Chapter 1 – Introduction
Customer Retention is a variable process and can be defined as a strategy adopted by sellers to attract its regular clients for achieving repeated sales within a given time period.
The present business environment has completed a full circle and the trend of seller’s market is shifted to buyer’s market. Today, customers have various options available to them in the market from where they can buy the best possible services and products to satisfy their needs. Earlier, most of the organizations focused on mass production and mass marketing only and because of which customers had large number of products and services available to them. But because of this, the quality of interaction between customers and sellers changed significantly. For service and product providers, users become just “account numbers”. Even though, market was flooded with variety of things, shopkeepers were not able to meet the customer’s requirements. Thus, numbers of company lost their customers and were struggling to re-establish relationship with existing as well as potential customers to improve customerloyalty (Jeng and Bailey, 2012).
Although, technological advancement, product innovation, better service quality and cost optimization are very important for all the organization, but the most important thing is, customers must appreciate one’s products and services. Take the example of coal and diamond, both consist of carbon but due to their quality and valuation by customers, they are priced differently. Therefore, it can be said that, from starting of the operations to finishing of the product and services, a business is completely driven by customers. It’s not only with the manufacturing industry; service industry is also switching to “relational exchange” from “transactional exchange” to strengthen their relationship with the potential customers. It is helping them in reaping the benefits of customer lifetime value, profitability and transactional cost. As, the customer was, is and will remain the focal point for all the companies, so delivering better products and services to them is the need of the hour (Customer retention strategies at a UK telephone bank, 2002).
There are many factors such as globalization, development in services, economic scenario, competitive pressure that has forced tourism and hospitality industry to bring some changes in its operating environment. Thus, hotels and other industries of hospitality sector started focusing on implementing competitive marketing strategies to retain customers and to enhance competitiveness. Thus, customer retention management which includes service recovery and service failure management is an effective tool with the hotel industry to retain their customers (Yoo, Lee and Bai, 2011).
In entire hospitality sector, especially in hotel industry, there is great deal of interaction between the employees and the guests. So, there are large number of chances that this interaction many result in service failure. Mostly, when a customer consumes a particular service, there are chances that it may cause failure of the service. And rate of service failure can be high in hotel industry as production and consumption of services in it are inseparable. Moreover, requirement of services in it are variable as it depends on different type of guests, which may demand any type of service at any point of time. Thus, all these factors make this segment vulnerable to failure of service (Bharwani and Butt, 2012).
So, hotel industry is now adopting different strategies to overcome the service failure and to provide maximum satisfaction to their guests. Organizations are trying to implement some “win back” programs to attract its lost customers and are planning ahead for recovery of services. This will help them in delivering more satisfactions to their clients.
This paper will discuss about relationship marketing and its role in the hospitality sector, to be specific, in hotel industry. It will focus on different customer retention strategies and will evaluate the effectiveness of Priority Club Reward adopted by Hotel Crowne Plaza London Ealing in customer retention (McDonald's serves up better customer care and lower employee turnover: Two-stage training for more than 4,000 staff, 2007).
Relationship marketing can be defined as a customer retention strategy that is adopted by most of the hotels for establishing, maintaining and enhancing the relationship with its clients and stakeholders so as to reap continuous benefits. Relationship marketing also helps in developing congruency in companies which is making sure that employees, vendors, consumers and the society are aware about the business operations (Kandampully, 2006).
Focus and Purpose
The main focus of this dissertation is on customer retention. There are various strategies for retaining customers. For example a company can retain its users by consistently delivering them better products and services at reasonable prices. Another way of retaining customers is to communicate with them frequently through different channels of communication. One more strategy adopted by many organizations is to offer some promotional gifts to its esteemed customers so as to attract them to make repeated sales. Finally, in recent years, many companies, especially those operating in the hospitality industry have implemented a new customer retention strategy named Priority Club Reward (Jamal, 2006).
This study will also majorly focus on Priority Club Reward scheme adopted by many hotel chains. Through this scheme, organizations attract its regular guests to make repetitive visits to their properties. Moreover, this offer enables them to attract even new potential customers. In order to maintain consistent clientage, hotels offer this scheme. Under this, they offer different benefits to its guests such as providing rooms at discounted rate, or offering complimentary dinner or lunch or breakfast. In addition to this, they offer some reward points also with each purchase which the user can redeem in their next visit. Even hotels offer them an option that they can redeem their loyalty points at their other property situated at some another place. This will make sure that even the guest visit some other place, he or she is going to stay in the same brand (Luck and Lancaster, 2013).
To determine the effectiveness of Priority Club Reward in customer retention in Crowne Plaza London Ealing.
To determine how Priority Club Reward scheme acts as an effective tool in customer retention
To analyze why customer retention is important for Crowne Plaza London Ealing
To evaluate other customer retention strategies that can be implement by Crowne Plaza in retaining customers
The purpose of conducting this research is to get insightful knowledge about the effectiveness of Priority Club Reward in customer retention. Till date many scholars have conducted researches on the effectiveness on different customer retention strategies adopted by different organizations operating in various sector. This report will highlight the benefits that a hotel can reap by adopting Priority Club Reward scheme. As, hotel industry operates in an environment where there are chances of service failure due to high degree of interaction between the hotel staff and the guests. So, it is very essential for them to implement some relationship marketing strategy so as to retain their customers. So through this study, it will be tried to find out that how service failure can impact the business of the hotel and how hotel can over come from such problems (Ngai, 2005).
There are some questions which are needed to be answered in order to successfully conduct the research in the given area. These questions are:
How Priority Club Reward scheme can acts as an effective tool in customer retention?
Why customer retention is important for Crowne Plaza London Ealing?
What are other customer retention strategies that can be implement by Crowne Plaza in retaining customers?
Framework and Analysis
This section tells about process in which the entire research will be conducted. It provides details above different steps. For successfully conducting any research it is very important for the researcher to implement various strategies and methodology, so the framework analysis provides a platform to explain all such methodologies and strategies. It deals with various research approaches that have been applied while undergoing the research and provides information related to data collection methods, different techniques of research, analysis of collected data, type of research, sampling techniques used for selection of sample for the entire population, etc. moreover, the authenticity and reliability and validity of the entire study depends on this section, so it is very important to have proper framework analysis. Finally, it is very important for the researcher to have complete knowledge about the environment and the surrounding in which he is conducting research so that he can carry out the research in correct manner (Pring, 2004). For the proposed report, following techniques have been used:
Research Design: It is very important to adopt correct methodology and procedure for conducting successful research. Research design helps in selecting correct procedure and methodology. It can be of three types: Descriptive, Explorative and Casual. For the present study, explorative research design will be used as the problem in hand is new and the researcher is going to develop new insight on the research area (Kuada, 2012).
Research Philosophy: In order to understand a specific research pattern, it is important for the researcher to develop some research philosophy. It can be either Interpretivism or Positivism philosophy. For the present research, Interpretivism philosophy of research will be employed as same philosophical approach can’t be implemented on the entire society. Further, as for the study, the sample size will be relative small so it is convenient to implement this philosophical approach (Daniel and Sam, 2011).
Research Approach: Inductive research approach will be used in this work as the researcher will initially monitor different activities and then will design different patterns for those activities. Through those pattern he will deduce a particular concept and finally based on those concept will devise a premise. Moreover, as this work will not involve any kind hypothesis formulation and testing so inductive approach can be used.
- Research Type: For the present study, the research will adopt qualitative research. To conclude any research, it is very important for the researcher to study all the parameters related to the area so as to improve his knowledge on the topic. Moreover, it helps researcher in understanding the social interaction of those parameters. So, the researcher will use qualitative research (Goddard and Melville, 2004).
- Data Collection Method: The researcher will gather data from both secondary and primary sources. The primary data will be accumulated by designing a structured questionnaire and then surveying the employees and customers of Crowne Plaza London Ealing. The questionnaire will include both closed ended and open ended questions which are to be answered by the respondents. Moreover, to collect more reliable and valid information, semi structured interview of some of the higher managerial level of the hotel will be conducted. On the other hand, secondary data will be collected by referring different books, journals, newspaper, articles published in different magazine. Some secondary information will also be collected from the hotel’s website (McDonald and Adam, 2003).
- Sampling Technique: Sampling can be either probability or non-probability. For this study, probability sampling technique will be used. In such technique, all respondent have equal probability of surveying. For selecting sample of employees and customer from the entire population, simple random sampling techniques will be used, while to select the sample of managers, systematic sampling technique will be employed.
- Data Analsis Techniquey: In order to gain some meaningful information from the collected data, the researcher will analyze it through qualitative technique. In qualitative technique, thematic analysis method will be implemented so as to analyze both primary and secondary data. For thematic analysis, different themes will be designed which will help in concluding the research. In addition to thematic analysis, collected data will be represented through graphical representation also so as make findings statistically more authentic (Sobh and Perry, 2006)
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The present research will highlight the effectiveness of customer retention strategies more particularly, the Priority Club Reward Scheme, in retaining the customers. The research will identify the benefits of such scheme to the Crowne Plaza London Ealing. This research will help them in assessing whether the Priority Club Reward scheme adopted by them to retain customer is really working for them or not. Further, it will also provide various other measures of customer retention that can be adopted by Crowne plaza London Ealing to retain its guest and to attract potential customers. It will help them in assessing the effectiveness of variety of strategies and the hotel can chose some other strategy also if they found it better than the present strategy. Further, this study is important for those hotels which have presently adopted some strategy on customer retention but want to adopt some other strategy or want to diversify their retention scheme. At present, there are some hotels or inns which have note adopted such kind of strategies, so this report will have be of lot of significance for them as it will enable them to understand the importance of implementing any kind of customer retention strategy which will provide them long term benefits and will help in building brand image of the company. Apart from hotel industry or hospitality sector, this report will have lot of significance for those sellers also who deals in other sectors also such as retail, FMCG, etc. In addition to above, this work will be beneficial for those scholars who want to accomplish future research on customer retention. For them this research report will act as secondary data for collecting information. Moreover, this work will be beneficial for lot of professor and students who want to gain knowledge on the topic customer retention and relationship marketing management. Finally, this research report will also help me in enhancing my understanding on the customer retention and its implementation in the hotel industry. During the research, I will refer many secondary data which will increase my knowledge on the proposed topic.
Chapter 2 – Review of Literature
As the proposed research focuses on the effectiveness of the Priority Club Reward program launched by the Crowne Plaza London Ealing on the customer retention, the theoretical outline of the study is based on two important business aspects related to hotel industry; loyalty program management and customer retention management.
The rationale behind referring literature review is to get in depth knowledge about hotel loyalty programs and customer retention management. Through this review, ample of information has been collected which will help in successfully conducting the study. This literature study helped in recognizing the gaps presented in the earlier studies and this review is an attempt to find answer to the proposed research question.
Whenever some hear the word hospitality, the first thing which comes in the mind is hotels and restaurants. But in reality, it has much broader meaning. According to the Oxford English Dictionary, Hospitality means reception shown to a visitor, guest or strangers. There are number of reasons which justify that hotel industry operates in very complex environment. Firstly, because its structure is very complex, that is, there are large numbers of categories associated with any hotel (Gilmore and Pine, 1997). For example, its quality, usage, location, style, etc. Secondly, management structure and affiliation of hotel is very complex, as it can be operated as independent, in consortium or as franchisee. Further, it can be either managed by a single owner, or can be managed as national or international brand. And thirdly, it is one of the most fragmented industries among all the industries. Further, with the evolution of online booking and pricing and the e-business model has resulted in enhancing the purchasing power of tourists and because of this they have become less loyal to a particular brand, and have become somewhat price sensitive (Christou and Kassianidis, 2003). With all this, hotel industry is also experiencing the effects of globalization, customer expectations, customer acquisition cost, customer turnover, etc. All these factors suggest that competitiveness and performance of hotels is solely depends on its ability to effectively and efficiently satisfy the customer’s needs and retain them.
The concept of relationship marketing has shifted the paradigm to customer oriented from transactional orientation. According to Gronroos, the concept of relationship marketing is much older than the concept of transactional perspective of marketing. That is, although the term relationship marketing recently came into existence, but the concept of management of customer’s relationship is very old phenomenon in business environment. Relationship marketing is applicable to both service and industrial market. For example, in industrial marketing, business to business relationship model is used to establish stable and enduring relations. On the other hand, in service market, face to face interaction between customers and service provider is consider very effective in establishing and developing long term relationship (Gronroos, 2000).
Most of the firms practice relationship marketing with a motive to retain customers. Although, degree of retention of customers depends on the type of industry and firm, still most of the firms believe that customer retention yields many economic benefits to an organization. According to Buttle, customer retention can be defined as, attracting existing customers for making repetitive purchase from the same seller. If a company is able to retain its customer it means the tenure of customer grow longer and as a result of which the sales or purchase volume increases. One more benefit of customer retention is that, there are chances that customer referrals will increase (Buttle, 2004). Apart from this, customer retention reduces the relationship maintenance cost as both customer and the seller started to understand each other well. Now, as the customer churn rate falls down, it has direct impact on the customer replacement cost, that is, it also cascades. Finally, it has been seen that loyal customer are ready to shell out more money for their desired products and services and likelihood of them receiving discount schemes as compared to new customers is less. All these factors lead to maximize the net present value of retained customers. In his study, Lindgreen found out that retaining a customer is very important for any company as acquiring a new customer can be around ten times more expensive for the firm as compare to retained customer. He also concluded that cost of generating same amount of profit from a new customer as compared to retained customer can be up to sixteen times more (Lindgreen and et. al., 2000).
Importance of Customer Retention for Hotel industry
Scope of customer retention is significant in the entire hospitality sector, especially it plays very important role in hotel industry. As the hotel industry is customer driven, so to sustain in the competitive market it is necessary for the hotels to keep holding their guests. Below is the importance of customer retention for hotel industry:
Enhance brand image of the hotel: The first and foremost benefits which a hotel can reap from holding its existing customers is, it helps in improving the brand image of the hotel. As a particular guest will revisit the same hotel every time, it creates good image of the hotel in the minds of other potential customer. It may thus lead to image enhancement of the brand and will attract more clients. It presents a positive image of the hotel in the sense that it surely has some unique features because of which it has been successful in retaining its customers. Getting repeated business is not an easy task in hotel industry as customers do not get satisfied easily. When they are paying more then they demand excellent services in return. A hotel which has been successful in retaining its customers has evidently done its bit in satisfying them (Rutherford and O’Fallon, 2010).
Word of Mouth publicity: Holding esteem guests may prove beneficial for the hotel as it esteem and retained guest can be used by the company for marketing purpose. If some customer are satisfied by the services delivered by the hotel, they will tell about the hotel to other their friends and family. Thus, it will prove to a kind of viral marketing for the hotel. Moreover, the hotel will be able to guess about the taste and likes of those persons who visits their property based on referral made by the existing client. Thus, it will enable to serve them in better manner.
Repetitive Visits: Maintaining good relationship with the guests will enable the hotel to encourage them for revisit. It is easier for the staff to serve their regular clients as they have complete knowledge about their liking and taste. Thus, they will be able to provide higher satisfaction level as compared to their last visit and this will urge the client to visit the same brand whenever he made next visit. It is more beneficial for those hotels who are maintain a chain a hotels as if the customer visits some other place, his first choice will be to search for the same brand (Petzer, 2005).
Knowledge about customer: If a same guest frequently visits the hotel, the hotel manager and staff will have complete information about the client. In that case they will have knowledge about the liking and taste of the guest. This will enable them to deliver better services to the client and thus, will enhance customer’s stay experience. Further, it will reduce the chances of service failure as staff will be able to fulfill all the needs and wants of the client.
Exceeding customer’s experience: Whenever a guest visits some hotel, he has some expectation regarding the hotel’s services and ambience. And if he satisfied with the service provided to him, there are chances that he will visit it again in future. In such case, he will have higher expectations that the staff and the management. On the other hand, as the management will identify him as profitable customer for the hotel, they will try to entertain him in much better way than ever before. Thus, this tool helps in meeting and exceeding customer’s expectation.
Higher occupancy rate: Hotel which follows the relationship market and practice guest retention have higher occupancy rate as compared to other hotels. That is, keeps on getting continuous business from the existing clients in addition to the new clients. This leads to generating higher revenue, and profit (McCall and Voorhees, 2010).
Optimum utilization of resources: Another importance of customer holding in the hotel industry is the optimum use of its resources. As, services delivered by the hotel are perishable, so if not consumed on time they will get wasted. For example, if a hotel has 50 rooms but it is not able to attract customers towards it and most of its rooms remain vacant every day, it means its resources are going waste every day. On the other hand, if it is able to retain its guest, it will ensure that most of its rooms will remain occupied and thus its resources will be in used and will be generating cash flow. In addition to this, hotel requires high volume of staff that looks after the clients. In the absence of guests, they will remain idle which means wastage of resources. Retention technique will help in overcoming this problem to some extent.
Increases market share: Customer retention is very useful in increasing the market share of the hotel. As the hotel will experience repeated sales and repeated business, its market share in the industry will increase. Effective customer retention can provide a hotel an edge over its competitors. With increasing customer base, the company will be able to garner larger portion of the market (Atkinson and Brown, 2001).
Less expense on marketing and promotional activities: If the company is successful in retaining its customers then gradually it will have to incur less on its advertising and marketing. These strategies will then be used only for acquiring new customers. The hotel management can be sure that its loyal customers will be ready to pay more for the services and products desired by them.
Reduces set up and acquiring cost: Studies of many scholars have revealed that cost attached to acquiring a new client is much more that cost associated with retaining a guest. Further, if a hotel maintains healthy relationship with the guest, it requires less set up cost. Moreover, it has also been found out that worthy and loyal customers are ready to buy the services and products at same or even at higher prices because they get satisfaction from them only, on the other hand new clients will always bargain for lower price and if some competitor offers them services and products at lower cost, there are high chances that they will drift towards them. For attracting new customers, the hotel will either have to invest in some promotional activates or will have to reduce its rates. This means the acquiring cost will increase and profitability will decrease (Sonpar and et. al., 2008).
Customer Retention Strategies
As stated earlier, retaining a client is a variable process and it depends on many factors. The most important parameters are the type of products and the frequency of purchase by the consumer as it has been seen that many products are not frequently purchased by the customers. For example, take the case of stock industry. In this industry, buyers buy only those stocks which are performing well. If a particular stock is note performing well, investor will not invest in that till it starts giving good returns. Thus, in such condition, customer retention is not implemented. But, it is not the case with the hotel industry. In this sector, holding customer is very important as purchase cycle in this industry is not very long. The most important parameter on which the customer retention depends is the attrition and the silent attrition rate (Elsey, 2005). Attrition can be defined as a process when buyer changes his or her need and does not want to buy same product with the same seller and by not purchasing the service or product, he signals the producer of the goods and services that he is breaking the bond with the company. Many a time they don’t even intimate suppliers. The process in which the customer silent breaks the relationship is termed as silent attrition. Thus, it is essential for the seller to save his existing clients by improving or innovating his products and services so that he can satisfy every demand of his customer. Moreover, this strategy does not insure that customers are loyal. For example, a hotel is into both into luxury rooms and budget rooms. A customer who generally books luxury room may be possible that sometime he books budgeted room. Thus, in this case it case it can be said that guest is not loyal to a particular services, but hotels keeps holding him. Thus, retention is a strategic process and is possible only when seller develops healthy relation with the users and his services and products are able to satisfy the needs of the customers (Hansemark and Albinsson, 2004). In order to achieve this, hotels adopts different kinds of strategies such as:
Customer delight: Most important strategy adopted by many hotels is to treat their guests as God. It means they try to amuse their customers by exceeding their expectation. For delighting the customers, it is not necessary that the hotel have to do something extra ordinary or have to be best in the class. It is just that they must know how to please the guests so as to surprise him. Hotels formulate different strategies to delight the customer as it is not an easy task for them to predict the future demands of their guests. This means, they must have complete knowledge about the customer’s liking and taste. If hotel consistently makes efforts to please its shows their commitment and helps in building trust. This trust results in longevity in relationship with customers (Smith, 1996).
Loyalty program: Loyalty programs are important for the purpose of rewarding the valuable and potential customers for their patronage. They are being referred as those schemes, which offer immediate and delayed incremental rewards to all the clients for their benefaction. The more customers spent, the more will be the reward. All these programs offer an added value to the customers at 2 points i.e. during the acquisition and redemption. Unless and until the credits are redeemed, they have no material value; still they might offer some pre-redemption psychological advantages to customers like, a sense of belongingness and anticipation of desirable future events. At the time of redemption stage, customers receive both material and psychological benefits. Seeking help from the reward, hotels can positively influence and reinforce the buying behavior of the customers. Loyalty programs also demonstrate that the organization is recognizing the value of their potential customers and they are appreciating them as well. The overall sense of belongingness and emotional attachment of the company enhances through this sense of being recognized (Ahmed and Buttle, 2002).
Building customer engagement: It is nothing but, engaging the customers with one another with a company or a particular brand. This is also regarded as one of the most important positive strategy for building customer retention. If the clients of the company or a particular hotel are highly engaged than they will have strong level of emotional attachment and commitment for a brand, which in turn help them resisting competitive influence in the market. This phenomenon can be also be defined by the word commitment, engagement and attachment, as these words can be used interchangeably (Retaining industrial customers, 2002).
Implementing advance technology in operations: It has become very essential for the hotels to install advance technology in the premises. For example, it is must have Wi-Fi facilities, internet facilities, smart cards for selecting hotel online, etc. Most of the premier hotels earlier used to charge for these services, but with the increase in competition and options available to the guests, hotels are providing these services free of cost to its regular and frequent customers so as to stick them with their hotel. It is very effective strategy as most of the guests nowadays carry modern gadgets with them (Mcllroy and Barnett, 2000).
Different Loyalty Programs
In most of the countries around the globe, hospitality has again started doing well after the economic crises in the US, euro crisis in the UK, tsunami and SARC epidemic in Asia and is reemerging as one of the most important sector of the economy. Because of this, there is very stiff competition among different players, in such a competitive business environment, all the companies are focusing on their key asset “customers”. Following the same trend, many hotels have started some loyalty programs to attract and retain customers. For example, Thrifty and Cendant came up with a loyalty program under which it offers miles and points to its elite class guests which they can redeem at their next visit (Gracia, Bakker and Grau, 2011).
The concept of loyalty programs in hospitality was first introduced by the Holiday Inn group in January, 1983. Later in the same year Marriott group also launched “Honor Guest Award” for its regular customers. In 1999 Starwood hotels launched a Starwood Preferred guest program, which was considered to be one of the best loyalty programs at that time offered by any hotel. Under this program, the holder of the preferred guest card can books and redeem his card any time and on any day. They can be redeemed even on black out days. In addition to this, the card offers them an opportunity to redeem it at any of its associated property around the Europe (Uncles, Dowling and hammod, 2003).
Hotel Crowne Plaza London Ealing and Loyalty programs
Hotel Crown Plaza London Ealing which is one of the most luxurious and stylish hotel of the London too felt the need of introducing the loyalty program to retain its existing and regular customers and to attract more guest towards it. The main reason behind this was ever increasing competition and loyalty programs launched by its competitor. As the group felt that it is losing its customers to its competitors, it worked on the relationship marketing strategies and designed came up with different loyalty programs. In recent past, the group introduced an “Any Hotel, Any Where” card for its loyal customers. It is considered as one of the best initiative made by one of the world’s largest hotel chain which has global presence. According to this loyalty program, its regular customer will receive this card if they keep on revisiting their hotel. On every visit, the hotel will reward certain points to the guest according to the spending made by them during their stay at the hotel. Guests can redeem these points at any of its property around the world. According to the management of the hotel, its regular guests have shown good response towards this scheme and the database of the hotels revels that the attrition rate has gone down. This means, customer who once visits the hotel, their chances of revisiting the hotel have increased. As, the points collected through this anywhere card can be redeemed anywhere around the world at any of its property, this further attracts customers, as they can experience newer place and property of the hotel at either lower price or may result in some kind of reward or gift (Priority Club rewards, 2013).
Effectiveness of Priority Club Reward scheme
In very short span of time, hotel group is able to register around 24 million members in its priority club scheme, it tells about the effectiveness of the strategy. It means through this relationship marketing strategy, hotel is able to retain its regular and existing clients. Moreover, irresistible offers delivered through this card are attracting more and more clients towards it. So, it can be said that the hotel is maintain strong customer base, and schemes like priority club reward is helping company to keep on expanding its clientage.
Chapter 3 – Research Methodology
The present chapter will highlight the theoretical facts that will help in conducting the survey process. All kind of researches include implementation of various kinds of strategies and techniques. This chapter will describe all the techniques and strategies in detail which will be used by the researcher while conducting the research.
The motive behind writing a chapter on research methodology is to explain the potential significance and limitations attached with the study. It is done with an aim to collect valid, authentic and reliable information, as findings of the research will be purely based on the data collected during the survey process. In order to assess the facts and findings related to any area, it is essential to develop proper methodology so that data collection and analysis becomes easy. Moreover, research methodology helps in identifying solution to may real life problems related to the area or research. Thus, in the entire report, this section has lot of importance as it validates the data collected from various primary and secondary sources (Alkins, 2010).
Research Aims and Objectives
Every research is conducted with some aims and objectives. The sole aim of conducting this research is to determine the effectiveness of Priority Club Reward in customer retention in Crowne Plaza London Ealing. Thus, this work will fulfill the following objectives of the study:
- To determine how Priority Club Reward scheme acts as an effective tool in customer retention
- To analyze why customer retention is important for Crowne Plaza London Ealing
- To evaluate other customer retention strategies that can be implement by Crowne Plaza in retaining customers
Before reaching to any concrete conclusion, there are some questions related to the research area which needed to be answer. This work will provide solution to the following questions:
- How Priority Club Reward scheme can acts as an effective tool in customer retention?
- Why customer retention is important for Crowne Plaza London Ealing?
- What are other customer retention strategies that can be implement by Crowne Plaza in retaining customers?
The following section of the report deals with various sources through which data can be collected, further it will also throw some light on the methods through which the collected data can be analyzed. Research philosophy is developed with an aim to build strong research methodology so that survey pattern of the study can be defined. There are two types of research philosophy, first is positivism and another is interpretivism. The positivism philosophy or the scientific philosophy is based on the facts that sensory experience, logical treatment and mathematical treatment are the best sources for collecting any kind of information (Collins, 2010). This theory states that, above mentioned sources are the scientific sources of collecting knowledge, and data collected through these sources are genuine and acceptable by all.
To logically understand the subject on which the research is focused, it is very important to propose a research design. To nullify the chances of incorrect interpretation, every researcher suggest a research approach for his work, so that his efforts don’t go waste and he can come up with authentic findings. It provides a base for answering the research questions and to test the hypothesis. While proposing any research design, various parameters are considered by the researcher such as, type of data required, data collection methods, analysis method, sample design, etc. A researcher can choose from different research design which can help him in concluding his research. Research design can be either explorative, descriptive casual, experimental or case study (Golafshani, 2003).
There are two types of research approaches on which a research can be based; deductive research approach or inductive research approach. Under Inductive research approach, the researcher initiates his study by accumulating the data relevant to the area under study. Using inductive approach, the scholar examines the collected information and on the basis of the facts, existing patterns are drawn. Inductive research enables researcher to develop some facts regarding the subject matter under study. Or it can be said that inductive approach is bottom up approach, that is, the researcher moves from a specific situation to more generalized situation. This, approach can be suitable for the proposed research as the scholar will first study the effectiveness of priority club reward and then will analyze whether it is effective tool or not for retaining the customers (Heeks and Bailur, 2007).
To conduct any study, the most important thing a researcher requires is ‘information’. In the absence of authentic, reliable and valid information, it will be impossible for the researcher to conclude his research as he will not be able to find anything relevant to the subject. There are different sources available to a researcher from where he can collect data. The data collection can be through primary or secondary sources. Primary sources are those from where the information collected will be used for the first time by the scholar, and that data is not used by any other scholars. There are various sources from where primary data can be collected, for example, experiments, observation methods, survey method etc. For this research, the researcher can use either questionnaire to understand the views of staff, managers or customers on the loyalty program and priority club scheme (Morgan and Harmon, 2001).
To reach to any conclusion, it is very important for the researcher to collect and analyze the data. For this he will have to contact every single person who is exists within the system. But practically it is not possible for the researcher to record views of the entire population, as it will be very tedious, time consuming and costly affaire. So to overcome from this problem, all researchers select a portion of the population, which can be surveyed by them easily. Moreover, sample is selected in such a way that the data collected from them do not contradict if the data is collected from the entire population. Thus, sampling makes research process easier and reduces time and money spent on it. Further, it also makes the entire process less tedious. But the researcher has to be very particular while choosing its sample and sample size, as the entire primary information will be collected through them only. So if the sample is not selected properly. Or if some biasness is shown while designing a sample, it may result into failure of research. So, the concept of sampling is very important from a researcher’s point of view as most of the relevant and authentic data will be collected from this small part of the entire population. Thus, it plays significant role in data collection and can be done in two ways: probability and non-probability sampling (Reynolds and et.al., 2003).
The penultimate stage of any research process is to analyze the collected data so that some meaningful information can be extract from it. As, raw data is of no use, it does not suggest anything regarding the views of the respondents until it is evaluated using some proper tools and methods. So, this section is of core importance in research process as conclusion and all the recommendation are made on the basis of result obtained from the data analysis. It ensures that the information collected is not tempered by anybody and it enhances the value of the data collected and converts it into simpler form which can be understand even by a common man. There are several statistical tools available which can be used by the researcher to evaluate the gathered data so as to draw some conclusion from it. Thus, this section is considered important for both; research and the researcher as it helps in finding solution to a situation and give appropriate information to the scholar so that he can conclude his study (McBurney and White, 2009).
Validity and Reliability
The outcome of any research is considered authentic only when the information collected from primary and secondary sources is valid and reliable. If the information gathered by the researcher is of inferior quality, there will be questions regarding its reliability and validity and the conclusion made on the basis of this data will be not acceptable and will not have any authenticity. Thus, it is essential that researcher must maintain authenticity in collecting information. Thus, it the researcher of the present report wants to reach to some concrete conclusion about the effectiveness of the priority club reward scheme, he must randomly select all the respondents so as to nullify the chances of biasness. If the scholar wants to attain his research objectives and to evaluate the accuracy of his research, it is must that he gathers only correct and authentic data. In addition to maintaining accuracy, the researcher must also follow consistency in data collection. He must standardize the data collection process as it will act as filter and only valid and authentic information will be collected by him. Standardization of process will ensure that despite of following any method, the result remains same. Thus, certainty and accuracy of the topic will be there. So, if the researcher will involve the genuine customers of the hotel and will select the manager without any biasness, he will get valid, authentic and reliable data (Timothy, and et.al., 2004).
In addition to collecting valid and authentic data, it is must that researcher follows ethical practices during the entire research process. While conducting the research, he may have to come across many situations related to political, legal, ethical, social issues. So it is essential that he must follow ethical practices in all the situations. Before initiating the research process, the researcher must gain full knowledge on the subject under study, and the time of making any recommendations, he must have concrete ground for supporting his recommendations. Ethical approach must be followed by the researcher while dealing with the respondents. He must not disclose the identity of the staff member or the customer and must follow complete secrecy. For example, if some customer or guest of the hotel provides negative information about the hotel or ill practices followed by the hotel, the researcher must not forward it to the management, rather, he must use it only for his research purpose. Similarly, if any manager or staff member gives some confidential information about the hotel, he must not leak the information in the market (Kimmel, 2009).
Limitations of the study
There are several limitations associated with a research process due to which quality of the outcome of the research gets affected. First and foremost limitation is the inadequacy of the information. For a study to be considered as successful, it is very necessary that the researcher must have ample of data related to the study otherwise it will be difficult for him to draw some conclusion. As, not much work has been done on determining the effectiveness of the loyalty program and more specifically to determine the effectiveness of the priority club reward scheme in retaining customer, so, collecting secondary data was an limitation faced by the researcher. Limited time was another limitation faced by the researcher. Research process is very lengthy and requires lot of time and patience. But, as there was very short time given to the researcher for conducting the entire process, so at some point he felt shortage of time. As, to collected data from the regular customers is very difficult as firstly researcher needs to know who are the regular clients of the hotel. Secondly, it may be possible that at the time of survey, regular guest were not staying in the hotel. So, time was another resource constrain. This may impact the quality of the findings. Another limitation was the unavailability of the respondents. Manager of the hotels were very busy and were not showing interest in the survey process. Moreover, guests were also interested in enjoying with their friends and family rather that indulging in the some research process. So, these were the major limitations faced by the researcher (Limitations of the Study and Avenues for the Future Research, 2003).
Chapter 4 – Data Analysis
The penultimate chapter of the any research report is the data analysis. This chapter deals with appraising, understanding and presenting the collected data in such a manner that that it can be comprehended by even a common person. Thus, data analysis is included in the report so as to draw some relevant conclusion from the collected information. Thus, this chapter has lot of significance in academic research as well as research associated with any sector of the economy. As all the major decisions are based on the collected information and the conclusion and recommendations are made on the basis of this data only, so the role of this section is very important to arrange data in such a manner that can be interpreted by all. The process of data analysis is as follows:
- Initially, the secondary information is collected through some secondary sources and then complete analysis of that data is conducted by the researcher. Scholars interpret the collected data by plotting graphs and diagrams. Some models are also applied to make the understanding easier.
- Discussion is made in the next step. These discussions are regarding the findings of the above step, that is, the outcomes of the secondary data are discussed. While discussing on the topic, the arguments and comments are appropriately supported by referring the existing literature and on the basis of that outcomes are derived. There are some researches, in which the researcher has to make some hypothesis or some works are hypothetical, in such cases, the researcher makes some assumptions and on the basis of that draw the outcomes. Then those outcomes are compared with the past work done by other scholars on the same subject matter.
- The ultimate step involves critically analyzing the result obtained by reviewing the literature and by evaluating the collected data. On the basis of findings, conclusion and recommendations are made (Sobh and Perry, 2006).
To analyze the collected data qualitatively, the researcher will use one of the most frequently used qualitative method; thematic analysis. From thematic analysis, different patterns are drawn by using the collected information. It slender the process of recording and analyzing the patterns drawn with the help of collected information. After formulation of the different themes, they are classified and studied. Following are the steps involved in thematic analysis:
- Organizing data for assessment
- Categorizing and evaluating main points
- Classifying the information
- Designing the thematic pattern
- Elucidating the designed themes (Hartman and Conklin, 2012).
Theme 1: Hotel’s business goals are related to customer retention
From the data collection from the primary sources, it was concluded that the main aim and goal of the hotel is to hold its existing customers rather than attracting new customers or to gain competitive edge over its competitors. According to the views of the hotel’s managers it is established that their hotel is one of the most luxurious and stylish hotels of the London and there are very few competitors exists in their segment, still there is fierce competition exists I this segment. So it is very import for them to focus on customer retention.
Theme 2: Customer Retention is a strategy to retain existing customers
During the survey process of the managers, it was found that the hotel Crowne Plaza London Ealing is continuously making efforts to retain its customers. For this purpose the management is working hard. The hotel knows the fact that in hospitality industry it is very important to retain its customers as it provides more benefits as compared to attracting new customers. So, in the views of managers, keep holding a customer is must for the hotel in this competitive environment.
Theme 3: Retaining customers is significantly important for the hotel industry
Findings: During the survey, most of the managers said that it is very important for the hotel industry to retain its customers. In their views, if any hotel is able to retain 5% more customers as compare to last year, they can generate 100% more profits from them. Moreover, as the staff members of the hotel will have complete information regarding the customer, so it will be very easy for them to deliver services to them. The hotel will be able to serve them in better manner as they have complete knowledge about their taste and preferences. In addition, they also said that, hotel will be able to exceed the expectation of the retained guests as they can provide them services which they might not have expected. Moreover, they also feel that it is better to hold existing guests as cost associated with attracting new clients is very high as compared to cost associated with holding the customer. Further, the hotel can sell more services to an existing guest easily and at any cost, but it is difficult for the management to sell the same services to a new customer as sense of trust is missing when they deal with new customer.
Theme 4: Delivering customized services help in retaining guests
In the views of most of the managers, it is essential for the hotel to provide customized services to its clients to retain them. As taste and preferences of all the guests are not same, so to provide them extreme satisfaction, it is must for them to deliver services according to their needs so that their needs can be satisfied. Moreover, they feel that giving tailored services not only helps in retaining customers, but is also a good strategy for attracting new customer. And hotel can market this facility by word of mouth publicity by their regular guest. So it is necessary for delivering services according to the needs of customers as it will also help in surveying in the competitive business environment.
Theme 5: Returns are higher as compared to cost associated with retention
Accumulated information from the respondents shows that as compared to cost associated with in drafting retention strategy, its benefits are more for the hotel. Managers says that cost associated with retaining customers is just providing them some free or discounted benefits, but in return it gives surety that next time also the customer will visit the your hotel. Moreover, it is easy to sell services to the existing customers at higher cost rather than selling them to selling them to new customer. So it ensures consistent cash inflow.
Theme 6: Upholding existing customers is more beneficial
From the survey of the managers it was found that for the hotels it is beneficial to retain customers as compared to attract new customers. If the hotel provides some extra benefits to its regular guests for free of cost of at discounted rate, it will ensure that the customer will revisit the hotel next time also. And if any customer visits the hotel next also it means there will be some cash inflow. Further, that customer will tell the rewards and offering made by the hotels to its loyal customer to his friends and relatives also. So it will serve both the purposes; one it will help in upholding the customer and secondly it will attract new customers towards the hotel.
Theme 7: It lowers attrition rate
From the findings it was concluded that customer retention strategies and loyalty programs help in lowering the customer attrition rate. Attrition rate can be defined as losing existing customer to the competitors. Most of the managers say that loyalty programs are very successful among the customers as their database shows that most of its guests are revisiting the hotels. That is, the hotel is just providing the rewards points against the purchase they made and the customers arte benefitted from it. Further, spending pattern of most of the customers shows that in order to earn rewards points or to avail extra benefits, customers are spending more. Further, in order to get extra or discounted benefits, customers prefer their hotel over others.
Theme 8: Priority reward club scheme is fully satisfying the intentions
From the collected data it can be concluded that priority club reward scheme is fully satisfying the intention for which it has been set up. This loyalty scheme was hit among the customers and the literature review shows that it was one of the most successful loyalty program launched by any of the hotel and within a very short span around twenty four million members are associated with it. Most of the managers say that through priority club reward scheme the hotel is able to hold its existing customer and in addition, has attracted new customers also.
Theme 9: Customers frequently visit Crowne Plaza Hotel
The survey data shows that around half of it total customers are satisfied with the services of the hotel. Moreover, they like the loyalty programs offered by the hotel. The survey of hotel’s customers shows that in addition to the quality services provided by the hotel, customers are attracted towards the loyalty program also. They are benefitted by the program as they enjoy free nights or gifts offered by the hotel. So, in order to earn reward points and to get free dinner of night offer, customers often visit the hotel.
Theme 10: The hotel is favorite destination among the corporate
Out of total customer, purpose of most of the customer for visiting hotel is to attend some business meetings or seminars. This shows that the hotel is hit among the corporate houses, and as it provides excellent infrastructure and services to them, they prefer to book this hotel most of the time form conducting some meetings. As the location of the hotel is appropriate, and it is well connected from all parts of the country, so it is liked by the business houses for conducting meeting and training sessions.
Theme 11: Most of its regular customers are loyal towards it
The researcher from his survey concluded that most of the customers are loyal towards the hotel. It means they are satisfied by the services provided by the hotel and like the loyalty programs offered by the hotel. This shows that hotel is able to provide satisfaction to its clients by catering all their needs. Further, they keep full knowledge of their customers which helps them in delivering exceptional services to them.
Theme 12: Priority Club Reward scheme attracted many customers
After collecting the responses of the customers, the researcher concluded that priority club reward is very effective in attracting and retaining the customers. Before this scheme, customers do visit the hotel, but they were not loyal to it. But, after the launching of the scheme, customers have become more loyal to the hotel and are attracted towards it.
Theme 13: Loyalty schemes was the main reason to be associated with the hotel
When it was inquired from the respondents that, what the main reasons which persuade them to remain are associated with the hotel than most of them revealed that it is the loyalty schemes being offered by the company that compels them to remain loyal towards the brand. However, there were many participants who were of the view that they are being associated with the hotel just because it provides them quality service.
Theme 14: Mouth publicity by customers
The information gained from the customers reflects that customers gets immensely satisfied with the services of hotel and in turn recommend the hotel to their friends, family and other social groups. Interview conducted with the managers also shows that it’s more of its customers visit hotel because of recommendations of known ones. In addition to it, maximum customers say that they are satisfied with the hotel services and they also recommend it to others in order to gain the ultimate experience.
Theme 15: Many benefits are availed by the loyal customers
Study by the researcher revealed that customers are revisiting the hotel to avail many benefits of its loyalty program priority club reward scheme. It shows that it is very effective tool in retaining customers as customers are attracted towards this scheme and showing their loyalty towards the hotel.
Theme 16: Loyalty reward schemes encourages customers to remain loyal
Through the survey process researcher found that customers are encouraged by the loyalty schemes and their chances of remaining loyal to the hotel increases. As the above themes shows that most of the customers are attracted towards the priority club reward scheme and to avail the benefits of the scheme such as free night stay, free dine, discounted merchandise, etc, are ready to remain loyal. So this loyalty reward scheme can be an effective tool for the hotel management to ensure that its regular customers will remain loyal to it and the hotel will able to retain them. Moreover, it will also make sure that the hotel will be able to acquire more customers also through these schemes.
Chapter 5 – Conclusion and Recommendations
The above report presents a detailed overview of customer retention, its importance and the customer retention strategies employed by Hotel Crowne Plaza London Ealing. The main focus of the research was on a loyalty program named Priority Reward Scheme started by the hotel. Its relative significance and effectiveness in retaining customers has been analyzed. The paper discussed about relationship marketing and the role played by it in the hotel industry.
The literature review section of the report, is based on two significant facets of the hotel industry i.e. customer retention management and loyalty program management. By reviewing different literary sources on relationship marketing it has been identified that this phenomenon has made a transition from being transaction centric to being customer centric. It has been found that relationship marketing plays an instrumental role in the hotel sector. By maintaining good relations with the guests a hotel can be more aware about their needs and expectations and hence they can be fulfilled more effectively. Internet is being used as an effectual marketing tool by the hotel companies and both its transactional as well as relationship aspects are being exploited to gain maximum advantage.
As disclosed from the data analysis and conclusion, there are some areas in which the hotel can take steps to augment the effectiveness of its retention strategies. Firstly, the management has become too much reliant on its retention strategies. It is absolutely fine to depend on a core strategy. However, excessive reliance on just one strategy in such turbulent times can have dire consequences. In addition to its loyalty programs, the company must also take sufficient steps to magnetize new customers. The existing client base comprises of mainly business travelers and some leisure travelers. As the business clients are already loyal, the hotel management should attempt to garner more business through a new target segment like honeymooners, pleasure seeking travelers and etc. This will give more business to the property and then the loyalty programs can be applied on the new customers as well.
This paper was truly an informative journey for me, which has improved my existing knowledge about the topic i.e. significance of customer retention in hospitality industry. This entire research has provided me immense knowledge in context with various strategies adopted by hospitality companies in order to retain customers which are considered to the lifeline of organization. To gain deep insight into the topic, I selected Hotel Crown Plaza for the study. This has facilitated me to examine impact of various marketing strategy to reach customers and to make them loyal toward the firm. Furthermore, the efficacy of Priority Loyalty club reward scheme of hotel in retaining customers has also been analyzed.
While studying the customer retention strategies of Hotel Crown Plaza, it has been observed that how important customer is for the hotel organizations and what measures these companies take with the view to enhance its customer base. In addition to it, what tactics they implement in order to retain old customers and to gain new ones.
Collecting the required information from various sources was not easy, but for keeping me attentive, dedicated and to move toward in right direction, I formulated the well-planned structure of the research. On the other hand the time limit was also one of the major challenges that hindered me during the entire study. However, the systematic structure has helped me a lot in achieving the preferred goals and objectives of research. In the present report, wide range of sources has been reviewed including books, journals, magazines etc. But as these sources are vast and takes lots of time and energy, therefore primary sources was also employed in this study. For collecting the primary data structured questionnaire and the survey techniques with employees and customers of the hotel has been used. Both open ended and close ended questions which were pre-determined were used. Along with it to get the immense knowledge on the topic, managers were also interviewed by me. Interview was in the form of semi-structured i.e. certain questions related to the research questions were framed, in addition to it, other basic questions were also asked. Employees were seemed to be reluctant sometimes in giving questions, thus there several challenges that interrupted me during the research. But these certainly have not affected the quality of work done by me. Though, I would recommend that researches that are to be conducted in future should be more comprehensive and according to the current trend, as the trends are ever-changing which change the consumer’s needs and preferences to great extent. While the technology, industrialization and globalization are also impacting greatly to the hospitality industry. Therefore these factors are required to be considered in every research subject.
Lastly, I would just like to say that this research has been the memorable experience for me which has improved my knowledge and level of confidence highly. At this point of time, I have observed my academic as well as professional development. With this achievement I expect my future to be bright and successful.
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(Questionnaire for managers)
Q1. Are your business goals related to customer retention?
Extremely, Moderate And Not at all
Q2. What are your views on customer retention?
- To retain customers
- To attract new customers
- To achieve competitive edge
Q3. Does providing customized services helps in retaining customers?
Q4. What is the importance of retaining clients in the hospitality industry?
Q5. Cost of implementing customer retention strategies is more or less than its returns?
Q6. What is more beneficial from profitability point of view – upholding existing customers or attracting new customers?
- Upholding customers
- New customers
Q7. Does it assist in lowering customer attrition rate?
Q8. What types of loyalty programs are being adopted by your hotel?
Q9. How long have you been using Priority Club Reward system?
Q10. Is it satisfying the purpose for which it has been set up?
Q11. What benefits are being availed to the customers through this program?
Q12. Are you working on some other strategies for customer retention?