Have you had problems to manage customer relationships? Don’t you know how to keep your customers satisfied and loyal? Are you unsure, how to maintain customer relationships, especially in a digital world? This blog post will help you to understand how to deal with customers in tourism. Before we move on to the practical part it is worthwhile to take a little sneak peek behind the curtains to understand the history and reasons for relationship marketing.
Meaning of customer relationship marketing
Francis Buttle studied the history, meaning and characteristics of relationship marketing.¹ He found that it is about healthy relationships including concern, commitment, trust and service. Meaning of relationship marketing started to grow as a term and strategy in early 1990 after the booms of mass marketing and customer segmentation. Behind this rising was incremental competition. Also, a need to stand out other ways when it was not possible to compete with the quality of products anymore.
Nowadays your product only is not enough to beat your rivals. Rather you need high-class service and focus on your customers. Marios Sotiriadis has researched business relationships in online distribution channels.² He discovered that internet has changed tourism markets from a consumer-centric market to a consumer-driven market. That means there is more competition in the online tourism industry. So, markets are today more consumer- and technology-driven. But what are the profits of relationship marketing and why it should be maintained?
Goals and benefits of customer relationship marketing
Rodoula Tsiotsou and Ronald Goldsmith have studied the goals and benefits of relationship marketing to understand, why it is so valuable for companies.³ They showed that relationship marketing is nowadays one of the most important tasks of marketing managers. The main goal is to create long-term connections and involvements with consumers. You need to attract customers, maintain the relationships and enhance them. Your customers will get lifetime value. Simultaneously your company will have a revenue stream, positive word-of-mouth (WOM) and repeated transactions.
Here are five steps what need to be considered if you want to reach customer relationships.³ Firstly, acquire your customers with advertisement, promotions or WOM. Before that, you, of course, need to know, who your customers are. Secondly, you have to retain your customers and create an emotional bond with them to keep them loyal. When you know your current customers there’s a possibility to develop your products and services even more personal. You can also ask for help from your loyal customers and have consultation and co-creation with them. Finally, you can try customer conversion with influencers to spread the positive WOM. But is relationship marketing always just positive and are there some risks to fail?
Christina Öberg has studied the pros and cons of relationship marketing.⁴ She founded that there can be both negative and positive effects in short- and long-term. Let’s focus now more on the long-term effects. If you are having a positive long-term relationship with your customer, it will give a great opportunity to develop your products and services more to personalize them. You will enjoy a stream of satisfied customers and get even more through positive WOM. That probably increases your revenue.
The risk to fail?
But there is the risk to develop your products too much to fulfil the need of one specific customer. People are individuals and not all of them want the same personalization. Try to find a balance between different customers. Developing products is expensive and when it is not working, it decreases your incomes and may affect a bad reputation. Both Öberg⁴ and Tsiotsou and Goldsmith³ stated that it is cheaper to keep your current customers than get new ones. Also having negative WOM is a larger risk than the benefits you will get through positive WOM. But how to avoid these risks and get more benefits? Keep reading if you want to learn how to manage digital customer relationships in tourism.
Irene Gil-Saura, María Eugenia Ruiz-Molina and Beatriz Moliner-Velázquez have researched customer relations and their loyalty in the tourism industry.⁵ They agree that it is better to maintain long-term relationships with the customer to give more value and to achieve commitment and loyalty. They also stated that in B2C business can be seen three aspects of relation benefits – confidence benefits, social benefits and special treatment benefits. These confidence benefits are psychological factors. Social benefits are bonding with customers and special treatment benefits are service customization and economic benefits. When all these three aspects are taking into account and balanced, it is easier to get a higher level of loyalty and create better relationships with customers. Special treatment benefits are the most used ways to achieve customer’s heart.
How to convert a connection to a relationship in 5 steps?
1 Know your customers
Before you can manage and create relationships, you need to know your customers. Who they are and what they really want from your company? Why they are your customers and what you want to offer them? When you find the answers to these questions, you can move on to the next step.
2 Listen to your customers
Christopher Reichstein and Ralf-Christian Härting have studied potentials of changing customer needs in the digital world.⁶ They found that customer relationship marketing is one of the core assets of the company to fulfil customer’s needs. That is why it is important to recognize needs and meet them. Especially in tourism digital services, digital marketing, data mining and online travel communities are important potentials of changing customer’s needs.
To be effective and offer something special, you need to listen to your customers. Anna Krizanova, George Lazaroui, Lubica Gajanova, Jana Kliestikova, Margareta Nadanyiova and Dominika Moravcikova have researched the effectiveness of marketing communication.⁷ They stated that to cover customer’s needs you need to focus on stimulating, developing and increasing sales.
3 Give Value
Not only needs play an important role in relationship marketing. Martina Gallarza, Irene Gil-Saura and Morris Holbrook have researched customer value in tourism services in meaning for a relationship marketing approach.⁸ They stated that relationship marketing is one of the most closely linked to the role of customer value. It makes it an important component of the customer’s decision-making process. When your products and services co-create value, it will also boost the positive WOM and increase transactions.
4 Use Big Social Data to analyze and develop
In the digital world using and analyzing Big Social Data is necessary to beat your rivals. Maria Teresa Duomo, Debora Tortora, Pantea Foroudi, Alex Giordano, Giuseppe Festa and Gerardino Metallo have studied digital transformation and tourist experience co-design.⁹ They found that the meaning of creating value is in a key role. It is also essential to understand how to use Big Social Data and how it can strengthen digital collaboration and customer experience. Technology has increased information sharing and value co-creation together with customers. Participate your customers to share their experiences by storytelling and giving value to encourage potential customers to choose your company.
Big Social Data and user-generated content appear to be key sources by managing customer relationships. You can utilize Big Social Data to develop your products and services to fulfil better your customer’s need.⁶ Social media and influencer marketing provides you with good opportunities to characterize your products. But remember to not personalize too much and follow ethical practices in data management.
5 Know your business and be one step ahead
Especially in the tourism business is better to be careful with one’s own actions. The effects of negative WOM might be crucial. Do not overthink but keep your focus on customers and their needs. The tourism industry is now a consumer-driven market.
Ibrahim Yilmaz has researched service quality and marketing.¹⁰ He has used as a base of his research the refreshed version of the Service Quality (Gap) Model by Zeithaml, Berry and Parasuraman (1988). That model focuses on gaps between customer expectations and management perceptions in service quality. So, the dilemma is, how to fulfil the expectations and give quality service maintaining customer relationships at the same time. When the quality of your products and services are good, you will more likely get positive WOM and more loyal customers.
To sum up, remember to attract, maintain, develop and enhance your customer relationships. You cannot fully please everyone but try to find a happy medium and enjoy the flow. Give your customers a stage to express themselves in social media channels and encourage them to tell about their experiences and feelings. Listening is in a key role. Remember to reward your customers and create something new with good taste. Be you and people will value your achievements.
This blog post was written as a part of the Information Technology in Tourism Business course at the International Master’s Degree Programme in Tourism Marketing and Management (University of Eastern Finland Business School). Read more about the programme at https://www.uef.fi/tmm
¹Buttle, F. 1996. Relationship Marketing – Theory and Practice. London: Paul Chapman Publishing Ltd, 1-8.
²Sotiriadis, M. 2018. Evolving destination and business relationships in online distribution channels – Disintermediation and re-intermediation. In Gursoy, D. & Chi, C (Editors), The routledge handbook of destination marketing (488-501). New York: Taylor & Francis Group.
³Tsiotsou, R. & Goldsmith, R. 2012. Strategic marketing in tourism services. UK: Emerald Group Publishing Limited, 139-146.
⁴Öberg, C. 2011. Pros and cons of long-term customer relationship. In Farkas, V. (Editor), Customer Relations – Business issues, competition and entrepreneurship (129-141). New York: Nova Sciences Publisher.
⁵Gil-Saura, I., Ruiz-Molina, M-E. & Moliner-Velazquez, B. 2011. Customer relations and loyalty-based segmen-tation: A B2B approach in the tourism industry. In Farkas, V. (Editor), Customer Relations – Business issues, competition and entrepreneurship (115-128). New York: Nova Sciences Publisher.
⁶Reichstein, C. & Härting, R-C. 2018. Potentials of changing customer needs in a digital world – a conceptual model and recommendations for action in tourism. Elsevier: Procedia Computer Science 126.
⁷Krizanova, A., Lazaroui, G., Gajanova, L., Kliestikova, J., Nadanyiova, M. & Moravcikova, D. 2019. The Effectiveness of Marketing Communication and Importance of Its Evaluation in an Online Environment. In Cristobal-Fransi, E., Ramón, N., Ferrer-Rosell, B., Marine-Roig, E. & Martin-Fuentes, E. (Editors), Sustainable Tourism Marketing (28). Basel: MDPI.
⁸Gallarza, M., Gil-Saura, I. & Holbrook, M. 2012. Customer Value in Tourism Services: Meaning and Role for a Relationship Marketing Approach. In Tsioutsou, R. & Goldsmith, R. (Editors), Strategic marketing in tourism services (147-162). UK: Emerald Group Publishing Limited.
⁹Cuomo, M.T., Dordora, T. Foroudi, P., Giordano, A., Festa, G. & Metallo, G. 2020. Digital transformation and tourist experience co-design: Big social data for planning cultural tourism. Elsevier: Technological Forecasting & Social Change 162.
¹⁰Yilmaz, I. 2018. Service quality and marketing. In Gursoy, D. & Chi, C. (Editors), The routledge handbook of destination marketing (92-99). New York: Taylor & Francis Group.