Research Proposal on "Customer Relationship Management in Turistic Businesses in Latin America"

Research Proposal 8 pages (2928 words) Sources: 15 Style: Harvard

[EXCERPT] . . . .

CRM in the Latin American Tourism Industry

Understanding the contributions that investments in Customer Relationship Management (CRM) software make as it relates to the sustaining and strengthening of loyalty on the part of customers for Latin American tourism providers is the basis of this proposal. Customer loyalty is crucial for the success of any business, yet it is tantamount in the area of tourism in Latin American nations. The creation and sustaining of customer loyalty over time in the Latin American tourism industry is measurable over time using the SERVQUAL research instrument (Ramsaran-Fowdar, 2007) and methodology (Carrillat, Jaramillo, Mulki, 2007). Applying SERVQUAL measures to Latin American's tourists experiences and propensity to become more loyal over time is the basis of the proposed research effort, with the measurement of social networking and Web 2.0 technologies' contribution to defining and executing effective marketing campaigns. Table 1: Web 2.0 CRM Applications in the Appendix section of this proposal provides an overview of the key Web 2.0 technologies that form the basis of social networking. The contributory effects of Web 2.0 CRM technologies on increasing SERVQUAL ratings for the Latin American tourism industry form the foundation of the methodology and structure of research.

Problem Statement

Traditional CRM strategies for increasing and sustaining the loyalty within regional and national Latin American industries has ranged from the historical (Kelso, 2008) to the eco-conservatism based (Carr, Pederson, Ramaswamy, 1993). These tourism strategies are aimed at providing an enriching and fascinating experience of visiting Latin America to a true expedition-like experience that seeks to deliver ecologically-based trips. Across this spectrum of tourism services in Latin America is the need for consistency of segmentation (Sarigollu, Huang, 2005), effective and targeted use of e-commerce based online selling strategies (Stockdale, 2007) and the need for using more standardized measures of service performance including SERVQUAL (Carrillat, Jaramillo, Mulki, 2007). The essence of the problem that this proposal addresses is the lack of consistency in measuring customer satisfaction and loyalty across the Latin American tourism industry. This is made more complex by the reliance in the industry of relying on multiple channels and service providers to create the entire structure of the industry itself (Neslin, Grewal, Leghorn, Shankar, 2006). As a result of the lack of insight into a consistent measure of quality throughout the Latin American tourism industry there is also a corresponding lack of insight into how the demand curve for specific service offers compare to the price elasticity of demand in key markets (Raab, 2008). In short, the value drivers of Customer Relationship Management (CRM) strategies in the Latin American tourism industry are not quantified, much less codified into a series of strategies that are known to deliver exceptional results, an area of study often called best practices. In seeking to find the price elasticity curve of any served market for Latin American tourism services, marketers find the preference points for services (Raeburn, 2008). To date there is no actual link of SERVQUAL measures relating to CRM strategies based on traditional and Web 2.0 CRM applications as well.

Theory

This research effort seeks to create an equilibrium-based model that centers on the definition of value drivers (Richards, Jones, 2008) in CRM strategies specifically designed to create increased loyalty for Latin American tourism over the long-term using SERVQUAL (Carrillat, Jaramillo, Mulki, 2007) as the basis of the measurement and benchmarking. It is crucial for the study to seek to normalize performance and create a common baseline of performance across the CRM efforts of Latin American tourism providers so that the gap between CRM execution and needs for generating higher levels of loyalty be quantified and acted upon with subsequent strategies (Dimitriadis, Stevens, 2008). The need for an equilibrium-based model specifically to address how SERVQUAL can be used to create a baseline of service performance over time while taking into account the adoption of Web 2.0-CRM applications has the potential to significantly increase the effectiveness of Latin American tourism service providers' strategies over the long-term.

Literature Review

The Rapidly Changing CRM Landscape

Latin American tourism providers are beginning to adopt one of the most noteworthy developments in CRM within the last five years, which has been the meteoritic rise of CRM-based Software-as-a-Service (SaaS). The market factors driving the adoption of SaaS over the traditional licensed approach to delivering enterprise-wide CRM applications is that the it Departments of many organizations are increasingly being called on to reduce costs more often than make selling strategies work. For the typical it department today their direction is to reduce costs first and when possible, help with business strategies. SaaS as a delivery model however circumvents the cost-reduction agendas of many it organizations and gives line-of-business managers including Sales, Marketing, Operations, and Service Vice Presidents, Directors and other senior managers from these ranks the power to bring applications in through web browsers. At the center of the dynamic growth of CRM through on-demand and SaaS is the shift in the balance of power in software spending in organizations (Lassar, Lassar, Rauseo, 2008). Today the line-of-business managers, especially Sales VPs, want to be able to develop and refine their selling and customer retention strategies quickly without having to rely on it. As SaaS is by nature the delivery of applications over the Internet and accessible through any web browser, Sales VPs are finding they can pilot and even deploy enterprise-wide CRM from the leading SaaS vendors including Salesforce.com, RightNow Technologies, NetSuite, Oracle due to their acquisition of Siebel and their CRM on-Demand application business, SAP with their unique hybrid approach to the on-Demand model that allows customers to have either single or multi-tenancy in their application deployment, and Microsoft Dynamics CRM. Of these vendors, many have predicted that Microsoft would eventually emerge as the CRM industry leader due to their commanding leadership in e-mail with Microsoft Outlook. In terms of the implications of SaaS-based CRM on the Latin American tourism industry the need for creating a consistently reliable and intuitively-based interface to websites used for booking travel is crucial for SERVQUAL measures of performance to be at their optimal levels (Kim, Zhao, Yang, 2008). SaaS can also revolutionize the adoption rate of applications within Latin American tourism service providers as well, which is a major concern for any new company adopting CRM as a strategy (Xu, Yen, Lin, Chou, 2002). Lastly, the SaaS platform can provide for exceptional insights into measuring SERVQUAL from the customers' perspective, further providing data for the development of the equilibrium model this research effort intends to create, in addition to benchmarking of Latin American tourism service providers' performance on SERVQUAL.

Defining CRM

What had begun as a series of applications aimed at capturing customer information has transformed into a series of strategies for attracting, selling, and serving customers. This transformation of CRM has been directly attributable to the change in which members of organizations are acquiring the software. When CRM was first created it Departments were the first customers, and the key success criteria of it are quite different than line-of-business executives who have profit-and-loss responsibilities for their companies. These line-of-business executives have transformed CRM from a series of applications to a series of strategies supported by applications, and this is a critical point in the evolution of this area overall.

There are many definitions of CRM and its components, yet one of the best is from Gartner Group. (Gartner 2001) defined a series of eight building blocks for CRM that are based on several excellent assumptions including the fact for CRM to be successful it requires being considered a strategy that encompasses all areas of a company at the enterprise level vs. just an isolated or siloed strategy. Gartner's definition is shown in Figure 1.

Figure 1: Gartner Group's Eight Levels of CRM (Source: Gartner, 2001)

Underscoring CRM is the role of analytics or metrics including SERVQUAL, as Gartner has labeled it in their model shown in Figure 1. There are Applications, Architectures and Infrastructure that are present at the next layer, and this is where SaaS-based approaches to delivering applications are taking hold and growing rapidly. The next layer, CRM Information, supports the redefinition of CRM Processes. In effect both CRM Information and CRM Processes work in conjunction with each other to support customer experiences and organizational collaboration, two strategic areas that have served to transform CRM from a series of applications to a series of strategies. The additions of the top levels, CRM Strategy and CRM Vision have more to do with the progression of CRM's many applications into tools for line-of-business managers vs. being purely applications. While this definition has begun at the bottom of the model and worked progressively up the model's layers, CRM strategies work best when CEOs take ownership of and champion the adoption of customer-centered strategies and selectively layer in technologies to accomplish their goals. Jakobson (2007) in his analysis highlights the dual nature of CRM and the contributions of CRM moving a company's goals through strategies, to plans, objectives and finally tactics. In effect… READ MORE

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