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How Does Crm Optimize Sales and Marketing Effectiveness in Travel and Tourism Industry?

Essay by review  •  May 30, 2011  •  Research Paper  •  1,813 Words (8 Pages)  •  961 Views

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How does CRM Optimize Sales and Marketing Effectiveness in Travel and Tourism Industry?

The profitability in travel and tourism market is focused on capacity in peak and off-peak seasons, fixed costs and variable costs, and the pricing of a product; therefore, capacity utilization and the development of demand balancing are the solutions. For that reason, instead of selling products or services separately, companies bundle them into the combinations of products and services that are more valuable because they serve the customers from the customers' perspective. The key to optimize sales and marketing effectiveness is customer relationship management (CRM).

Sales and marketing optimization is about building trusted relationships. Purchases of complex products, such as holiday packages, will increasingly be made by groups of decision makers, not by individual purchasers. More and more research is done via the Internet. The customers are more informed about the products, services and competitor options than they ever have been before. As a result, organizational processes, technology, sales and marketing strategies such as customer knowledge competence strategy and customerization strategy, and as well as organizational structure and labor quality are crucial for the relationships building.

In the research report by Chu (2002), they have developed the CRM value cycle which provides an overall framework and approach for helping companies focus on the most important aspects of customer relationships. The value cycle has four key components: customer experience, customer insights, refined business actions, and strategic capabilities. To create strong, unique and continuously improved customer experiences is the primary goal of the value cycle. The improvement process is based on generating customer insights across segments and individual customers, and translating those insights into actions that provide new and improved experiences. The company has to enhance their strategic capabilities continuously in order to drive optimal value for customers and the company.

Nowadays, sales force are working harder and longer just to keep up with the information flow and building the trust needed with customers in order to close deals. It is essential to employ technology through value-driven interactions that has the ability to utilize real-time information in multiple ways as it's gathered from systems. Moreover, technology must be a customer focused asset. The processes are coordinated across the value chain within the company to enhance customer experience and optimize sales and marketing effectiveness. In the research article by Stockdale & Borovicka (2006), a case study of Lonely Planet which the travel publisher has established an online community where members feel a sense of belonging, a shared history and develop ongoing relationships.

By developing online communities, Lonely Planet has a constant flow of information, albeit unstructured and often effusive, and feedback. They develop and maintain a high level of loyalty from a substantial community membership that reinforces brand recognition. The opportunities to accumulate customer information and to build customer relationships are extensive. In essence, a business supported online community is an effective tool for Customer Relationship Management (CRM).

However, effective sales and marketing optimization don't come standard with technology. Strategic thinking and evaluation is a necessary component. Collecting customers' information is essential for sales and marketing. By analyzing the information, enables companies to explore profitable opportunities created by emerging customer demand and reducing potential risks of misfitting customer needs. In the research article by Campbell (2001), customer knowledge competence is composed of four organizational processes. The first organizational process is the customer knowledge process which refers to the set of behavioral activities about customer information that is acquired, interpreted, and integrated to customer knowledge into the firm's marketing activities. The second organizational process is the Marketing-IT (information technology) interface. Marketing-IT interface refers to the process in which marketing and IT communicate and cooperate with each other. The third organizational process is top management involvement which refers to the process by which top management signals its support for the generation and integration of customer knowledge within the firm. The fourth organizational process is the employee evaluation and reward systems. The employee evaluation and reward system refers to the process by which employee behavior is aligned to the goals of generating and integrating customer knowledge into the firm's marketing strategies.

Customer knowledge competence enables companies to realize strategic benefits aimed at improving their competitive advantages that can help to optimize sales and marketing effectiveness.

Marketing efforts are designed to bring attention. After gathering and analyzing customers' information, companies can use customerization to capitalize on that attention which is required not only by customers' wants and needs that are best satisfied by customized offerings, but also by its operational capabilities to nurture the relationships that are needed. It is not only the first sale but continuing sales and loyalty.

In the research article by Wind & Rangaswamy (2000), they propose that companies are transforming the practice of marketing from being seller-centric to being buyer-centric by adopting customerization. Customerization offers customers more control in the exchange process. By providing relevant information and by making it easier and cheaper for customers with competitors; however, companies can still effetely influence customer decision making and choice processes. In fact, customerization is driven by a company's desire to redefine the relationship with its customers.

Take as an example, which has been transforming in the travel and tourism industry. The whole process starts way up on the value chain. Its customers can start with a simple idea; for example, a desired location and design a dream vacation on their computers, customizing their travel plans by trying out various options such as the air carrier, the hotel brand, and things to do, etc. before deciding what they want. Travelers can even just choose a simple vacation package and without dealing different things from different vendors (Stockdale & Borovicka, 2006).

The site also contains rich information related to traveling, all designed to help its customers in their decision



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