An Evaluation of Relationship Marketing and Customer Retention Practices in the Hotel Industry
Date of Award
Master of Business (Research)
Mr. Michael Walsh
Customer relationships have received considerable attention from both academics and practitioners. It is accepted that relationship marketing is keeping, not just getting customers, (Berry, 1983). However, it has been criticised that firms frequently focus on attracting customers (the “first act”) but then pay little attention to what they should do to keep them (the “second act”) (Berry and Parasuraman, 1991). It has been demonstrated that it is far less expensive to retain a customer than to acquire a new one. The increasing emphasis of relationship marketing is based on the assumptions that building committed customer relationships results in guest satisfaction, loyalty, positive word of mouth, business referrals and increased purchases. As a customers’ relationship with the company lengthens, companies can increase profits by almost 100% by retaining just 5% more of their customers (Reichheld and Sasser, 1990).
By developing and implementing customer retention strategies, hotels can develop long term relationships with customers whereby their value to the business is greater than the costs of acquiring or servicing their needs. The tools which are best suited to retaining customers, and maintaining or increasing their value to a business, include financial bonds, social bonds, service personalisation and defection management.
The objective of this thesis is to discover what customer retention strategies hotels practise to strengthen an existing customer base and to discover consumers attitudes towards each type of retention strategy when making the choice of which hotel they wish to patronize on a regular basis.
This study conducted primary research among hotel managers in Cork to evaluate their use of relationship marketing and customer retention. It researched the customer preferences and buyer behaviour of hotel users in regard to the choice of a particular hotel. The study found that hotels vary across a spectrum in the extent of the adoption of relationship marketing and customer retention practices. Cleanliness, employee attitude and location received the highest importance ratings from hotel guests when choosing a hotel. Staff friendliness and empathy were found to be the most important considerations when deciding whether to return to patronize a hotel.
Kenny, Lisa, "An Evaluation of Relationship Marketing and Customer Retention Practices in the Hotel Industry" (2002). Theses [online].
Available at: https://sword.cit.ie/allthe/132