable training on how to use customer relationship management and properly maintaining the customer database
Customer management process is described as a significant factor influencing customer relationship management practices Hotels should therefore enhance the cycle of customer management by constantly improving services and benefits, partnering with key customers, increasing the ability to meet their customer needs, fulfilling commitments, offering consistent quality services and continuously delivering superior and added value to key customers The hotel managers should also engage in more dialog and discussions with key customers to determine where their needs lie in order to provide them with a tailor-made deal
Customer management support technology is a factor which affects customer relationship management practices Hotels should therefore enhance technology-based CRM by maintaining robust customer records to develop their services and integrating the required hardware and software facilities to meet customers ' evolving need for
Trang 10advancement technologies, by retaining the right technical staff to support the use of computers and device technologies Awareness of human resources is found to be a significant factor impacting customer relationship management practices Hotels will concentrate on improving employee awareness about customer relationship management by taking care of them and providing adequate training prior to using the program
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