Customer Relationship Management (CRM) is a much-misunderstood process. At its heart, CRM is a business strategy that attempts to generate a 360-degree view of customers so as to be able to anticipate and react to their needs at every point of customer contact with the hotel or restaurant. What CRM is clearly not about is technology.

Simply using a computer system or developing a customer database on its own will not build customer loyalty. Failure to understand this key issue about CRM is likely to result in wasted investments rather than the oft-touted benefits reported in the popular press. However, CRM is facilitated and supported by technology based systems. The success of the process depends to a large extent on accurately collecting, storing, aggregating and analysing large amounts of data about current and potential customers something that is made much easier by computerised systems. This article examines the role of technology in the CRM process, and highlights many of the pitfalls associated with its implementation in hospitality organisations.

Data Collection
As was mentioned above, the entire CRM process is based on the analysis of large quantities of customer data. While in the past, collecting such information would have been difficult, the hospitality sector has in recent times shook off its resistance to technology and transaction data can now be taken from the many computerised systems in use in hotel and catering operations. Valuable data on customers is recorded in the reservations system, the property management system, electronic point-of-sale systems, as well as potentially in a variety of other databases such as the loyalty club programme and on the company's website. However, while often comprehensive, the majority of such data is transaction orientated, and its very nature means that it is stored in a variety of formats and a variety of different places. The successful aggregation of these individual pieces of data into a consolidated whole is thus one of the key success steps to making CRM work.

Data Consolidation
The majority of CRM solutions make use of a data warehouse a customer centric repository that collects data from transaction processing systems, supplements it with data from external sources where appropriate and allows analysis to be safely performed away from systems that are designed to support operational processes. Even though in theory collecting the raw data from the transaction processing system should be relatively easy, the shameful lack of standards in hospitality information technology, coupled with the extensive use of legacy systems, makes this step more problematic than in many others industries. Some companies understand the power of a CRM approach, and have gone to seemingly drastic lengths to overcome such problems. For example, Cendant, one of the largest US franchise companies, has simplified the consolidation process by introducing a single, customised, operational system throughout the chain. Known as "Project Power Up", Cendant has effectively eliminated legacy systems and introduced a common set of data standards throughout the group by giving franchisees a standardised set of computerised systems (including a Property Management System, a Yield Management System, an Accounting System and a Database Marketing System) to help them run their operations more effectively.

Simply consolidating the data is not the end of the road. The merged data must then be cleansed and validated to ensure that it is accurate, consistent and complete. And in an era where customers have multiple credit cards, phone numbers and even addresses, accurately identifying each individual customer to reconcile this data can be a challenging process. Most data warehouses include complex algorithms dedicated to data cleansing, but, unfortunately, these can only work if the data was input correctly in the first place. One of the major hotel chains admitted recently that tests had revealed that only about 30 per cent of the customer contact details in its corporate customer database widely used by the chain at the time for database marketing were accurate. The accuracy of other fields, such as nationality codes and market segment data was even lower. Subsequent investigations revealed the source of the errors contact details were entered by harassed reservations agents who were assessed based on the number of calls processed rather than any measures of data quality. Because they needed to focus on processing the reservation as quickly as possible, they were not overly concerned about the accuracy of the data they entered, in many cases simply leaving the default value presuming that it would be corrected at check-in. Training on the importance of data quality, a revised incentive scheme and the use of "mystery callers" to monitor data entry accuracy are now being used by the chain to help address this problem.

Developing Data Intelligence
Simply collecting raw data brings little benefit. To be useful, it must be analysed, translated into information and then used as the knowledge to drive the actions of the company. It is this "intelligence" about the customer that allows a company to personalise its operations to more closely match the needs and wants of their target markets.

The majority of CRM solutions provide facilities to analyse the data in a variety of ways. All provide pre-defined reports that allow companies to perform straightforward data analysis based upon known parameters. A typical example is the identification of top customers across the chain as a whole. However, much greater benefits arise from the use of data mining techniques more sophisticated processes that are exploratory in nature.

One proven approach here is provided by Guest Relationship Optimisation from Amateo . Its complete solution exclusively for the hospitality industry not only standardises data through staging areas in its Loader product, but then leverages this data to generate revenue through drill-down reporting tools, executive dashboards and marketing campaign automation.

Instead of being placed in pre-determined categories, customers are segmented according to trends discovered in the data, and once placed into segments, they can be analysed based on any of the parameters in the database, thus helping to better understand their needs and wants. The more sophisticated systems even allow the user to interactively "slice and dice" their multi-dimensional database using a graphical interface, and to drill down into the data to as low a level as necessary to answer whatever ad-hoc questions occur to them. In short, the analysis facilities of CRM solutions permit users to interactively make sense of the sea of data that has been collected, building up a comprehensive picture of the likes and behaviour of both the individual customer and particular customer segments, all with the objective of providing a more targeted service.

Knowledge dissemination
The final process in using technology to support the CRM process focuses on insuring that the knowledge generated is available where it is needed. While much that has been written about the CRM process places emphasis on bringing data together at a central level, the opposite is just as important the results of the analyses must also be available at each of the relevant customer touch points. To be successful, CRM must be an organisation-wide philosophy, and thus everyone, from top management to front line employees, needs to have access to relevant information about customers to personalise the experience. It is here again that Internet and Intranet-based systems are particularly strong, allowing the correct data to be distributed quickly and easily to the relevant people. However, this ease of access to information in itself prompts another problem one of data privacy. Many customers are now concerned about the quantity of data being stored about them on different commercial computer systems, and the uses to which it is being put. Both the European Community and national governments are beginning to legislate as to what data can be stored, the purposes for which it can be used and even how different data sources can be combined. Although of direct concern to anyone currently attempting to implement CRM, the issues surrounding data privacy are complex, with significant disagreements in approaches in different regions of the world. One thing that is clear is that the privacy issue is a minefield waiting to explode.

Thus it can be seen that technology forms the backbone along which a CRM strategy is built. However, it must be remembered that the technology is only the facilitator of the process. While data collection, consolidation, analysis and knowledge dissemination is made much easier by modern computing and communications systems, a radical shift in orientation is needed in most companies to make CRM work from one that concentrates on short terms gains to one that focuses on using knowledge to maximise the lifetime value of the customer.

Published in Hotel & Restaurant - IT Solutions, September-October 2001

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