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Customer Relationship Management On Service Quality In Hotel Marketing Essay

Paper Type: Free Essay Subject: Marketing
Wordcount: 3701 words Published: 1st Jan 2015

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This past few decades, hospitality industry has developed become wider and bigger due built and managed their business. The rapid developments on hospitality industries are including of development in information technologies, increased price, and changing on customer’s attitude and preferences. Impact of changing customer’s attitude and preferences, nowadays many elements and strategies for managed the customer relationship. The hotel that can survive and grow will be the one who can understand about the globally changes of customer needs. One of it is customer relationship management (CRM). Every industry increasingly focused on the managing the customer relationship. “CRM is a business and marketing strategy that integrates technology, process and all business activities around the customer” (Feinberg & Kadam, 2002). Customer Relationship Management also known as relationship marketing or customer management. CRM is management or strategy in information technology to organize, enterprise, and manage customer relationship. Customer Relationship Management concept is a strategy to make a long-term relationship with the customer. This concept is one of the key for business to success.

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Attracting a new customer viewed only as an intermediate step in marketing process. Strengthening a relationship and transforming to indifferent customer into loyal ones and serving customers as a client considered as other marketing goals. Hence, loyalty, participation, and cooperation from the customers are becoming more and more important elements in enabling services companies to build long-term relationship with customer. The other thing why nowadays many hotel industries implement CRM is the competition in hospitality industry is very high. Hotels make efforts to define what it takes to satisfy the guests and how well they have done at delivering what their customer expect. Many hotels want to do the right CRM strategy to maintaining a successful long term relationship with the customer because CRM is one of tools for retaining customer. In the hotel industry guest satisfaction is very important for have a good relationship with the customer.

The CRM can become effectively if hotel have a right strategy, leadership, and culture. As the customer’s needs, their expectation of service and product has many options. So, many companies struggling to re-establish their connection to new as well as existing customers to boost a long-term customer loyalty (Chen & Popovich, 2003). Participation and loyalty of service quality of customers are become more important elements in enabling service companies to build long-term relationship with customers. In the literature, we establish that trust, commitment, two way communication, and conflict handling are the important parts of Customer Relationship Management to build high level quality of services to customer.

Problem Statement

Hospitality industry improved rapidly in every aspect, they need to maintain a good customer relationship based on their parts of the CRM to maintain a better service quality. The purpose of CRM is to increase customer satisfaction, improve customer perception of service quality and increase customer loyalty (Baran et al., 2008: 397). Customer relationship need to be managed and doing the successfully requires innovative thinking. Customer relationship is a big asset for hotel, because the more relationship a hotel can develop, the greater are its assets. Understanding the customer is not easy, because every customer have different satisfaction of every product and service. Since, in the hospitality industry, service is more important than product. Hotel must treat the guest like a king and give the customer a best service to get their satisfaction. In the CRM, hotel must know how to build a long-term relationship with the customer. Hence, building long-term relationship with the customers is not that easy. Nowadays, many hotels tried to build their long-term relationship with the customer. Since, it is a big competitive for every hotel to get a long term customer, the hotelier tried to find out the best way to build a long- term relationship. The purpose of this study is to further understand the important parts of CRM consists of trust, commitment, two ways communication, and conflict handling towards service quality required by hospitality industry.


H1 : The guest trust positively influence CRM

H2 : The guest commitment positively influence CRM

H3 : The guest two way communications positively influence CRM

H4 : The guest conflict handling positively influence CRM

H5 : CRM positively influence Service Quality

Research Objectives

The objectives of the study:

To analyze the risk between customer relationship management and service quality.

To analyze whether there is a relationship between customer relationship for build long term relationship with the service quality

To identify the role of CRM on the effect of trust, commitment, two way communication, and conflict handling to build a long term customer relationship

To recommend methods to improve the customer relationship management and service quality.

Literature review

This section will be discussed about the concept and dimensions of Customer Relationship Management which are Trust, Commitment, Two ways Communication, and Conflict Handling. It is link to the dependent variable which is quality of service that can achieve guest satisfaction as well as the relationship between these variables.

Define about Concept of Customer Relationship Management (CRM)

The most important in the hotel industry is customer. Hotel needs to define what is customer’s needs and wants to achieve their satisfaction to meet their expectation. Customer is the only sources of the company’s present profit and future growth. Customers, whose service expectation are not met, are not likely to return and will tell others of their bad experience (Bitner, Booms, & Mohr, 1994).

Based on Francis Buttle (2007) state that: “Customer in the context of B2B (Business to Business) is an organization of companies, or an institution, whereas in the context of the customer (B2C) is the ultimate consumer, the individual person or family.”

Customer Relationship Management (CRM) involves attracting, developing, and maintaining successful long-term relationships with the firm’s customer (Day, 2000). CRM aim is to create the most effective customer relationship possible and to develop competence building good relationship, which can help a company do service better and higher added value to the customer. The objective of CRM is to continuousy build a customer satisfaction, which will turn to long term loyalty, and eventually profitability competitive advantage (Parasuraman & Grewal, 2000). Nowadays, it is becoming increasingly important from managerial and theoretical to measure Customer Relationship Management (CRM) as a key intangible asset to enhance customer experience. Hence, the goal is to modify the current and future value of the customer for this hotel industry. CRM has become a important strategic for succesfull firms in every business sector.

According on the Buttle (2004) state that: “CRM is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit.”

Based on this CRM, Customer Relationship Management can impact for quality of service in the hotel industry. In implementing CRM, hotel can make a long-term reltionship that the customer gets their saisfaction by their service of quality.

Elements of the importance point in CRM

There are 4 key virtues that described about relationship marketing. The key virtues are trust, commitment, communication, and conflict handling. Morgan and Hunt (1994) stated that trust and commitment are main point of relationship marketing because they give encourage to work for get a good quality service and satifying the customer. However, when both of it between trust and commitment applied together, it will be produce outcomes that promote productivity, efficiency, and effectiveness. Furthermore, stated by Ndubisi and Wah (2005) is communication and conflict handling are the most impotant virtue to achieve a success customer relationship management. They stated that both of it is the basic virtue to retaining the customer an build a long term relationship.


When a people think relationship doesn’t exist, they need to perceived that the relationship is exist and they need to build an awareness to have a relationship based on the trust and commitment. Trust has been proposed as a key ingredient in the development of a successful relationship. The concept of trust is perceived to lead to successful relationship. From relationship marketing perspective, level of trust can defined by perceived level of interaction between hotel that provide the informations, service, and products with the customers who received it. Doney and Cannon (1997) emphasized that trust is the perceived credibility and benevolence. Based on above definitions, it is clear that “trust is a human characteristic that is based on assessment of one another’s personality traits (Chu, 2009), motives and behaviours” (Tian et al, 2008)

Building a strong relationship is not easy between the customer and the hotel. Sometimes, hotel cannot reach guests expectation. There are many type of customer, some of the customer have a low expectation, but some of them have a very high expectation. So if their needs didn’t meet their expectation, it impossible that customer will have a long term relationship with the hotel. Since its really difficult to build a trust between customer and hotel. Once the trust is broken, they will not retaining to the hotel. The development of trust is considered to be a critical result of establishing a long-term successful relationship between all the parties involved.

The level of trust is differently significantly among individuals based on their personal decision making and habits and characteristic. With a high level trust, it can increased to the organizational profitability. Its better to gaining a trust to maintaining the service quality and guest loyalty. Trust is focused on the sense of confidence and security for other people. The trusting relationship will be have a positive outcomes. “Trust in the organization should increase the benefit from transacting with the organization” (Botha et al., 2010)


According to (Biedenbach and Marell, 2010), commitment is the essential ingredients for successful long term relationship. It is beginning from trust then belief from partners that will be difficult to replace. “Customers will only make a commitment to trustworthy partners because commitment entails vulnerability, and leaves them open the opportunism” (Read, 2009). In the customer perspective, a customer can be have either positively committed, indifferent, or negatively committed. So, if they have a high commitment to a hotel they will have a good loyalty and hotel will give a good service quality for them. It would be a reciprocal relationship between the customer and the hotel, as the hotel provide a good service to consumers so, they will have a high loyalty toward the hotel.

“Trust is a major determinant of commitment. Relationship parties cannot becommitted to the relationship without a basis of trust. Both commitment and trust positively affect on long-term loyalty.” (Gil-Saura, Frasquet-Deltoro & CerveraTaulet. 2009). Loyalty can encourages partners to do cooperation and mutual investment to the relationship. Relationship specific investment may increase the level of commitment. because it is impossible to transfer the investment into another relationship. When the seller makes investments to the relationship, he exposes himself to the customer’s exploitation. Such investments can be, for example, a free training arrangement or conferences. “Relationship specific investments increase customer’s trust and commitment.” (Bendapudi & Berry. 1997). Commitment alsomakes the long-term benefits more attractive compared to the short-term alternatives. The fundamental factors that maintain a relationship are not only commitment and trust but also mutual objectives.

“Commitment as the belief that the importance of a relationship with another is so significant as to warrant maximum effort at maintaining it” (Peppers and Rogers, 2004). Commitment in here means that they have a same understanding that they are in the same purpose for the long-term. They can sacrifices because they are mutually dependent each others. The employee can perform very well, and it will leads to trust and it will be impact to commitment and therefor become customer loyalty.

Two Way Communication

Communication is a dialogue that always between two segments, it is like between customers and the hotel. “Communication in relationship means that providing a correct information that can be trusted for the customers, providing information when problems are occur, and providing information to fulfilling promises” (Ndubisi and Wah, 2005).

Word of mouth are perceived as a strong and meaningful source of communication among of customers. The hospitality industry is particulary concerns with a communication recommendation since hotel have the ntangible nature of its product and its all about personal experience that basis for customer’s assesment of the service. Word of mouth become more important as the hospitality industry attempts to build a power of long term relationship. Long term value of the customer have become more essentials for the competitive advantage of hospitality firms.

For identify the relationship between the customer and the hotel, the customer’s needs must be fulfilled. The needs of the customers can analyze and identify by gathering the information from them. It will be provide a better understanding and communication between both of it. “This activities can take by face to face interviews, focusing to the groups, and observe the service’s for the customers” (Tsai et al., 2010). Employee in the hotel become a front line service that will know everything what customer’s need and wants than anyone else. Having a good open communication between employee and the management can reduce the risk of problems and prevent before the problem happened (Du Plessis, 2010) In the hotel, communication is likely to contain information about satisfying or dissatisfying experiences, expectation, price levels, service quality and recommendation.

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This two way communication is more effective than one way communication, The reason is, it can makes information flow directly and smoothly because the response or feedback from the customer can be made and it can discussed immediately for get the most effective outcome. Two ways communication will make information is clearer and more accurate. Besides, hotelier must make sure to know the information including all necessary very well before share it.

Conflict Handling

Problems are always occur in the organization that handling a customers, without problems they will never know when they make a mistake and what they need to improve. With this, employee need to have an ability to handling and resolve a problems with the customer that dissatisfied in a satisfactory manner. As we can see, satisfied customer will tell three people of their good experience and dissatisfied customers will tell ten people.

There are conflict handling styles in different perspective and some various determinants of selection of conflict handling styles. “Differences of conflict handling styles on the basis of gender, position in job, experience, age” (Brahnam et al, 2005). When conflict arises, we need to be able to manage them properly, so that it becomes a positive force, rather than a negative force which would threaten the customer.

Customers which the complaints are resolved in the satisfactory manner will be more loyalty to the hotel. When they complain and the problems can resolved very well, they will come again to try our service rather than people who never express any complain to the hotel. “An organization which can encourage dissapointed customer and empower employees to remedy their situation, they have been shown that can achieve higher revenue and profits” (Kotler and Keller, 2006). Complaints should be addressed as opportunities to improve relationships with the customer.

Define about Service Quality

In hotel industry, CRM application with more satisfied customer can bring a lot of benefits, such as increase their retention, revenue, and profit. There are some elements from CRM that can impact for customer satisfaction. One of the impacts is service quality; service quality can define as a scale for evaluating the customer’s satisfaction. Service quality can measure the level of customer satisfaction. In the service quality based on the Parasuraman et al (1985), came up with a ‘gap model’ used for analyzing sources of quality problems and to understand how service quality can improved.


Gap 1 : The management perception Gap, this gap can be happened when the management perceives the quality expectations inaccurately.

Gap 2 : The Quality Specification Gap, this gap happened when service quality specifications are not consistent with management perceptions of quality expectations.

Gap 3 : The service delivery Gap, this gap happened when quality specifications are not met by performances in the service process.

Gap 4 : The marketing communication Gap, this gap happened when promises given by market communication are not consistent with the service delivered.

Gap 5 : The perceived service quality Gap, this gap happened when the perceived or experienced service is not consistent with the expected services.

Service Quality is the differences between customers expectation of service and perceives of service. But, if their expectation is greater than service performance, perceived quality is less than satisfactory and hence, customer dissatisfaction occurs.

Conceptual Framework

More formally, the main purpose is to identify that independent variable can influence the service quality in the hotel industry. According to Leedy and Ormrod (2005), an independent variable is a variable that studied as a possible cause of something else. According to Hussey and Hussey (1997), a dependent variable is a variable that the values are predicted by the independent and intervening variables.

The intervening variable can be defined as a factor that will affect the observed, but cannot be seen or measured. This intervening variable is refers to relationship between the hotel and the customers. These relationships is very important, hence they can influence the loyalty and support for the customer.


Customer Relationship Management


Service Quality

Two Ways Communication

Conflict Handling

The Dependent Variable is Service Quality and the Independent Variable for this study are trust, commitment, two ways communication, and conflict handling. Hence, the customer relationship management becomes intervening variable.


In this studies, the research investigate the important parts of CRM consists of trust, commitment, two ways communication, and conflict handling towards service quality required by hospitality industry. The research will be focused on quantitative method, because quantitative method is to quantify data and generalize results from a sample to the population of interest and to measure the incidence of various views and opinions in a chosen sample. Quantitative methods are centered on the quantification of relationship between variables to establish relationship between measured variables.

The research sampling method that will be used of data collection is structured techniques. The research will use a survey questionnaire to identify the CRM’s part that may influence the service quality in five and four star hotel in Kuala Lumpur. Data will collect from a large number of group and randomly selected respondents to obtain a more scientific result that could be used to represent the entirety of the population. The data analysis, the researcher will be used statistical data analysis in the form of tabulation to identify evidence regarding the cause and effect relationships.

In the questionnaire, the data collection method that the research will be finding and analyze will contains three parts. The first part is close questionnaire for the demographic factor of the respondent. Choosing a close questionnaire the first part is because for obtaining data such as age, gender, marital status, income, nationality, and education is specific information. In the second part, the research will be use likert scale for the dependent variable in this study; it is CRM components that contain trust, commitment, two ways communication, and conflict handling. And for the last part, the research will be used a same method with the second part to test whether there is relationship between the dependent variable towards the independent variable of this study. It will test about how the CRM components will impact the service quality in the hotel.

The respondent will be ….. (location)

The questionnaire requires information about… (demographic, age, )


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