The spread of social media as a new form of communication contributes to a shift of paradigm from one-way communication to two-way communic...
The spread of social media as a new form of communication contributes to a shift of paradigm from one-way communication to two-way communication. Social media users expect to interact with firms and with other members of a community, sharing content and experiences. Therefore, companies should consider the risk of a “passive” social media presence. This means to have a company page on main social media, generally not connected with the business strategy, without a clear idea on how to
manage them. On the contrary, a quick improvement of social media presence could be advisable in order to enhance customer interactions, relationships, and engagement.
In order to better understand the possible paths a company can undertake to establish and to improve online relationships with customers and prospects, next sections will briefly examine the developments of relationship marketing theory, with particular reference to the most recent influence of Information technology (IT) and social media.
manage them. On the contrary, a quick improvement of social media presence could be advisable in order to enhance customer interactions, relationships, and engagement.
In order to better understand the possible paths a company can undertake to establish and to improve online relationships with customers and prospects, next sections will briefly examine the developments of relationship marketing theory, with particular reference to the most recent influence of Information technology (IT) and social media.
Relationship Marketing
Research on the topic of Relationship Marketing (RM) grew in the 1980s with the development of services marketing studies,22 the network theory, and business-to business marketing (Hakansson and Ford 2002). RM determines a shift of paradigm from transactional marketing, based on a dyadic relation between suppliers and customers, to a wider and systemic approach that considers the opportunity of customer retention through a proper management of interactions into networks of relationships (Vargo and Lusch 2004).23 According to this stream of research, core variables of marketing are: relationships, networks, and interactions (Gummesson 2002).
There are many definitions of relationship marketing, mainly focused on the development and maintenance of long-term relationships with customers and other stakeholders (Christopher et al. 1991; Morgan and Hunt 1994; Grönroos 1997, 2000a, b). Relationship marketing was conceptualized for the first time by Berry in 1983 in the field of services marketing as “attracting, maintaining and-in multiservice organizations-enhancing customer relationships” (Berry 1995). According to Christopher et al. (1991), an effective management of customer relationships allows companies to enhance long-term profitability, increasing customer retention.
The introduction of relationship marketing affected both marketing theory and practice leading to a change in the very definition of this concept. In fact, right now the prevalent approach in the literature defines marketing as the process of identifying and establishing, maintaining, and enhancing relationships with the customer and other stakeholders, at a profit, so that the objectives of all parties
involved are met (Morgan and Hunt 1994; Sheth and Parvatiyar 2002; Grönroos 1997; Kotler et al. 2010). The most recent definition of marketing proposed by the American Marketing Association (AMA)24 recognizes the importance of customer to customer exchange of value. This overcomes the approach that sees the company as the manager of relationships that delivers value “to” and not “with” customers (Gummesson 2006). The definition of 2007 is characterized by a more inclusive approach in comparison with the previous one of 2004, even though, for some extent, it limits the power of the relationship marketing approach (removing the term “customer relationships”).
involved are met (Morgan and Hunt 1994; Sheth and Parvatiyar 2002; Grönroos 1997; Kotler et al. 2010). The most recent definition of marketing proposed by the American Marketing Association (AMA)24 recognizes the importance of customer to customer exchange of value. This overcomes the approach that sees the company as the manager of relationships that delivers value “to” and not “with” customers (Gummesson 2006). The definition of 2007 is characterized by a more inclusive approach in comparison with the previous one of 2004, even though, for some extent, it limits the power of the relationship marketing approach (removing the term “customer relationships”).
The company is influenced by a great deal of market relationships and many of them are beyond the control of the marketing and sales department (Gummesson 1999; Gummesson 2002).25 Therefore, the relationship value is based on a continuous dialog among all company’s partners within the whole organization that creates new knowledge (Grönroos 2000a, b) and that transcends the boundaries of marketing and sales (Gummesson 2002). Considering this, Gummesson conceptualizes a definition of relationship marketing based on a systemic approach: “Total relationship marketing is marketing based on relationships, networks and interaction, recognizing that marketing is embedded in the total management of the networks of the selling organization, the market and society. It is directed to long
term win-win relationships with individual customers, and value is jointly created between the parties involved. It transcends the boundaries between specialist functions and disciplines” (Gummesson 1999).
term win-win relationships with individual customers, and value is jointly created between the parties involved. It transcends the boundaries between specialist functions and disciplines” (Gummesson 1999).
Scholars agree on a few properties to evaluate relationships: trust, satisfaction, and commitment are the most considered (Gruen 1995; Bauer et al. 2002; Gummesson 2006; Lagrosen and Svensson 2006). Trust is the confidence that one party demonstrates in the other party’s reliability and integrity (Morgan and Hunt 1994; McKinght et al. 2002; Bart et al. 2005; Urban et al. 2009); satisfaction is the
result of the comparison between expectations and perceptions (Oliver 1980, 1993; Zeithaml et al. 1985; Liu and Arnett 2000); and commitment is an enduring desire to maintain a valued relationship with the other party (Morgan and Hunt 1994). Other authors include also personalization (Miceli et al. 2007; Montgomery and Smith 2009) and involvement as a dimension able to influence customer satisfaction and, consequently, customer loyalty (Oliver 1980; Sanchez-Franco 2009).
result of the comparison between expectations and perceptions (Oliver 1980, 1993; Zeithaml et al. 1985; Liu and Arnett 2000); and commitment is an enduring desire to maintain a valued relationship with the other party (Morgan and Hunt 1994). Other authors include also personalization (Miceli et al. 2007; Montgomery and Smith 2009) and involvement as a dimension able to influence customer satisfaction and, consequently, customer loyalty (Oliver 1980; Sanchez-Franco 2009).
Therefore, the value of the relationship will be determined by the company ability to create trust, satisfy customers, and stimulate commitment by means of involvement and service personalization.
Online Relationship Marketing
In recent decades, interest in relationship marketing has increased due to a greater recognition of its benefits to both firms and customers, as well as thanks to the rapid advances in information technology (Berry 1995). The progress of IT and social media offers companies the opportunity to develop dynamic relationships and interactions with customers from the very first stages of the product development. As a consequence, consumers can take part in the value-creation process (cocreation), personalizing their experiences through interaction and dialog (Prahalad and Ramaswamy 2004).
According to our opinion the word “conversation” better describes relationship marketing in the online environment. Companies can manage relationships with their customers but, at the same time, also with prospects. In turn, both customers and prospects can interact with each other and with firms. All the community is involved in the communication process and in content generation and value
creation.
creation.
The opportunity to communicate online with a large number of individual customers and prospects creating personalized relationships can positively affect companies’ performance. This is confirmed by some studies conducted in the hospitality industry that found a positive connection between the ability of companies to initiate and encourage relationships and dialog strategies on the Web and
their level of success (Romenti et al. 2011).
their level of success (Romenti et al. 2011).
Customer Relationship Management
Relationship marketing theory is linked to the concept of customer relationship management (CRM) and, to such an extent, sometimes they are considered synonyms by academic scholars (Parvatiyar and Sheth 2001). However, CRM is generally more used to describe a set of techniques, usually IT solutions, that enables to generate long-term relationships with the company’s stakeholders (Ryals
and Payne 2001; Payne and Frow 2005). Therefore, CRM joins the potential of relationship marketing and IT with the aim to “collect, analyze and exploit guests’ knowledge for creating personalized services and experiences that solve individual guests’ problems” (Sigala and Christou 2006).
and Payne 2001; Payne and Frow 2005). Therefore, CRM joins the potential of relationship marketing and IT with the aim to “collect, analyze and exploit guests’ knowledge for creating personalized services and experiences that solve individual guests’ problems” (Sigala and Christou 2006).
By learning about customers’ needs and features, and collecting this knowledge for use, companies can customize the service (Berry 1985). In practice, firms look for and store relevant guests’ information in data warehouses in order to make them available in the whole organizations. This requires “a cross-functional integration of processes, people, operations, and marketing capabilities that is enabled through information, technology, and applications” (Payne and Frow 2005). Moreover, a front-line information system is particularly important for the effectiveness of CRM strategies (Parvatiyar and Sheth 2001).
Literature offers conflicting results about the relationship between CRM technology and organization performance.29 A study of Mohammed et al. (2014) in the hotel industry demonstrated that CRM becomes a source of competitive advantage only when CRM technological resources are integrated in marketing competencies (planning and implementation). In practice, CRM technology helps companies to plan and implement effective marketing actions with the aim of improving the companies’ ability to maintain profitable relationships with customers.
Well-known examples of customer-oriented IT solutions to manage customer relationships in tourism are frequency marketing programs such as frequent flyers/ guests programs and reward/fidelity cards.
Electronic Customer Relationship Management in Tourism and Hospitality
IT advances and Web 2.0 generated an extention of the traditional concept of CRM, increasingly integrated by the Internet opportunity to facilitate customer interactions.
The term Electronic Customer Relationship Management (eCRM) has been coined to define relationships management by means of IT solutions or on the web (Gummesson 2006; Sigala and Christou 2006). The objective of this practice is to engage with consumers by means of collaborative conversations for the creation of co-produced experiences. A proper Social CRM strategy can generate interesting benefits for travel companies: increase the value offered to customers and to prospects, decrease advertising costs, encourage loyalty, and promote favorable WOM.
CRM applications to tourism and hospitality have been studied by both scholars and practitioners. In recent years, research has considered especially the online environment and, in particular, the propensity of travel companies to interact with customers on the web, as long as the antecedents of this behavior.
Gan et al. (2006) investigated the Singapore hotel sector with the aim to study how the Internet is used to manage customer relationships. They classified CRM in four levels: information provision, database collection, personalization, and community relationships. Results indicated that Singapore hotels were mainly in the stage of database collection and that the propensity to employ CRM strategies was positively related to company’s star rating and dimension (number of rooms). Other
studies confirm the existing connection between company’s dimension (size) and its development of online strategies and interactions (Arnott and Bridgewater 2002; Sigala 2001; Gilbert et al. 2002; Bai et al. 2006; Romenti et al. 2011). Especially companies that focus on brand (members of a hotel chain) are more likely to adopt and develop IT (Wang and Qualls 2007; Scaglione et al. 2005) and invest more in social media to create online relationships as a way of strengthening their brand (Lagrosen and Josefsson 2011). The connection between a company’s quality level, as an antecedent of IT adoptions, and online interactions orientation is resulted to be more conflicting: some scholars confirm the relationship between quality level (Scaglione et al. 2005) and company’s relationship orientation (Sigala 2001; Schegg et al. 2002; Romenti et al. 2011), whereas other authors found that economy hotels demonstrate to have more interest in creating online customer relations (Essawy 2005; Lagrosen 2005; Minazzi and Lagrosen 2013).
studies confirm the existing connection between company’s dimension (size) and its development of online strategies and interactions (Arnott and Bridgewater 2002; Sigala 2001; Gilbert et al. 2002; Bai et al. 2006; Romenti et al. 2011). Especially companies that focus on brand (members of a hotel chain) are more likely to adopt and develop IT (Wang and Qualls 2007; Scaglione et al. 2005) and invest more in social media to create online relationships as a way of strengthening their brand (Lagrosen and Josefsson 2011). The connection between a company’s quality level, as an antecedent of IT adoptions, and online interactions orientation is resulted to be more conflicting: some scholars confirm the relationship between quality level (Scaglione et al. 2005) and company’s relationship orientation (Sigala 2001; Schegg et al. 2002; Romenti et al. 2011), whereas other authors found that economy hotels demonstrate to have more interest in creating online customer relations (Essawy 2005; Lagrosen 2005; Minazzi and Lagrosen 2013).
Other academic studies pointed out a more informative purpose of the website rather than a dialogic online orientation in the hospitality industry. In particular, Sigala (2005) analyzed eCRM operated by Greek tourism companies and found a more defensive than proactive focus in the use of eCRM instruments. The same approach resulted from another study of Romenti et al. (2011) who examined the relational and dialogic orientation of Italian hotel companies in the Milan area.
Therefore, ICT solutions are widely adopted by the travel industry but mainly at the level of having a PC and being connected. Anyway, the experience varies according to the type of business (travel agencies, hotels, restaurants, etc.). For example, hotels use intensively hardware, software, and the Internet connection for booking services while restaurants are more familiar with mobile devices and
electronic cash (Gil-Saura et al. 2012). Moreover, Web 2.0 and its applications are sometimes underestimated due to a lack of knowledge about social media practical instruments.
electronic cash (Gil-Saura et al. 2012). Moreover, Web 2.0 and its applications are sometimes underestimated due to a lack of knowledge about social media practical instruments.
The reported studies conducted in the travel sector pointed out how tourism organizations, especially small- and medium-size firms, should work to improve their ability to manage online customer relationships as it could be a valuable way to compete with larger hotel chains and groups. A recent study conducted in the Hong Kong hotel industry tried to give a motivation to the slow adoption of Web 2.0. (Leung et al. 2011; Leung et al. 2012). They concluded that it could depend mainly on a misleading perception of hotel managers related to the benefits that IT instruments can realize for the company. Indeed, IT and social media are often considered by hotel managers only as instruments to reach customers rather than a part of the entire business strategy (Law and Jogaratnam 2005; Law et al. 2008; Milano et al. 2011). This could be caused also by the aforementioned possible lack of knowledge about social media instruments.
Therefore, in the light of previous research on the topic, travel companies should also try to improve their knowledge about social media (classifications, instruments, etc.) to better exploit their opportunities and to create long-term relationships with actual customers and prospects.
Social Media Customer Care
A way companies can employ to manage online customer relationships is “Social Media Customer Care” (SMCC). This means to provide customer care and customer interactions by means of social media. According to a survey conducted by Nielsen (2012), nearly half of U.S. interviewed consumers prefers social networks to interact with brands and service providers (learn more about products, compliment brands, complaining about a product/brand). Facebook is the preferred channel to have access to social care and to ask for information, responses, and complaining.
With the development of IT and social media, human relationships (h-relationships) are increasingly integrated by electronic relationships (e-relationships) (Gummesson 2002). The first type occurs by means of a physical, face-to-face contact while the second one takes place online through websites and social media. The use of emails, social media, SMS services, etc. to manage relationships with customers and prospects facilitates customer care activities. Therefore, social media become an important channel for SMCC.
Electronic (online) and human relationships are deeply linked. IT advancements of the communication process do not substitute human relationships but sometimes contribute to their improvements. In practice, the ease of connection with the company could increase the intention to have a direct relationship with a corporate customer care office, chatting or phoning with Skype. A recent study by Aslanzadeh and Keating (2014) found that live-chat and video-chat satisfy the need for human interaction during all the steps of the decision making process.
Travel operators develop multiple customer support systems to interact and keep in touch with customers. They are generally composed by different services and can be classified according to two variables: time (real-time/non real-time) and type of relation (human/electronic). Below image shows possible customer care services a travel company can employ.
Social media and mobile technology employ, in particular, real-time interactions both human and electronic. Human interactions can vary from the more traditional telephone calls (free of charge or toll-free) to Skype calls and live chat (voice and video chat). In some cases, personal meetings can also occur (i.e., corporate customers and key clients). Electronic interactions include mainly personalized notices and online chat by means of main web applications and social media (i.e., Skype, WhatsApp, Facebook, Twitter) both through the web and mobile devices (PC, tablet, Smartphones). Several travel suppliers use social media notices to keep updated users about travel services. For example, Twitter is used by some airlines to give customers real-time information about aircrafts delays (i.e., American Airlines).
Other traditional ways of communicating with customers on the web are e-mails and online forms that consumers have to complete and send to obtain a reply. In these last two cases, the time range is non real-time and then the customer have to wait for receiving a reply.
In the social media environment, it is crucial the speed of the company’s response. If web users know, when sending an e-mail, that they have to wait some time to receive a reply (better if not for a long time), they are not so indulgent in case of a social media request because in that context real-time conversation is considered the norm.
Moreover, new hybrid ways of creating half-electronic and half-human relationships are represented by voice recognition systems (i.e., Siri), avatars, and holograms. An example is that of virtual assistant holograms increasingly provided by various companies (i.e., Delta Airlines, United airlines) at major international airports (i.e., London, Dubai, New York, etc.). Virtual agents are able to assist
travelers in a natural language but based on artificial intelligence. They offer responses to customers’ queries on the basis of pre-recorder scripts, generally supported by a touchscreen function, that is more practical in the case of airports, where voice recognition could have some difficulties. With ongoing and future improvements of Web 3.0 and virtual intelligence, these instruments will also become more flexible, interactive, and able to increase personalization (i.e., multiple languages) thanks to more various prerecorded scripts.
travelers in a natural language but based on artificial intelligence. They offer responses to customers’ queries on the basis of pre-recorder scripts, generally supported by a touchscreen function, that is more practical in the case of airports, where voice recognition could have some difficulties. With ongoing and future improvements of Web 3.0 and virtual intelligence, these instruments will also become more flexible, interactive, and able to increase personalization (i.e., multiple languages) thanks to more various prerecorded scripts.
The interactive nature of social media, along with the opportunity to establish conversations among individuals and firms in online communities, has motivated travel companies to better serve customers and satisfy their needs. For example, Hyatt has created a specific Twitter page called “Hyatt Concierge” dedicated to customer care and relationships. Community members can ask for information, assistance, they can complain and the “web concierge” replies real-time activating a
conversation. The main difference between Twitter and online chat is that in the first case the conversation is public: other customers can start interacting and sharing their experiences. This could be both helpful and damaging for companies because other social media users could support the company or, alternatively, the customer in case of complaints. For this reason, these kinds of services should be developed when able to manage them properly, with adequate resources and knowledge about technology and applications.
conversation. The main difference between Twitter and online chat is that in the first case the conversation is public: other customers can start interacting and sharing their experiences. This could be both helpful and damaging for companies because other social media users could support the company or, alternatively, the customer in case of complaints. For this reason, these kinds of services should be developed when able to manage them properly, with adequate resources and knowledge about technology and applications.
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