Customer Retention and Satisfaction in the Hotel Industry

Free «Customer Retention and Satisfaction in the Hotel Industry» Essay Sample

The consequences of globalization, developments in the hotel industries, and rise in the competition have resulted to changes in the operations of hotel environment worldwide (Huber &Gorman, 2008). It therefore requires the hotels to set up competitive marketing techniques to improve competition and retention of customers. One of the competitive strategies is customer retention management (Belk, 2006). Also, creating a firm ethical environment may lead to increments in hotel profits, good customer relationships as well as management efficiency. The hospitality marketers are always interested in brand constancy since brands are the basis for stability in businesses. They offer protection against any competitive imitation and give consumers a chance to shop confidently in this complex world. Therefore, knowledge on customer retention strategies is of great value for the hotel industry (Lowenstein, 2002). By studying customer retention, the marketers can know whether perception of customer retention of a particular industry is consistent with demands of the targeted market.

Problem Statement

Through efficient communications of the hotels’ retention services such as pricing, marketers can meet the needs of customers. A researcher foresees that the hotel industry is one of the factors contributing to industrialization globally. A service refers to an activity that is more or less intangible in nature and that usually takes place in an interaction between a customer and employees who offer the service or food that are provided as a solution to the customer needs (Lowenstein, 2002). Establishing and managing a strong brand image facilitates success in hotel industries to retain their customer’s loyalty. Image is very crucial to the service firms, and in most cases the way customers assess the services they receive is majorly dependent on the image. The aim of this study is to examine factors that influence customer retention.

Customer satisfaction is the key determinant as to whether customers will leave or maintain their loyalty in an organization. Therefore, it is paramount for every industry to have an understanding of retaining its customers. Some customers who are not satisfied may decide to remain in the organization because they believe they cannot receive better services elsewhere and some of the satisfied customers can still look for other service providers if they think better services can be offered elsewhere. Hence, customer satisfaction is perceived as an essential indicator of retaining customers, but it is not at all times a guarantee of customer retention. Retaining customers is also dependent upon the factors like choices, prices, and income. Therefore, hotels need to understand the reasons as to why their consumers choose them as their service providers.

How Marketing Research Is Used to Identify and Exploit Business Opportunities

Marketing research is normally used to understand the needs of consumers and establish better ways of satisfying those needs in an efficient way. This helps the organizations to come up with business opportunities and appraise them. Information and data from marketing research help organizations to identify customers, markets on target, possible opportunities, as well as strengths and weaknesses. Marketing research is essential when running any business (Belk, 2006). Without a market research, one is not able to know what elements are required for the right decisions to be made. Marketing research has the role of improving the ability of organizations in making product decisions, examining effects of marketing, making stakeholders happy, and analyzing market forces quantitatively (Lowenstein, 2002). Also, the marketer accesses information about public, a consumer, as well as a customer through marketing research. The information obtained is used in identifying and defining market opportunities and challenges. Moreover, this information also helps in evaluating marketing performance, monitoring actions of marketing, and improving the knowhow of marketing process.

Marketing research determines the information needed to deal with the marketer’s specific objectives in a clear and well-defined manner (Belk, 2006). After that, a method is developed to assist in data collection, analyzing results, as well as communicating the findings and their implications. Additionally, reliable data is a condition of making the right decisions. Currently, it is possible for a store to be covered with wireless sensors that are invisible to enable the researchers to track the traffic in different store parts. This enables the retailers to know the stop points of shoppers in purchasing a product. In this manner, marketing research helps to identify the intention of buying and actual purchases for the retailer to correct the issues that can cause commotion between the purchase and the intent (Little, & Marandi, 2003).

Role of Ethics in Marketing and Psychology

Marketing and psychology are integrated globally. An understanding of basic psychology, as well as human behavior, is required to succeed in the field of marketing. On the other hand, ethics creates a boundary between what is socially acceptable and what is not. Ethical issues in marketing are critical as marketing has the responsibility to identify and satisfy the requirements of customers in a profitable way (Schlegelmilch, 2003). There are many controversial instances in marketing that might cause an unintended depressing influence on customers (Huber &Gorman, 2008). For instance, sex appeal is brand information in marketing context that is connected with sexual information. This appeal is used to bring brand awareness by the use of a shocking technique. These techniques aim at making advertisement more appealing. In this case, emotional advertisements stimulate people’s emotions instead of their understanding of practical advertisements. For this reason, the principle of ethics needs to be applied to overcome perception of these emotional advertisements.

Quantitative Discussion and Analysis on Customer Retention Strategies

Customer retention is one of the important concepts in marketing that is concerned with initiating and maintaining a long-lasting customer relationship (Sim, Mak, & Jones, 2006). Many organizations have heavily invested in customer retention strategies for the purposes of improving customer retention rates, which leads to increment in profits (Huber, & Gorman, 2008). Nevertheless, maintaining firm relationships with customers is not the main purpose of some firms since there are differences in customer relationships and profits. Furthermore, many firms concentrate on the current revenue and ignore cash flow over the customers’ lifetime. Those customers who are attended poorly usually relate their feelings of dissatisfaction with services in the hotel to 15-20 other customers (Slabbert, 2010). It is reported that the cost of getting a new customer is expensive when compared to that of keeping a customer who is satisfied. Additionally, if the services offered were poor, approximately 91% of customers will not return to the hotel. Therefore, the satisfied customers improve the business as dissatisfied ones ruin it (Slabbert, 2010). Hence, customer satisfaction is very important to attain retention.

How Marketing and Psychology Contribute to Customer Retention in Hotels

Despite the efforts of hotel industries to execute competitive strategies so as to attract customers, and irrespective of their efforts in managing supply, productivity, and demand with the purpose of providing their customers with services of high quality, customers can still move to other organizations or remain in the same organization (Schlegelmilch, 2003). Therefore, for any hotel industry to be successful, it must go beyond just satisfying its customers. The industry should aim at building the relationships that will lead to customer retention. The framework of customer retention management must involve marketing efforts, defection management, compatibilityy management, as well as service failure management (Slabbert, 2010).

Importance of Customer Retention in Hotels

Relationship marketing assists industries to build strong relationships with their customers. The relationships referred here are those that the success of a long-lasting business depends on. The other important factor in customer retention is managing customer-to-customer interactions or, in other words, compatibility management (Slabbert, 2010).  Therefore, any hotel industry should develop a program that is compatible with customers so as to promote positive encounters and evade dissatisfying encounters of their customers. Service providers should as well establish programs to minimize customer defection. Once customers no longer purchase from the industry, it is improbable for them to be reclaimed (Schlegelmilch, 2003). The other factor or strategy in customer retention in the hotel is pricing (Huber &Gorman, 2008). Increased competition and the ever-changing environment in hotels have led to the slight price differentiation among the hotels with the same ratings. Therefore, price increase can scare away customers as they might choose to go for other cheaper hotels that offer similar services (Sim, Mak, & Jones, 2006).

It can be concluded that customer retention marketing is one of the important factors of growth and long-lasting profits for any business. Whereas some of the businesses still value getting new customers more than developing an in-depth relationship with the current customers, it is intuitive on the basis of what is known about lifetime. In developing measures for customer retention and customer satisfaction instead of implementing measures that cut cost, which cause dissatisfaction, the industry will reap more benefits because recommendations that are in the form of positive feedback can boost the business (Lowenstein, 2002). Cost-cutting measures that are ill-advised can have the contrary effect, where discontented customers may condemn that particular business to other potential customers and the industry may lose its probable business thereby putting at risk effectiveness of cost cutting. If the industry resists in providing wrong cost-cutting measures, then it should retain more business, which will help to uphold revenues and profits at any point of time, even when there are difficulties in the economy (Huber & Gorman, 2008).

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Data Analysis

In the research done by Slabbert (2010), analysis was carried out through SPSS to find out if there were significant statistics on the basis of whether customer satisfaction leads to customer retention in hotels. The results showed that 15-20 customers who were poorly attended to left the hotel and went elsewhere. This means that 91% of customers with the feeling of dissatisfaction with the services offered never returned to the hotel. It can therefore be asserted that increasing customer satisfaction leads to an increment in customer retention, and this increases profits (Slabbert, 2010).

Appraisal of Sources

I have decided to use these sources because the study intended to focus on the results of customer retention and satisfaction in the hotel industry. The sources have plenty of detailed information regarding customer retention in hotels. Connection between customer retention and customer satisfaction has been studied for several years. Customer retention has become a crucial phenomenon in the hotel industry because it experienced extensive growth and competition globally. Hotels are currently shifting their strategy of marketing from customer acquisition to customer retention. It is believed that corporate relation and managing performance influences the industry’s profits. It means that customers are hotel assets, hence retaining customers in return leads to higher profits. The sources used in this paper have adequate information concerning issues of customer retention and marketing, as outlined in it.

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