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.
International Journal of Management (IJM) Volume 11, Issue 3, March 2020, pp 16–27, Article ID: IJM_11_03_003 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=11&IType=3 Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication Scopus Indexed 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 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 http://www.iaeme.com/IJM/index.asp 16 editor@iaeme.com Tsegaye Mathewos Mena and Dr Bijal Zaveri and 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 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 policymaking 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 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 http://www.iaeme.com/IJM/index.asp 17 editor@iaeme.com Exploring the Relationship between Determinants of Customer Relationship Management Practice generation 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 http://www.iaeme.com/IJM/index.asp 18 editor@iaeme.com Tsegaye Mathewos Mena and Dr Bijal Zaveri relationship 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 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 Where, n = the sample size N = the total population e = margin of error Table Number of permanent employees in selected hotels No Four-star hotels N Central international hotel 250 Kerawud hotel 60 Lewi hotel and resort 120 Haile resort 180 South star hotel 110 Total 720 Source: Human Resource Office Report from Respective hotels, 2019 n 89 22 43 64 39 257 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 http://www.iaeme.com/IJM/index.asp 19 editor@iaeme.com Exploring the Relationship between Determinants of Customer Relationship Management Practice 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 Descriptive Summary of Study Variables Variables Minimum Knowledge of CRM 1.60 Organizational culture 1.17 Customer management process 1.57 Technology for supporting CRM 1.00 Human resource knowledge 0.67 CRM practice 1.50 Source: Own survey, 2019 Maximum 5.00 5.00 Mean 2.9074 2.9183 Std Deviation 0.71479 0.59805 5.00 2.9128 0.58432 5.00 2.5894 0.84376 5.00 5.00 4.0856 2.9056 1.52554 0.56906 As Table 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 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 Correlation Analysis Result Variables KCRM ORC CMP TCRM HRK KCRM 343** 518** 499** 311** ORC CMP TCRM HRK 414** 135* 531** 628** 479** 043 http://www.iaeme.com/IJM/index.asp 20 CRMP editor@iaeme.com Tsegaye Mathewos Mena and Dr Bijal Zaveri CRMP 615** 425** 873** 685** 755** **Correlation is significant at the 0.01 level (2-tailed) Source: Own survey, 2019 The results of Table shows that knowledge of customer relationship management has a positive and statistically significant association with the customer relationship management practice (r = 0.615, p