An Assessment of the Internet’s Potential in Enhancing Customer
Relations
Noor Raihan Ab Hamid, Universiti Tun Abdul Razak, Malaysia Romiza Md Akhir, Universiti Tun Abdul Razak, Malaysia Puti Maizan Mashudi, Universiti Tun Abdul Razak, Malaysia
Abstract: The interactivity and ubiquity of the Internet have captured much attention from
managers to use the technology as a marketing tool. From a marketing perspective, the Internet medium is becoming a necessity as it enables companies deliver superior service quality to online customers and leading to long-term relationships. Based on the belief that serving existing customers are more profitable than the new ones, companies strive to utilize all means including the Internet as part of their customer relationship management (CRM) initiatives. The use of the Internet as a tool in CRM program is also known as electronic CRM (E-CRM). This study attempted to uncover the extent to which companies in hospitality industry utilize the Internet towards relationship building. Derived from past studies, we classified the E-CRM features into three categories: informational, transactional and relational. We investigated 405 hotel Web sites ranging from five stars to two star hotels and identified their levels of adoption. The findings revealed that hotels differ in their usage of E-CRM. We discussed the managerial implications of this study, as well as the limitations and future directions of research.
Keywords: Electronic CRM, Internet-marketing, Hotel companies, Relationship marketing,
Customer loyalty.
1 Introduction
Due to the increasing pressure from globalization, more companies believe in the significant value of the Internet technology as marketing as well as transactional tools. Companies that do not take advantage of the Internet technology is viewed as not delivering value added services to their customers, thus are at a competitive disadvantage. Obviously, the Internet technologies provided companies with tools to adapt to changing customer needs, and could be used for economic, strategic and competitive advantage. In contrast, companies that utilize the technology (at least having a web site that displays corporate and products information), are viewed as progressive and continuously striving to meet the current needs of customers. In turn, these companies have a low cost base and have begun producing competitive high quality products. By far, both companies and consumers have acknowledged the Internet as an effective tool for disseminating information. From a marketing perspective the Internet is not just another marketing tool, but a tool that can reach far to help companies understand customers better, to provide personalized services and to retain customers. Hence, the Internet technology is imperative in managing customer relationship for businesses in the digital economy The elements of interactivity and the ability to capture useful information from Internet technology have spurred interest in the feasibility of streamlining information provided, forecasting consumers’ needs, understanding preferences, delivering personalized services and enabling
customization. Thus the impetus of strategizing Customer Relationship Management (CRM), using Internet technology, or also known as E-CRM, as an enabling tool, escalates as firms strive to create value to consumers in an intensified competitive market of cyberspace (Ab Hamid & Kassim, 2004).
Clearly, as is evident in today’s global marketing, the previously ad hoc and fragmented techniques for dealing effectively with consumers are giving way to a more methodical relationship marketing approach of identifying, attracting and retaining the most valuable consumers in order to sustain profitable growth, that is, CRM (Anton & Hoeck, 2002). Motivated by economics of consumer management, firms have implemented retention programs, which are aimed at exerting influence on consumers’ repeated patronage behaviours. According to Heung (2003), in the hospitality and tourism industry, travel products and services appear to be well suited to Internet marketing because of their distinctive high-priced, high-involvement, intangible, heterogeneous, high-risk and well-differentiated characteristics (Burger, 1997). Burger (1997) also notes that the hypertext feature of the Internet may have been specially designed for the tourism industry. Not surprisingly, the travel sector is rated among the top three product or service categories purchased via the Internet (Heichler, 1997). Heung (2003) further purported that from the supplier’s point of view, the development of electronic commerce in the travel industry allows travel suppliers to reduce transaction costs (i.e. commission), since “disintermediation” is carried out, which means that travellers are able to bypass retail travel agencies to deal directly with suppliers of travel products. On the other hand, travellers are also able to enjoy the provision of extensive information, lower price, discounts, time saving and cost saving due to the emergence of the electronic market. With the adoption of electronic commerce and its benefits being gained by both travel suppliers and travellers, the travel industry has become one of strongest performing sectors of e-commerce.
2.1 CRM and Internet Technology
Chen and Popovich (2003) espouse that the effective management of information is critical in CRM, since information technology enables one-to-one marketing to grow faster (Zineldin 2000) and to deliver the promise of greater profitability from an increase in retention rate (Winer 2001). Winer (2001) further notes that the construction of a consumer database or information file is the foundation for any CRM program. The historical data about consumers can be used to build consumer segmentations, which would be demographically or behaviourally based, and consumer profile (Gurau 2003; Winer 2001). The analyses would reveal consumer patterns, behaviours and develop predictive models (Chen & Popovich 2003), that is, depending on which, firms may identify consumers who would provide the most long-term profits from those who would not (Ness et al. 2001; Winer 2001). Expanding on consumer identification, the ‘mining’ of consumer data provides knowledge of each consumer’s preferences, which are then used to deliver personalized products/services, based on their needs and values. The Internet application has brought new meaning to building consumer relationships, that is, large volumes of data can be collected, processed, and analyzed efficiently which allows firms to offer personalized products/services to every consumer (Gurau 2003; Winer 2001; Zineldin 2000).
In order to understand the roles of the Internet in managing customer relationship, other researchers have approached this issue by examining company usage of the Internet in various marketing activities such as promotions, customer services, product reviews, consumers’ forums, loyalty programs and so forth (Ab Hamid et. al., 2007; Feinberg & Kadam, 2002). Today,
companies realize the advantages of adopting the Internet technology as a substitute of a traditional channel on improving buyers-sellers relationships. In other words, in order to compete and be sustainable, companies have no choice but to, amongst others, leverage on the Internet technology in building long-term relations with customers (Ab Hamid, 2008; Bradshaw & Brash, 2001).
According to Zafiropoulos et al. (2003), the hotel industry has begun to accept the use of the web for electronic commerce, and many hotels have already established web sites to bring information about their products to the customers, to promote their services and products all over the world, in a direct, cost minimizing and time effective way, and eventually gain a share of online market (Liang & Law, 2003; Morisson et al., 1999; Gratzer & Winiwarter, 2003). However, adopting the internet does not guarantee success or a competitive advantage to any company (Wan, 2000). Web sites have to be well designed and easy to navigate in order to provide hotels with an inexpensive and effective platform for marketing and advertising, which potentially increase their competitiveness in the marketspace (Parets, 2002; Baloglu &Pekcan, 2005).
Apparently, content plays an important role particularly at the point when customers are browsing and searching for distinct products or services that a site can offer before making purchase decisions (Merwe & Bekker, 2003; Rosen & Puriton, 2004). Content refers to the information features or services that are offered in the web site (Huizingh, 2000) and is not limited to the subject, product or services provided. Rather, content includes the solutions and strategies employed to make it easy for the user to accomplish important tasks, such as information retrieval, search and navigation required in making a purchase, and obtaining feedback. Web sites will have also to offer reservation facilities and value added services in order to attract customers to the electronic marketplace (Calogne, 2001).
Therefore, the main purpose of this research was to investigate the degree of E-CRM adoption by hoteliers. In this study, the use of E-CRM tools refers to the extent to which companies utilize the Internet technology to disseminate information, enable customers to carry out certain transactions and provide value-added services which in turn, leading to customers loyalty.
2 Hotel Industry and E-CRM Initiatives
By far, the hotel industry recognises that superior quality of service is one of the crucial factors within its control that can add value to its product and, subsequently, lead to customer loyalty. Enhancing the quality of service at all levels of service delivery has therefore become mandatory for organisational survival, irrespective of the changes that might occur inside or outside the firm (Lee et al., 2003). In contrast, hotels that attempt to improve their market share by discounting their prices run a serious risk of having a negative impact on the hotel’s medium and long-term profitability. As a result, quality of service, rather than price, has become the key to a hotel’s ability to differentiate itself from its competitors and to gain customer loyalty (Kandampully & Suhartanto, 2000, 2003; Luck &Lancaster, 2003).
The Internet technology enables information gathering and businesses transaction (Cai et al., 2004; Wan, 2002) where business suppliers in general, and hotel managers in particular, can effectively perform direct marketing and mass customerisation (Jeong & Lambert, 2001) in a cost effective manner. Law and Hsu (2005) suggest that by collecting extensive information about
customers hotel managers' understanding of customers' needs can be improved, and subsequently developing their web sites accordingly in order to market their products and services to customers directly through their web sites. The understanding of customers' needs, and hence the success of their hotel web sites, is of the utmost importance to hotel managers. Hospitality researchers have performed various studies to examine various aspects of e-consumer behaviours and quality of hotel web sites (Law & Hsu, 2005). For instance, Wei et al. (2001) found, based on the responses of 165 respondents, that the use of the internet increased with hotel star ratings. Gilbert et al. (1999), however, argued that the success of a hotel web site was determined more by just the technology used and the appearance of the site. What hotels needed was a way which could bridge the gap between simply connecting to the web and harnessing its power for competitive advantages.
Law and Hsu (2005) further suggest that a method to assess the performance of hotels’ web sites is to analyse the content of web sites. For instance, Murphy et al. (1996) examined the web sites of 36 hotels, and identified 32 separate features found on these web sites. The authors then claimed that the most effective hotel web sites were those that gave customers the easiest and most rewarding access to relevant and related information. Weeks & Crouch (1999) performed a similar study, which analysed the content of 120 Australian tourism and hospitality web sites, and research findings indicated that the accommodation sector was less likely than other sectors to inform online visitors about other web sites. In another study, Van Hoof et al. (1999) surveyed 166 hotel managers, and among the eight types of web page contents, “virtual tours of the property” had the lowest percentage of inclusion (23.8 per cent), whereas all respondents' web sites had “information on the property”. Furthermore, Morrison et al. (1999) applied the balanced scorecard approach to web site evaluation, and claimed the critical success factors for hotels could be determined by four dimensions, namely technical, marketing, internal and customer. Empirical findings of the web sites of 16 small hotels in Scotland revealed that the web sites appeared as electronic brochures instead of interactive marketing tools. Empirical studies on the adoption level of web sites by hotels in Malaysia are indeed lacking. Since hospitality and tourism industry has grown to be one of the most important contributors in the Malaysian economy, a study to understand the adoption level of web sites in enhancing customer relations leading to greater competitive advantage merits further investigation.
2.1 Hotel Industry in Malaysia
Since hotel industry is a significant subset of hospitality and tourism industry, it seems reasonable to infer that one can ascertain the growth of hotel industry through the facts and figures of shown from the growth of hospitality and tourism industry.
2.1.1 Growth in Hospitality and Tourism Industry
A source from Tourism Malaysia on tourists’ arrivals statistics stated that Malaysia has recorded a total of 17,378,040 tourist arrivals during the first nine months of 2009, indicating a sign of continuous growth of tourists to the country. It represented an increase of 6.4% compared to 16,329,855 for the same period in 2008. During September 2009, tourist arrivals grew by 24.9% from 1,599,418 in September 2008. Tables 1 and 2 illustrate the comparison between 2008 and 2009 statistics indicating a trend of growth in tourism in Malaysia (Tourism Malaysia, 2009).
Table 1: Comparison of tourist arrivals to Malaysia (September 2008 and 2009)
MONTH TOURIST ARRIVALS
0 2008 TOURIST ARRIVALS 0 2009 % CHANGE SEPTEMBER 1,599,418 , 1,997,535 24.9 Source: Immigration Department of Malaysia
Table 2: Comparison of tourist arrivals to Malaysia (January – September 2008 and 2009)
MONTHS TOURIST ARRIVALS
0 2008 TOURIST ARRIVALS 0 2009 % CHANGE ANUARY –
PTEMBER 16,329,855 17,378,040 . 6.4 Source: Immigration Department of Malaysia
The top ten tourist generating markets from January to September 2009 were: Singapore (9,398,463), Indonesia (1,729,690), Thailand (1,075,689), Brunei (772,174), China (including Hong Kong & Macau) (735,529), India (420,046), Australia (371,488), the Philippines (332,293), the United Kingdom (324,061) and Japan (297,041). Besides, Forbes Asia projected growth in the tourism industry based on the attractive market Malaysia can offer to foreign hoteliers. According to Forbes Asia, while Malaysian businesspeople are reluctant to build local hotel chains, big international brands such as the Mandarin Oriental, Nikko Hotels, Hilton and others have jumped into the market. The Hyatt and Four Seasons chains will open hotels in Malaysia in the next few years. A new Doubletree in Kuala Lumpur is expected to start accepting guests in May (Gatsiounis, 2010).
According to Gatsiounis (2010), the foreign hoteliers consider the country's travel business is has risen considerably since the world's tallest twins, the Petronas Towers, opened more than a decade ago. More and more, Malaysia finds itself on itineraries, with low-fare airline Air Asia--perhaps Malaysia's most recognized brand--making it easier and cheaper to get to and around the country. Arrivals of visitors who stayed at least one night hit 23.7 million last year, up from 7.9 million in 1999. Tourism is now the country's second-highest revenue producer (behind manufacturing), accounting for 12.3% of the gross domestic product last year. At the same time a more open regulatory environment for the industry--compared with other parts of the region except Singapore and Hong Kong--is attracting hotel investment from abroad. Foreigners find it easier to buy property and to move their money in and out of the country (Gatsiounis, 2010).
2.1.2 Hotels’ Service Quality and Star Ratings
Hospitality and tourism organizations are generally becoming more aware of the benefits of technological applications, customers have also become increasingly driven by technology, and are therefore demanding higher levels of services associated with technology (Lee et. al., 2003). It is therefore imperative that hotels identify ways in which they can utilise new technologies to create services that contribute to increased value for their customers (David et al., 1996). Such value-added experiences refer to services within the hotel itself and outside it. The interaction of a
hotel with its stakeholders (customers, suppliers, retailers and employees) has been redefined as business is increasingly conducted in the electronic marketspace, and as customers increasingly utilise electronic media (such as e-mail and the Internet) to communicate.
Apparently, service quality levels of hotels are usually pre-determined by the local authority of a country in which the hotels are operating in and the standards are clearly defined and reflected in the star rating criteria and category. In Malaysia, the criteria for star ratings are pre-determined by Malaysia Association of Hotels (MAH), a government agency acting as the local authority on behalf of Ministry of Tourism, Malaysia. Based on the report generated by MAH, in year 2007 there are a total of 624 hotels ranging from 1 to 5 star rated hotels in Malaysia (Malaysia Association of Hotels, 2009). Out of the number of hotels in Malaysia 11% falls under the five star rating; 16% are four star hotel; 27% are three-star hotels; 29% are two-star and the remaining are 1 star hotels (see Exhibit 1 for a full list of hotel star ratings). There are six major areas covered in the criteria of star ratings (http://www.hotels.org.my/files/star_rating_criteria.pdf) :
a) Qualitative and Aesthetic Requirements (eg: safe and functional, decorations in bed and bath rooms)
b) Common Areas (eg: reception area, bar, dining, conference hall, restaurant, lifts, recreation)
c) Bedroom Requirements (eg: size, furniture and fittings, electrical equipment, ventilation) d) Services (eg: food and beverage, front desk, safety deposit, foreign exchange, credit card
payment)
e) Safety Standard and Hygiene (eg: fire, electricity, emergency power supply, kitchen, food storage)
f) Staff (eg: staff qualifications, language proficiency, medical examination of staff)
2.2 The Growth of Internet Adoption and Internet Marketing
The Internet is fast becoming popular among Malaysians and this is obvious with the rise in the percentage of users, that is, from 17 percent in the year 2001 to 57 percent in the year 2008, with usage levels increasing annually (Malaysian Science and Technology Information Centre, 2008). A report by Malaysian Science and Technology Information Centre on the Internet population for the year 2008 shows that Internet users comprised mainly those who have received tertiary education and more in the science stream, professionals or those at management levels, above average household income level, youths and those who live in an urban locality (Loh, 2000). Malaysian markets have recently begun to understand the importance of E-CRM (Ab Hamid, 2008). This is clearly seen in the fact that firms have given CRM top priority in their investment decisions, particularly since most of the companies are transforming from product-oriented to customer-focused organizations (The Star Online, 2004). Companies are looking for dedicated CRM solutions to meet the challenges of meeting the dynamic needs of consumers. More recently, it was reported that there has been increasing interest in implementing E-CRM by even small-to-medium scale businesses (Sharif, 2004a; Sharif, 2004b; Sharif, 2004c). In fact, it is reported that there is a positive trend and increasing awareness of the benefits of Internet marketing (Khatibi et. al., 2002; Suki et. al., 2002).
2.3 E-CRM Features on Hotels’ Web sites
According to Grönroos (1994) service firms by their inherent characteristics of inseparable production and consumption possess the elements necessary to forge relationships with
customers. Because most companies offer almost the same core product/services, differentiation will be of greater interest to companies with the strongest capability to develop long-term customer relationships (Zineldin, 1999). Customers perceived service quality, satisfaction and value have played an important role in service management (traditionally) in the context of online businesses, so a holistic and multi-purpose view of the whole relationship is required (Holmlund & Strandvik, 1999; Luck & Lancaster, 2003).
In a study of the current use of the Internet as a marketing tool in the hotel industry, Gilbert et al. (1999) present an argument for the application of the RM model as a framework for the development of hotel Web sites. They contend hotels need a framework that can bridge the gap between simply connecting to the Web and harnessing its power for competitive advantage. However, the pursuit of the marketing objective will be constrained by the possibilities presented within the hotel’s market area, the hotel’s location and its current product positioning (Jeffrey and Barden, 2000). WebProbe claims that if hoteliers know more about their visitors, they will be able to redesign their sites to help them build stronger relationships with them. Geoffrey Breeze, vice-president of marketing at Hilton International maintains that hotels have far more information about their guests than they can actually use (Caterer & Hotelkeeper, 2001).
Therefore, this study is premised on previous literature to investigate the extent to which hotel operators utilize and maximize the potential of the Internet in managing customer relations. Ab Hamid and McGrath (2005) reported 13 dimensions of E-CRM program namely: information quality, ease of navigation, customer service quality, fulfillment, integrated marketing channels, online community, rewards, personalization level, site security , value-added services, perceived trust and price attractiveness. The following paragraph describes Ab Hamid and McGrath dimensions of ECRM.
a) Information quality
Based on information systems literature, information quality is a reflection of relevancy, recency, sufficiency, consistency and understandability. Since a consumer’s decision making efficiency improves when searching is simplified, information presented on the sites should be easy to understand and up-to-date.
b) Ease of navigation
In brief, ease of navigation includes both good organization (format) of the content layout as well as simple-to-use navigation (ease of use). Sites that are easy to navigate offer quick access to information needed with minimized effort.
c) Customer service quality
Consumers constantly demand for careful, continuous, useful communication with company Representatives. Since these attributes are frequently identified as salient dimensions in store selection behaviour, company representatives should have the knowledge and basic technology skills to answer online questions. They should understand consumer-specific needs, have the capacity to handle problems that arise and address consumer complaints in a friendly manner. d) Fulfillment
The order fulfillment process is concerned with delivering the right product at the right time and responding to consumer inquiries.
e) Integrated marketing channels
For click-and-mortar companies, integration of the virtual and physical operations is crucial to ensure continuous consumer relationships in both channels. This is because consumers want to be able to deal with companies as single entities. They also expect to get the same consumer service level via all channels.
f) Online community
Consumers can exchange information with each other and obtain online help from their online members when a product related problem arises. These experiences create stickiness – the extent to which a company is able to attract consumers to use a site relatively longer and return, and consumers are more likely to revisit the site.
g) Rewards
Reward is another attribute deemed important to attracting consumers to repatronize. Reward programs allow consumers to collect points for every purchase from or visit to a site, in exchange for free gifts, coupons or cash rebates. The program also provides greater membership privileges for returning consumers.
h) Personalization level
Personalization attracts consumers to come back repetitively since it turns consumers into product ‘makers’ rather than simply product ‘takers’ (Winer 2001), Thus, consumers are empowered in ways that they can choose their own preferred design, colour, product updates and other attributes that go well with their tastes.
i) Site security
Consumers are concerned about online payment security, reliability and privacy policy since they have to provide their personal details and credit card information in the ordering process. This concern increases the perception of risk and simultaneously reduces the level of trust in an online company, which in turn adversely affects satisfaction. Hence, online companies that clearly communicate to consumers on how their private and transaction data are secured are more likely to benefit from increased consumer satisfaction.
j) Value-added services
Consumers will feel empowered and in control when they are able to easily find product/service, learn more about it and quickly make a purchase decision. For example, a site may provide features such as shopping carts, one-click ordering and order tracking to provide superior convenience and higher levels of consumer control.
k) Perceived trust
Since online transactions are associated with perceived risk; trust and confidence in the firm seem imperative in a consumer’s decision making. Assurance of security in using the Web can be done by implementing security features such as digital certificates, secure servers and third party trusting agencies.
l) Price attractiveness
Online consumers can easily compare prices across e-tailers (retailers who use the Internet as their only marketing channel. Consequently, if a price paid is higher than what is found in other e-tailers for a similar product, the consumer is significantly less satisfied.
Further, Arnott and Bridgewater (2002) categorized marketing features on the Internet into three types:
• Informational feature, refers to one-way, informational marketing activities, for example publication of product information
• Transactional feature, refers to two-way activities involving user-company interactions, for example tracking order status and request for catalogue
• Relational features refers to activities which intrigue customers to return, in other words these activities create site loyalty such as rewards, superior customer service quality, personalization, loyalty programmes and building online community (Winer, 2001).
In order to be able to compete in the global and borderless market of digital business, Malaysian companies have little option, but to maximize the potential of Internet technology. It appears to be no longer a choice, but a necessity. However, Malaysian companies seem to be lagging in utilizing the potential of the Internet in forging relationships with consumers. Primarily, Malaysian companies are prone to use the Internet merely for informational purposes rather than transactional (Ab Hamid & Kassim, 2004). Most Web sites for example, display information on corporate profiles, product listings and contacts, but with no interactive features, such as shopping, placing orders, online payment, tracking orders, and online technical support and so forth. As such, consumers visit company Web sites only to obtain information and may have to use other conventional channels, such as the telephone, fax or walk-in to purchase a product. This will result in higher operation costs for companies that run businesses by conventional means, while their competitors world-wide may be enjoying cost savings, speedy markets, better customer services and increases in repeat consumers, as a result of maximizing the potential of Internet technology (Ab Hamid & Khatibi, 2006). Hence, we offer the following propositions:
P1: Hotel web sites do not differ in the usage level of the informational features. P2: Hotel web sites do not differ in the usage level of the transactional features. P3: Hotel web sites do not differ in the usage level of the relational features
3 Methods
3.1 Sampling and Survey Methods
The aim of this research was to assess the levels of E-CRM features presented on hotel web sites in Malaysia. A list of hotel web sites were obtained from two major hospitality and tourism portals in Malaysia: cuti..com.my; and marimari.com.my. Initially, there were 638 hotels listed on the two portals. However, the research objectives call for the assessment of each hotel’s own web site. Therefore hotels that do not have their own web sites were excluded and resulting in a total of 405 web sites used for further analysis.
To meet the research objectives, researchers tested the companies Web sites posing as potential customers. A standard process was set and adhered to as to find out the types of features available on each company’s retail Web sites. A total of 77 E-CRM features were listed as the operationalized items under study. The availability of these features on each hotel companies Web sites were noted and checked against the list. For example, items such as product information, FAQ, email links, locate store, chat, bulletin and so forth were checked “yes” or “no” to denote their existence or otherwise on the sites. In some instances, researchers posed as prospective customers, for example to assess the promptness of customer service. In such case, researchers posted emails to customer service and observed the promptness of reply - whether the reply was automated and standard, and whether it was personalized.
3.2 Operationalization items
This study adapts the 13 salient dimensions of E-CRM proposed by Ab Hamid & McGrath (2005) as well as features of E-CRM as purported by Feinberg and Kadam (2002). In addition, Arnott and Bridgewater (2002) categories of E-CRM activities are adapted as illustrated in Table 3.
Table 3: Theories from Past Studies on E-CRM Features and Levels Dimension
(Ab Hamid & McGrath, 2005)
Items
(adapted from Feinberg & Kadam, 2002)
Level (Arnott & Bridgewater, 2002) Customer Service Quality
• Purchase terms and condition • Product preview • VoIP • Request catalogue • 1-800 number • Call-back button • Complaining ability • Customer service area • Problem solving
Transactional & Relational
Site security • Privacy policy Relational
Rewards • Member benefits
• Gift certificate • Affinity program
Relational
Integrated channel • Find store Informational
Information quality • Company profile • Product information • Info. for first time users • Contact email • Fax number • Postal address • FAQ • Local search Informational
Personalization • Site customizing • pURL
Relational Value-added service • Order within 3 clicks
• Quick order ability • Track order status • On-sale area • Your account info.
• Cross sell/up sell/add-on sale
Relational
Online community • Chat
• Bulletin board • Blog
Relational
Ease of navigation • Site tour • External links • Site map
Informational
Perceived trust • Third party trust seal Relational
Price • Price list
• Discounts Transactional
Emotional benefits • Entertainment Relational
Order fulfillment • Online purchasing • Check out
Derived from variables listed in E-CRM dimensions and Internet features categories postulated by Arnott and Bridgewater (2002), our study assessed the levels of E-CRM adoption by hotel operators using operationalization items as shown in Table 4.
Table 4: Operationalization of Variables
No Item
E-CRM Level1 Star Rating
Informational Tools 2 Postal Address
3 E-mail
4 Company History/ Profile 5 Fax
6 Images
7 Local Search Engine 8 Links 9 Color 10 FAQs 11 Site Map 12 Annual Reports 13 Electronic Newsletters/Newsroom 14 Announcement 15 Advertisements
16 Introduction For First-time Users 17 Online Directory
18 Gallery 19 Mailing List
20 Electronic Bulletin Board 21 Glossary
22 Site Tour
23 Toolbar featuring other websites 24 Route Map
25 No of Visitors
26 Product Information Online
Transactional Tools 27 Posted Privacy Policy
28 Posted Disclaimer/Terms & Conditions 29 Preview Product
30 Toll Free Numbers 31 Product Highlights 32 Account Information 33 Promotions 34 Activities
35 Speed of Download Pages 36 Store Locator/Choose Location 37 Instruction Information/User Guide 38 Online Payment
39 Online Purchasing 40 Download Tools 41 Ease of Check Out 42 On-sale Area 43 Purchase Condition 44 Roaming Agreements 45 Request for Catalog 46 Rewards
47 eBrochure 48 Online Booking 49 Customer Service Page 50 Affinity Program 51 Multimedia (music /video) 52 Online Feedback Forms 53 Language 54 Bulletin Board 55 Membership 56 Online Help/Helpdesk 57 Complaining Ability 58 Problem Solving 59 Call Back Button 60 Member Benefits
61 Site Customization Relational Tools 62 Best Practices
63 Voice Over IP 64 Security-sign
65 Gift Certificate Purchase 66 Ability to Track Order Status 67 Customization Possibilities 68 Mobile Edition 69 Personalization 70 Chat 71 Discussion Board 72 RSS Feed 73 Blogs 74 financial calculator 75 Plan & Schedule 76 Online Games
77 three dimension model (3D)
4 Results
4.1 Respondent Profile
From the list of hotels from the cuti.com.my and mari.com.my we have analysed a total of 405 hotels’ web sites.
Table 5: Summary of Distribution of Hotels andStar Ratings Distribution of Hotels andStar Ratings
Hotel 5 Star 4 Star 3 Star 2 Star 1 Star Total
Johor 4 6 17 2 29 Melaka 3 7 13 1 24 Neg Sembilan 1 1 4 6 Pahang 3 2 10 15 KL 22 23 32 8 3 88 Selangor 11 10 4 4 29 Putrajaya 2 1 3 Perak 1 14 10 7 32 Kedah 9 9 18 3 39 Perlis P.Pinang 6 12 9 2 29 Kelantan 1 1 2 1 5 Terengganu 2 9 16 4 31 Sabah 8 7 21 3 4 43 Sarawak 3 5 19 3 1 31 Labuan 1 1 Total 77 107 175 38 8 405 4.2 Tests of hypotheses
4.2.1 Usage Level of E-CRM Features
Next, we performed the cross-tabulation analysis to test the hypotheses of this study. The results depict that hotel web sites do not differ in their usage of informational and transactional features (p= 0.23 and p= 0.19 respectively). Hence, P1 and P2 can be accepted. However, there is a significant difference in the levels of usage of relational tools, p= 0.02. This shows that not all hotel companies are at the same level of implementation for features that can enhance relationships with customers, such as online community building, rewards and incentives and
personalized services. Therefore, P3 is rejected. The summary of the results is shown in Table 6. Table 6: Summary of Results
4.2.2 Usage Level of Informational Features
Overall, hotels’ Web sites reported the highest adoption level for the following features: fax
number, use of images and information for first-time users. That is, almost all hotels’ Web sites
(more than 98%) have displayed on those features. These information are deemed essential as the Web site would at least provide sufficient contact information and showcase ‘inviting’ images on the layouts and facilties of their hotels, which in turn may influence customers decision making. However, the hoteliers reported the lowest score in the use of Frequently-Asked-Quentions (FAQ) where only 45% of the Web sites observed have this feature. Although some basic answers to common questions found in FAQ can assist prospective customers to learn more about the service, purchase or subscription terms and condition and so on this feature is found to be lacking on the hotels’ Web sites.
4.2.3 Usage Level of Transactional Features
A closer look at the descriptive results indicate that hoteliers maximize the potential of the Internet in offering the followinf transactional features: product highlights, product preview and search for location. Indeed, these features promote further interests especially to visitors who are “shopping around” and whom may be good prospects for future purchase. The ability for customers to search for the hotel location through the search for location feature regardless of geographical boundaries brings the hotels closer to their customers and promtoing wider reach to customers worldwide.
However, features that involved integration with mobile customers is lacking. Apparently, from the results the RSS feed feature scored the lowest. As the usage of mobile devices is increasing hoteliers have no choice but to be more proactive in adopting ‘new’ technology in order to gain better market share.
4.2.4 Usage Level of Relational Features
Among the Relational features, site customization feature is found to be the most popular feature on hotels’ web sites, followed by complaining ability and privacy policy features. This indicates that all companies are highly concerned with raising consumers’ confidence level and securing visitors trust through clear statements of treatment to visitors’ personal information. At the same time, providing facilities for lodging complaints are equally important as consumers are well aware of risks associated with transactions over the cyberspace and seek higher assurance of quality after-sales support.
In addition, hoteliers tend to a give reasonable attention to reward component which is shown by high scores for membership benefits and gift certificate (83%). Certainly, as is common with
Star rating Informational Transactional Relational
1 star Yes:62% Yes: 55% Yes: 12%
2 star Yes:88% Yes: 62% Yes: 24%
3 star Yes:74% Yes: 69% Yes: 38%
4 star Yes:80% Yes: 75% Yes: 60%
5 star Yes:93% Yes: 82% Yes: 75%
Chi-square value χ2 = 29.55; p= 0.23
χ2
consumers’ behavior from Asia region reward attractiveness plays an important role to entice repeat visits (Ab Hamid & McGrath, 2005). This indicates that Malaysian hotel companies are relatively responsive to online consumers’ needs as to offer services which may result in higher retention rate. Online community feature such as bulletin board, discussion room and blog are not widely adopted. The results indicate that hotel companies are less aggressive in utilizing online community tool and are less personalized in their offerings.
5 Implications to Managers
Our findings indicate that companies are at the same adoption level for informational and
transactional tools. From the detailed analysis it is safe to conclude that all hotel companies are
using the Internet to disseminate corporate information, promotions, as well as the latest product and pricing list to their customers at a high level. In order to be competitive, firms should strive for adding value in their offerings. Providing facilities such as tracking orders, keeping and tracking records of consumers’ history of purchases or activities, allowing some degree of customization, and understanding consumers’ specific needs and preferences enhance consumers’ perceived value thus increases loyalty.
This study is subject to several limitations. Firstly, this study assessed the extent to which hoteliers are adopting E-CRM through the features available on the web sites. Further studies need to be carried out to ascertain other elements impetus for E-CRM implementation such as the analysis on the data collected from the Internet interactions and the extent to which hoteliers utilize the data to create segmentations entailing to creating value to customers. In this study, respondents came from hotel industry. More in depth studies could be carried out to investigate the use of E-CRM in industry specific environment such as financial sector, entertainment, health, government, and education sector since E-CRM may imply different meanings from one industry to another. This study is concerned with E-CRM program and its effect on consumer retention. Although companies are well advised to adopt an E-CRM strategy its implementation may vary depending on the business scale. For example, small businesses may not be able to fully utilize the potential of Internet technology due to constraints in resources. Hence, E-CRM implementation in various business scenario merits further investigation.
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