Professional Documents
Culture Documents
Abstract
In this study, the factors influencing the implementation of customer relationship management (CRM) at small and medium-sized
tourism enterprises in Cappadocia were analyzed. The findings of the research indicate that communication-distribution
infrastructure, business dynamics, customer relations and innovation-quality factors affect CRM. Business dynamics plays an
especially critical role in customer relations. It was also determined that the most important barriers to small and medium-sized
enterprises (SMEs) in the tourism sector are inadequate supporting budgets, lack of senior management commitment to CRM and
poor communication.
r 2005 Elsevier Ltd. All rights reserved.
Keywords: Customer relationship management (CRM); SMEs; Tourism sector; Factor analysis
0261-5177/$ - see front matter r 2005 Elsevier Ltd. All rights reserved.
doi:10.1016/j.tourman.2005.06.011
ARTICLE IN PRESS
S- . Özgener, R. İraz / Tourism Management 27 (2006) 1356–1363 1357
dialogue with customers, across all their contact and 2.2. The importance of CRM
access points, with personalized treatment of the most
valuable customers, to increase customer retention and Customer focus and attention to customer service is
the effectiveness of marketing initiatives. not a new concept. It is certainly a business dynamic
CRM refers to all business activities directed towards that has been recognized for a long time by more people
initiating, establishing, maintaining, and developing than the management gurus such as Peter F. Drucker.
successful long-term relational exchanges. CRM is the CRM is more evolution than revolution. Thus, achiev-
set of methodologies and tools that help an enterprise ing the full potential of each customer relationship
manage customer relationships in an organized way should be the major goal of every business (Boxwell,
(Lawson-Body & Limayem, 2004). In other words, 2000). Particularly, customer relationships play a major
CRM can be defined as an interactive process achieving role in the competence development of SMEs (Skaates &
the optimum balance between corporate investments Seppanen, 2002). SMEs are embracing CRM as a major
and the satisfaction of customer needs to generate the element of business strategy, because technological
maximum profit. It involves (Gebert, Geib, Kolbe, & applications permit a precise segmentation, profiling
Riempp, 2002): and targeting of customers and competitive pressures
require a customer-centric culture (Gurau, Ranchhod, &
Hackney, 2003).
Measuring both inputs across all functions including
To survive in the global markets, focusing on the
marketing, sales and service costs and outputs in
customer is becoming a key factor for SMEs. It is
terms of customer revenue, profit and value.
known that it takes up to five times more money to
Acquiring and continuously updating knowledge
acquire a new customer than to get an existing customer
about customer needs, motivations and behavior
to make a new purchase. Hence, customer retention is in
over the lifetime of the relationship.
particular important to SMEs because of their limited
Applying customer knowledge to continuously im-
resources (Baumeister, 2002). Moreover, a dissatisfied
prove performance through a process of learning
customer causes market damage because they are
from successes and failures.
more likely to defect to competition and more
Integrating the activities of marketing, sales and
likely to persuade others to defect. It is therefore no
service to achieve a common goal.
surprise that CRM is an important topic of conversation
Implementing appropriate systems to support custo-
in business world (Feinberg, Kadam, Hokam, & Kim,
mer knowledge acquisition, sharing and measuring
2002).
CRM effectiveness.
CRM is the strategic application of people, processes
Constantly flexing the balance between marketing,
and technology to improve and sustain profitable
sales and service inputs against changing customer
relationships with customers and partners. CRM
needs to maximize profit.
provides transform organizations into customer-centric
enterprises that maximize the value of every customer
CRM is an active, participatory and interactive (Skaates & Seppanen, 2002). CRM is based on the
relationship between business and customer. The ability to facilitate communication and decision-making
objective is to achieve a comprehensive view of to provide consistent, high-quality, and cost-effective
customers, and be able to consistently anticipate and services to all stakeholders (Andrade, 2003). CRM can
react to their needs with targeted and effective activities help businesses enhance their customer relationships by
at every customer touch point (Piccoli, O’connor, attracting more profitable customers and establishing
Capaccioli, & Alvarez, 2003). stronger and more durable customer relationships (Falk,
CRM is essentially a two-stage process. The task of 2004). CRM gives sales force more time to sell, improves
the first stage is to master the basics of building customer response times and quality of customer
customer focus. This means moving from a product service, and allows marketing to better understand
orientation to a customer orientation and defining customer issues and trends. At businesses, CRM
market strategy from outside-in and not from inside- philosophy leverages best practices that value customer
out. The focus should be on customer needs rather than information as a corporate asset. It is committed to
product features. Businesses in the second stage are helping businesses implement strategies and solutions
moving beyond the basics; they do not rest on their improving the way they sell, communicate service and
laurels but push their development of customer orienta- analyze customers (Skaates & Seppanen, 2002).
tion by integrating CRM across the entire customer CRM is currently one of the hottest topics in the fields
experience chain, by leveraging technology to achieve of business strategy, marketing management and
real-time customer management, and by constantly information technology. CRM differs from traditional
innovating their value proposition to customers (Ry- marketing initiatives (see Table 1). CRM is also a cross-
gielski, Wang, & Yen, 2002). functional philosophy that calls for substantial business
ARTICLE IN PRESS
1358 S- . Özgener, R. İraz / Tourism Management 27 (2006) 1356–1363
Source: Piccoli et al. (2003, p. 62). Consequently, rapid changes on the competitive
environment have forced enterprises to fundamentally
integration. Thus, to implement CRM successfully, a rethink the way they do business. Therefore, CRM,
very different mindset is needed (Piccoli et al., 2003). which is of largely strategically character, is considered
Substantial investments in CRM are not right for an effective option (Feinberg et al., 2002). But, because
everyone. In a small business, for example, it is relatively of globalization and developments in information
easy to keep in touch with customers’ preferences. But, technologies, CRM applications are becoming more
because of the significant increase in the amount of multifunction (Karimi, Somers, & Gupta, 2001). Many
information that must be managed as the firm’s scale major businesses use softwares to support CRM
and scope increase, successful CRM requires significant implementations. But many types of software designed
investments in technology, process redesign, and people. for CRM largely neglect SMEs.
As customers and businesses interact more frequently,
businesses will have to leverage CRM and related
technologies to capture and analyze massive amounts
of customer information. Because, information and 3. A literature review
communication technology allows customer data to be
collected, consolidated, manipulated, and analyzed on Eriksson and Löfmarck Vaghult (2000) conducted
an unprecedented scale. However, CRM demands more empirical studies on customer retention in professional
than information and communication technology. The services, while Karimi et al. (2001) focused on the
customer must become the focal point of the organiza- impact of electronic commerce CRM on corporate
tion. All members of the organization must understand success. Özgener (2001) executed a survey on CRM at
and support the shared values required for CRM SMEs. Feinberg et al. (2002) analyzed the state of
(Rygielski et al., 2002; Piccoli et al., 2003). electronic customer relationship management in retail-
ing, and Campbell (2003) studied internal processes
2.3. Business benefits of CRM involved in creating customer knowledge competence,
which allow financial firms to strategically manage their
CRM focus on managing the relationship between a CRM programs. Madeja and Schoder (2003) investi-
business and its current and prospective customer base gated the impact of electronic commerce CRM on
as a key to success (Gebert et al., 2002; Falk, 2004). To corporate success. Another study of CRM in SMEs was
be effective, a CRM strategy must encompass and conducted by Lau (2003). Piccoli et al. (2003) addressed
integrate all customer-facing activities. It should ensure CRM in the lodging industry. Karakostas, Kardaras, &
that no matter where, when, or how a customer interacts Papathanassiou (2005) studied the state of CRM
with the company, the contact is personalized, consis- adoption by the financial services sector and Sigala
tent, and demonstrates that the company knows and (2005) discussed the integration of CRM in hotel
values that customer. Business benefits include (Özge- operations.
ner, 2001; Andrade, 2003):
Many studies were used to design the questionnaire to which the indicators of a construct belong together,
for the tourism enterprises (Peppard, 2000; Ryals & i.e. a measure of the homogeneity of variables.
Knox, 2001; Kim & Kim, 2005). A questionnaire was A regression analysis is used to examine the relation-
structured to gather information about the managerial ship between variables obtained by factor analysis.
areas of CRM as well as characteristics of the hotels, Furthermore, we calculated means and standard devia-
restaurants and travel agents. It consisted of 25 items tions for each variable and a correlation matrix to test
(see Appendix), scored on a 5-point Likert scale with an the relationships between variables.
agree/disagree continuum (1 ¼ strongly disagree,
2 ¼ disagree, 3 ¼ neither agree nor disagree, 4 ¼ agree,
5 ¼ strongly agree). The 25 item CRM instrument had
reliability (Cronbach’s a) of 0.934. In addition, multiple 5. Results
choices questions were designed related to the objectives
of CRM. 5.1. Characteristics of the sample
The sampling is from small- and medium-sized
tourism enterprises in the Cappadocia region. The data The rate of enterprises that responded to the
for sampling was gathered with the help of the Tourism questionnaire was 35.3% hotel, 21.6% pension, 3.4%
Ministry and eight municipalities in the region motel, 17% travel agency and 22.7% restaurant. Those
(Nevs- ehir, Ürgüp, Avanos, Göreme, Uc- hisar, Ortahisar, enterprises were located in Ürgüp (28.4%), Göreme
Derinkuyu and Kozakh). The enterprises were categor- (21.6%), Avanos (14.8%), Nevs-ehir (13.6%), Uc- hisar
ized into two groups, those licensed by the Tourism (10.3%), Ortahisar (6.8%), Kozaklı (2.3%), Derinkuyu
Ministry and those licensed by a municipality. Ques- (1.1%) and Güls- ehir (1.1%).
tionnaires were sent to 318 enterprises. Five point nine percent of the respondents were
Cappadocia has an important place in Turkey’s female and 94.1% were male. In terms of education
tourism sector. Based on 2003 data, the area has 41 levels, 15.9% of the responders had graduated from
hotels licensed by the Tourism Ministry, with a bed primary school, 31.8% from high school, 48.9% held
capacity of 7698. There are also 51 Group A travel Bachelor of Science degrees, and 3.4% had Master’s
agencies and 4 tourism enterprises licensed by the degrees.
Tourism Ministry. In addition, there are 237 tourism Respondents held a variety of positions in the
enterprises (89 restaurants, 82 hotels-motels and 66 businesses. They included owners (52.3%), senior
pensions) licensed by municipalities. The total bed managers (15.9%), customer relations managers
capacity of these hotels, motels and pensions is 4420. (5.7%), information processing managers (3.4%), public
E-mail and interviewers were used to distribute relations managers (2.3%) and other positions (20.5%).
questionnaires to 318 enterprises. The response rate More than 50% of those responding had BS degrees,
was 27.6% (88 usable questionnaires), an acceptable and 54.3% had more than 5 years of job experience.
response rate for this kind of study (Lewin, Sakano,
Stephens, & Victor, 1995; Pierce & Henry, 1996).
5.2. Business approaches to CRM
In this study, factor analysis was used to analyze the
relationships among variables. The basic idea of factor
Forty six point six percent of SMEs invested in CRM
analysis is to combine several variables into a smaller set
while 53.4% did not. In 78.4% of the enterprises, CRM
of independent variables without loosing the essential
was included in general activities, while in 6.5% of the
information from the original dataset (Kurtulus-, 1998).
enterprises CRM was in the public relations department.
When factor analysis is conducted, the first step is to
3.7% of the enterprises had separate CRM departments;
examine whether the dataset is appropriate for factor-
11.4% had a CRM department under the top manage-
ing. The following steps can be undertaken (Andersen &
ment.
Herbertsson, 2003):
In terms of the customer relations perspective, it was
Examine the correlation matrix: High correlations
determined that 79.5% of SMEs were customer
indicate that variables can be grouped into homogenous
oriented, 9.1% were production or service oriented,
sets of variables, and they are thus appropriate for
and 11.4% were enterprise oriented. The goals of
factor analysis.
tourism enterprises for CRM are shown in Fig. 1.
Examine Kaiser– Meyer– Olkin measure of overall
Fig. 1 illustrates that the main goals of CRM imple-
sampling adequacy (KMO)1 for each variable: The
mentations were acquiring new customers (40.9%),
KMO measure provides a means to assess the extent
sustaining a competitive advantage (38.8%), customer
1
No statistical tests exist for the KMO measure, but Kaiser and Rice (footnote continued)
(1974) suggest the following guidelines in the interpretation: A KMO larger than 0.7 is middling, larger than 0.6 is mediocre, larger than 0.5
measure larger than 0.9 is marvelous, larger than 0.8 is meritorious, is miserable, and below 0.5 unacceptable.
ARTICLE IN PRESS
1360 S- . Özgener, R. İraz / Tourism Management 27 (2006) 1356–1363
retention (26.1%), improving customer services (25%) was 0.719, in the acceptable range (well above 0.60).
and decreasing costs (14.8%). Therefore the assumptions for carrying out factor
analysis are met. The sample data of 88 responses was
5.3. Factor analysis of CRM at tourism enterprises examined using factor analysis with principal compo-
nents as the extraction technique and varimax as the
Before indicating the factors influencing the customer rotation method.
relations by using factor analysis, (a) a p2 value of Six factors were extracted in the unrotated factor
431.931 and significance level of 0.000 were obtained solution with eigenvalues over 1. These six factors
using Bartlett’s sphericity test, which suggests that the explain 76.2% of the variance. However, interpretation
intercorrelation matrix contains sufficient common of the factors that are not subject to rotation is rarely
variance to make factor analysis worthwhile, (b) significant. Two of the items were rejected due to their
Kaiser–Meyer–Olkin measure of sampling adequacy low communalities in the first rotated solution to
improve the factor analysis. A more parsimonious
solution was then sought by inspecting the factor scree
45 plot. Then after the content analysis, 9 non-significant
40 variables that have low loading values were not included
35
in factor analysis. After analyzing the remaining 16
Percentage (%)
30
factors, 4 factors having a factor loading of 0.50 and
25
20
eigenvalue greater than 1 were obtained. These four
15
factors explain 74.5% of the variance, which is an
10 acceptable percentage. The compromise is worthwhile
5 because the factor solution is easier to interpret.
0 A varimax rotation was applied which converged in 8
Improving
competitive
Customer
customers
Decreasing
Acquiring
Increasing
retention
Sustaining
advantage
customer
profits
new
costs
Table 2
Results of factor analysis to CRM
Table 3
Means, standard deviations and correlations of scales
Table 4
The results of regression analysis for customer relations
account when naming the factors (Table 2). Four factors between innovation and quality, and other three variables
were therefore identified as the main dimensions under- (communication-distribution infrastructure, business dy-
lying CRM in the tourism sector. Reliability was namics and customer relations) at the 0.05 level.
evaluated by assessing the internal consistency of the A regression analysis was used to examine the
items representing each factor using Cronbach’s a. The relationship between the other three factors (commu-
reliabilities of factors are shown in Table 2. Cronbach’s nication-distribution infrastructure, business dynamics,
a values were high, ranging from 0.75 to 0.95 for the innovation and quality) and customer relations. When
four factors. The factors are considering communication-distribution infrastructure,
FACTOR 1: Communication-distribution infrastructure. business dynamics, innovation and quality in its entirety
FACTOR 2: Business dynamics. as independent variables, the results show that business
FACTOR 3: Customer relations. dynamics and communication-distribution infrastruc-
FACTOR 4: Innovation and quality. ture have a significant positive relationship with
Table 2 shows each factor loadings, initial eigenva- customer relations in tourism sector (R2 ¼ 0:284). The
lues, variance and Cronbach’s a. results from regression analyses in Table 4 suggest that
Descriptive statistics related to variables and the the overall model was significant (R2 ¼ 0:284;
correlations between the four factors are shown in F ð3;84Þ ¼ 11:103; po0:001). The interrelation of the three
Table 3. The analysis of the correlation results showed independent variables was taken into account, and the
that there was a significant relation between customer R2 (0.284) was significant at the 0.000 level (F ð3;84Þ ¼
relations and other two variables (communication- 11:103). That means that 28.4% of the variance in
distribution infrastructure and business dynamics) at customer relations was significantly explained by the
the 0.05 level. There was also a significant relation independent variables. Among three independent vari-
between customer relations and, innovation and quality ables, business dynamics is the most important in
(po0:01). Finally, a significant relation was observed explaining the variance in customer relations as the
ARTICLE IN PRESS
1362 S- . Özgener, R. İraz / Tourism Management 27 (2006) 1356–1363
Table 5
The barriers to CRM
The barriers to CRM Strongly Disagree Neither Agree (%) Strongly Mean Std.
disagree (%) (%) agree nor agree (%) deviation
disagree (%)
Inadequate supporting budgets 0.0 8.0 15.9 33.0 35.2 4.03 0.95
Lack of senior management 6.8 5.7 13.6 36.4 31.8 3.85 1.17
commitment to CRM
Poor communication 1.1 6.8 22.7 37.5 22.7 3.81 0.94
An absence of complementary 4.5 9.1 20.5 33.0 23.9 3.68 1.12
customer management skills
Inefficiencies in business process 2.3 17.0 15.9 39.8 17.0 3.56 1.07
Lack of end-user input at service 1.1 17.0 26.1 28.4 20.5 3.53 1.06
stage
A lack of standardization 0.0 13.6 36.4 25.0 12.5 3.41 0.92
Inter-departmental conflicts 9.1 10.2 21.6 40.9 10.2 3.37 1.15
Lack of cultural readiness 22.7 23.9 27.3 14.8 1.1 2.41 1.08
highest beta (b) value was 0.406. Namely, business Besides, it is a fact that for these enterprises, human
dynamics were found to significantly predict customer behaviors have a very important role in customer relations.
relations (t ¼ 4:199; p ¼ 0:00). This result supports our When the factors influencing CRM implementations at
prior assertion that business dynamics can be a critical small- and medium-sized tourism enterprises in Cappado-
factor for customer relations in small- and medium-sized cia were analyzed, it was determined that almost half
tourism enterprises. The second-ranked variable was of SMEs in the tourism sector invested in CRM. The
communication-distribution infrastructure, with a beta major factors influencing CRM in those enterprises
(b) of 0.196. were communication-distribution infrastructure, business
In order to detect the presence of multicollinearity, dynamics, customer relations and innovation quality.
the tolerance value is calculated (Table 4). Tolerance is The analysis of the correlation results showed that
the variability of selected independent variables not there was a significant relation between customer
explained by the other independent variables. Thus, very relations and other three variables (communication-
small values denote high collinearity. A common cutoff distribution infrastructure, business dynamics and,
threshold is a tolerance value of 0.10 (Kim & Kim, innovation and quality).
2005). Since all significant variables in Table 4 have From analyzing the regression results, it was seen that
much higher tolerance values than 0.10, there is no business dynamics and communication-distribution
significant collinearity. infrastructure had an important impact on customer
relations in the tourism sector. Business dynamics was a
5.4. The barriers to CRM crucial factor for customer relations in small- and
medium-sized tourism enterprises.
When analyzing Table 5, it is seen that the most According to the findings of study, the most
important barriers to CRM for SMEs in the tourism important barriers faced by SMEs in the tourism sector
sector were inadequate supporting budgets, lack of were inadequate supporting budgets, lack of senior
senior management commitment to CRM, and poor management commitment to CRM, and poor commu-
communication. Furthermore, there were other impor- nication. As a result, information and communication
tant barriers including an absence of complementary technologies, customer participation, internal business
customer management skills, inefficiencies in business dynamics, ease of use, innovation and quality, security
process, lack of end-user input at the service/design and flexibility need to be taken into consideration to
stage, a lack of standardization, and inter-departmental improve CRM for SMEs.
conflicts, apart from the lack of cultural readiness.
6. Conclusion Acknowledgements
Small- and medium-sized enterprises generally have The authors wish to thank Mehmet Yıldız (Selc- uk
limited sources and channels for reaching customers; University), Orhan C - oban and S- efik Kartal (University
consequently they are concerned about keeping customers. of Erciyes) for their assistance.
ARTICLE IN PRESS
S- . Özgener, R. İraz / Tourism Management 27 (2006) 1356–1363 1363