Already the first merchants knew how to handle and take care of their best customers in order to make them come back regularly. Creating this relationship could be of varying complexity and done so with a complex strategy in place or just as simple as asking them. Nevertheless, this is not always done.
Shoemaker suggests that, “sometimes the hotel never asks them to come back and does not collect the necessary data to develop a meaningful dialogue with the customer.” (Stowe Shoemaker, 1999) From a hotel management perspective it can seem very strange that some guests may not develop loyalty because they are simply never encouraged to become a loyal customers.
However, the bottom-line was to make the customer come back to do a repeat purchase. This is also the direct benefit most companies still see today, together with the wish that the loyal customer also will act as a good ambassador bringing in further customers. This attitude is still alive today and confirmed by merchants everywhere through greeting gestures, carefully taken notes and warm welcomes which shows if the nearby people are returning loyal customers, visitors from time to time, or just ad-hoc strolling by tourists.
Shoemaker suggests that researchers are urged to continue to study customer loyalty, which is believed to be the future of hospitality marketing. (Stowe Shoemaker, 1999). This dissertation agrees with that view to the full extent and as this knowledge change over time, with the world and thru technological progress it is sometimes hard to keep up with.
A model that looks at the concept of customer loyalty in a more holistic way is the Loyalty Triangle (Stowe Shoemaker, 1999). This model and framework does not only view loyalty from one angle and point in time but also how you can develop and evolve your customers and their loyalty to an even more devoted customers. Using the Loyalty Triangle it is possible to rank, evaluate and measure the different parts of customer loyalty, as well as to plan future strategies for how to handle the various types emerging from the analysis. All of which are critical in the competitive world of today, through a much needed structure and in some cases acting as an eye-opener for companies dwelling in the past.
This framework places a lot of focus on the customer, the customer relationships together with the insight of a need to create a deeper level of loyalty. This puts the generic ideas of frequency and recognition programs in a different lighting. The loyalty triangle is also the model that this dissertation suggests to further build on.
One of the most important parts of the model is the holistic approach and not just to see customer loyalty as an isolated part. Stowe Shoemaker describes why the holistic approach is so important, “The loyalty triangle is an equal lateral triangle because of the belief that in order to create long-term loyalty, the service firm must execute all the functions described on each side equally well.” (Stowe Shoemaker, 1999)
The first side of the framework handles “‘how the service works, involving both guest and service perspective. For the guest the process starts from the time they begin to buy the service, to the time when they leave the property. For the service company the process includes the design of the service operations, the hiring and the training of service personnel, and the collection of information to understand the customers’ needs, wants and expectations” (Stowe Shoemaker, 1999)
The second side of the framework, “focus on the value creation and is sub-divided into two sections; value added and value recovery” where “the valued-added strategies increase the long-term value relationship, offering greater benefits, on both current and future transaction to repeat customers” (Stowe Shoemaker, 1999) As previously mentioned the value creation and the fact that customers have to see the value in what they buy is highly important and if done right can impact the long-term gain in a positive way and this is also supported by Dwyer, Gummesson and Gronroos.
However, even if the company did not succeed the first time there is most of the time a second chance to have an impact on the customer. ( (C. Fornell, 1987); (C.W.L Hart, 1990)) suggest that, “Value-recovery strategies are designed to rectify a lapse in service delivery occurring by providing amendments and compensation to alleviate the cost associated with failure. It is this process that insures that guest’s needs are taken care of without further inconvenience” (Stowe Shoemaker, 1999) By doing this you have most often not only avoided an unhappy guest but also may have created both a happy guest and a seed to cultivate and start the relationship with a future loyal customer.
The third side is about communication and according to Shoemaker; “incorporate database marketing, newsletters, and general advertising as they are all areas of how the service provider communicates with its customers” (Stowe Shoemaker, 1999)
The ultimate outcomes of higher customer loyalty and retention are according to (Zineldin, 2000)
Giving good service in today’s tech savvy society and a constantly increasing globalized world has made skills and knowledge around how to handle, understand and see the future potential of solutions like eCRM a necessity to be able to leverage on the technology, tools and modern strategies. Already today there is a gap in the race of competitors who have understood this and the ones who have not.
This dissertation argues that in order to deliver flawless 5-star service and still be able to continue to deliver in the future, companies will have to understand the potential and upgrade their skill set. In the 5-star segment you have to create epic customer experiences as this is what your guests are expecting and paying for.
To reach that level you have to start, learn from your mistakes and develop a solution for your business. For this to work the eCRM strategy has to be an essential part of the company culture, a long-term strategy and properly backed up by the management, later to be executed by operations in a holistic embrace.
Service is important whether it is performed face-to-face or over online channels and both Gummesson (1995) and Sigala (2006) emphasize the links, “between service, value and customer solutions.” This is further supported by Gumesson (1995) arguing that “the consumer do not buy goods or services, but rather purchase offerings that render services, which create value.” Gummesson (1995)
The concepts of customer satisfaction are often linked to customer loyalty in the literature. All the same, Stowe Shoemaker (1999) argues that, “Customer loyalty is not the same as customer satisfaction. Customer satisfaction measures how well a customer’s expectations are met by a given transaction, while customer loyalty measures how likely a customer is to repurchase and engage in partnership activities. Satisfaction is a necessary but not a sufficient condition for loyalty.” (Stowe Shoemaker, 1999) This standpoint and view is also supported by Heskett et al. (1997) who found that “the link between customer satisfaction and customer loyalty was the weakest relationship in their service –profit-chain model“(Heskett et al. (1997)).
This does not necessarily have to be evidence of dissatisfaction. In the literature there are even suggestions it could mean exactly the opposite and just be more or less a coincidence. Stowe Shoemaker (1999) writes in one of his articles, “Travelers may not be loyal to an individual or specific property because they never return to the area where they were satisfied with a specific property. Other guests may be satisfied with a hotel but their desire for novelty inhibits their loyalty to a specific property.” (Stowe Shoemaker, 1999)
First, loyal customers are generally more knowledgeable about the product offerings and surveys consistently report that consumers believe loyal customers deserve lower prices” (Werner Reinartz, 2002)
The concept of service is constantly changing and has now been made more complete (including online experiences) under the concept of e-service as suggested by Zeithaml et. al (2000) to be “the extent to which a website facilitates efficient and effective shopping, purchase and delivery.” (V. Zeithaml, 2000)
When exploring the service concept foremost one model has been used when measuring service, namely SERVQUAL. However to handle the online environment it is suggested by Sigala that, “Although the conceptualization and the measurements have been mainly based on the SERVQUAL model (Voss; Sigala 2004a; Sigala and Sakellardis 2004), the applicability of the latter has to be adapted to the internet environment. The adoptions of SERVQUAL are included in the WEBQUAL model (including information quality, website navigation/ appearance, user empathy/ mobility) for measuring service quality in PCs and mobile phones, developed by Barnes, Liu and Videgren (2001)” (Sigala, 2006)
Nevertheless, this is not the only model used for measuring e-service quality, Sigala (2006) also refers to a e-service quality model presented by Madu and Madu (2002) including “performance (ease of navigation and information quality); website features (i.e. search engine); structure (i.e. hyperlinks); aesthics (website appearance); reliability (consistency of website functionality); storage capability (ease of data retrieval); serviceability (complaints, handling/ solutions); security (system integrity; trust for data sharing); responsiveness (courtesy, flexibility to respond to customer needs) ; product/ service quality differentiation and customization; web-store policies; reputation ; assurance; empathy in elements of human contact i.e. email and call centers.” (Sigala, 2006)
This model focuses more on the added customer value, which is also along the lines of brand-, and customer loyalty. Sigala (2005b) suggests and highlights that, “The concept of service quality is nowadays being enhanced to include the meaning of customer value, experiences and customers’ participation in services that create customer solutions (Sigala, 2005b)
These models used in combination are can help us to understand, analyze and gain intelligence for more qualified management decisions. This will give management a clearer image of the perceived level of service as well as a better chance to adapt the service process to the needs, wishes and expectations of the customers.
Nevertheless, when it comes to the concept of good service; perception, human emotion and the personal taste the customer plays a key role. Earlier studies by Edvardsson (2005) and Sigala (2005b) suggests that, “service quality needs to be understood from both a cognitive and an emotional approach. This is because an emotional response can trigger a cognitive response. In many cases, it is difficult to separate emotions from service quality, since emotions are part of the core in the service concept.” (Sigala, 2006)
Even if the emotional aspects are not always logical there are ways to stabilize, strengthen and in some situations be able to leverage on the emotional spectra. It is all about creating a more qualified match between the customer needs, wants and expectation, in relation to your business. The better you know your customers the better you can anticipate their reactions. To have a strong customer relationship, both over online channels, as well as through face-to-face meetings are therefore crucial. This becomes even more important in the event of a service failure, or recovery situation.
