3. CHAPTER 3: RESEARCH METHODOLOGY & DESIGN
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1 3. CHAPTER 3: RESEARCH METHODOLOGY & DESIGN 3.1. Research Methodology The main objective of this study is to identify the factors that affect successful CRM implementations and to propose recommendations to adapt an existing CRM implementation framework to suit the Sri Lankan hospitality industry. Therefore, the target population of the study had to be hotels where CRM has been implemented and hotels where CRM implementation is in progress. Due to the fact that the target population size is small, this research was carried out using qualitative research methods. Adopting a qualitative approach also gave the author the added advantages of qualitative research methods (Marshall and Rossman, 2006): Being able to give the participants the opportunity to respond to questions in their own words instead of forcing them to choose the answers from the limited responses given in quantitative studies Ability to probe into the responses given by participants in order to understand the factors specific to individual participants and to identify any uncommon factors that was not evident from the literature review and unanticipated by the researcher Figure 3.1 depicts the key activities followed during the study Literature Review Initially, an extensive literature review was carried out in order to gain an understanding of the Sri Lankan hospitality industry, CRM and the factors that affect CRM implementations. Since the focus of the research is on factors that affect successful CRM implementation, the literature review mainly concentrated on available frameworks for CRM implementation and their CSFs. 22
2 Literature Review A thorough review of existing literature related to CRM implementation Preliminary Interview Preliminary data gathering via interview with individuals from the hospitality industry Conceptual Model Built using the concepts derived from the Literature Review and interviews Semi-structured Questionnaire Semi-structured questionnaire to be used when gathering data via interviews Data Collection Collection of data via interviews and observations Data Analysis Analysis of data using qualitative methods Recommendations Recommendations to localize and existing framework to suit the industry Figure 3.1: Research Methodology 3.3. Preliminary Interviews Preliminary interviews were conducted with individuals from the hospitality industry in order to gain an understanding of the factors that are vital when implementing CRM in hotels. These interviews were based on the factors identified during the literature review. 23
3 3.4. Conceptual Framework To fulfill objectives of this research, the author attempts to form a research concept based on the factors identified from the literature survey and preliminary interviews carried out with individuals from the hospitality industry. These factors were then conceptualized to a conceptual framework, which is going to be used to analyze the CRM implementations in the Sri Lankan hospitality industry. Since the main objective of this research is to adapt an existing CRM implementation framework to suit the local hospitality industry, the conceptual framework was mainly derived from existing CRM implementation frameworks Definition of Key Concepts Strategy Development The business strategies related to customer relationship management forms the foundation of any successful CRM implementation. The strategies begin with the long term vision and goals of the organization with regard to how they wish to handle their customer relationships. From this vision, it is possible to formulate the underlying strategies related to CRM such as business and customer strategies. Human and Organizational Aspects CRM implementations entail changes in the roles and responsibilities of employees across the organization, mainly the front-line customer facing staff. For CRM to succeed, the willing participation of the employees is vital. The entire organization should become customer oriented and all employees should be working towards a common goal. Since change is always met with resistance, this should be managed effectively to make the implementation a success. Therefore, human related aspects form a vital aspect of CRM implementation. 24
4 Financial Aspects CRM implementation requires a substantial financial investment. Therefore, an in-depth financial analysis needs to be performed at the outset of the project. This will provide the ROI of the project, justification for implementing CRM, enable organizations to identify the areas of highest ROI and also help establish projected costs and benefits a specific stages of the project based on the incremental improvement of business capabilities. Having this also helps maintain support and commitment to the project throughout the implementation. Technology and Implementation CRM requires that the existing systems be integrated with the CRM system being implemented in order to gather and make available the customer data that are scattered across various systems. Also, in order to provide a single uniform view of customers across the organization, it is important that there is effective integration of the channels being used by the organization. Performance Monitoring Performance assessment is essential in order to ascertain the extent that the organization objectives of implementing CRM are met and also to set a basis for future enhancements The Framework The concepts outlined in the previous section were further decomposed in to specific relevant factors, which are given in Table 3.1. Here, the factors that were evident during the preliminary interviews are denoted with an (*) mark. 25
5 Concept Strategy Development Organizational and Human aspects Financial aspects Implementation and Technology Performance Monitoring Factors Business strategy (Payne and Frow, 2005; La Velle and Scheld, 2004) Customer strategy Segmentation (Payne and Frow, 2005; La Velle and Scheld, 2004) Acquisition (Payne and Frow, 2005; La Velle and Scheld, 2004) Retention (Payne and Frow, 2005; La Velle and Scheld, 2004) Complaints handling (Ang and Buttle, 2006; Sigala, 2005) Customer win-back (Ang and Buttle, 2006) Alignment and integration of processes (Kumar and Reinartz, 2006) * Organization culture (Sigala, 2005) * Management commitment and support (La Velle and Scheld, 2004; Sigala, 2005) Project championship and leadership (La Velle and Scheld, 2004; Sigala, 2005) * Change management (La Velle and Scheld, 2004; Fjermestad and Romano, 2003; Sigala, 2005) * Staff empowerment (Sigala, 2005) * End-user participation (La Velle and Scheld, 2004) * Rewards and incentives (Sigala, 2005, La Velle and Scheld, 2004) * Cost and Financial Capability ROI (La Velle and Scheld, 2004) Budget Process Management (La Velle and Scheld, 2004) Implementation roadmap (La Velle and Scheld, 2004) * IT Infrastructure and Systems (Payne and Frow, 2005; Sigala, 2005) Integration with existing systems (Payne and Frow, 2005; Sigala, 2005) Analytical tools (Payne and Frow, 2005) Multi-channel integration (La Velle and Scheld, 2004; Payne and Frow, 2005, Nguyen et al, 2007 ) * Quality of data (Hannigan and Palendrano, 2002) * Sharing data among hotels in a chain (Sigala, 2005) * Training (La Velle and Scheld, 2004; Sigala, 2005) Stakeholder results (Payne and Frow, 2005; Smith, 2006) Customer value Employee value Shareholder value Table 3.1: Conceptual Framework 26
6 Figure 3.2 depicts the diagrammatic representation of the conceptual framework which was used for the execution of the study. Strategy Development Business Strategy Customer Strategy Segmentation Acquisition Retention Complaints Handling Customer win-back Factors Influencing CRM Implementation Organizational and Human Aspects Alignment and integration of processes Organization Culture Management commitment and support Project Championship and Leadership Change management Staff empowerment End-user participation Rewards and Incentives Technology and Implementation Implementation Roadmap IT Infrastructure and Systems Integration with existing systems Analytical tools Multi-channel integration Quality of data Sharing data among hotels in a chain Training Financial Aspects Cost and Financial Capability ROI Budget Process Management Performance Monitoring Shareholder results Customer value Employee value Shareholder value Figure 3.2: Conceptual Framework Definition of Individual Factors The following sections provide a definition of each factor belonging to the main concepts identified in the Conceptual Framework. 27
7 Strategy Development Business strategy Articulates the organizations vision and objectives related to how the organization wishes to handle their customer relationships. Customer segmentation Involves the analysis of the existing and potential customer base and identifying the most profitable customer segment Customer acquisition The organization strategies on acquiring new customers Customer retention The organization strategies related to the retention of the existing customer base. The customer segmentation also has an effect on retention strategies as most organizations focus their retention efforts on the most profitable customer segment Customer complaints handling The organization strategies and processes in place to manage customer complaints Customer win-back The strategies in place to win-back customers when customers are dissatisfied and complaints are made Organizational and Human Aspects Alignment and integration of processes The processes that need to be changed and streamlines in order to make CRM implementation more effective and efficient 28
8 Organization culture The organizational culture needs to be a customer-centric culture where employees spanning all levels of the organization need to be focused towards increasing the customer satisfaction, loyalty and retention Management commitment and support CRM implementation entails changes in the organizational strategies, processes and culture. Obtaining the full commitment and support of the management for the CRM project is vital for success Project championship and leadership The project should be championed and lead by a cross-functional team who are empowered to take decisions related to setting strategies, organizational process & culture change and resources allocation and utilization. This team will also be responsible for building support for the project throughout the organization. Change management Change management entails changing the attitudes, skills, patterns of behavior of the employees on the new ways of carrying out their responsibilities. This is one of the vital and difficult tasks of CRM implementation since people are naturally resistant and fearful of change. Change management also includes motivating the employees towards working towards a common goal creating a customer-centric culture Staff empowerment Empowering the employees to make decisions to delight customers and in the event of customer dissatisfaction and complaints End-user participation The involvement of the end-users during the planning and implementation stages of the project minimizes the resistance of the employees and helps towards building support for the project 29
9 Rewards and incentives The rewards and incentives given to employees for active participation in CRM related activities Financial Aspects Cost and Financial Capability This is one of the factors that were identified during the preliminary interviews. CRM implementation requires a substantial financial investment. Therefore, the financial capability of the organization plays a major role when deciding the viability of adopting CRM. ROI This entails the calculation of the ROI of the project in order to provide justification for implementing CRM. Performing this task also enables organizations to identify the areas of highest return which can be implemented first in order to show benefits early in the project. The ROI should include measurable and observable metrics in order to show clearly the results that can be achieved by CRM. Budget Process Management Management of financial aspects during the implementation Technology and Implementation Implementation roadmap Defines the plan for delivering CRM capabilities at reasonable increments. It consists of a set of prioritized, sequence of time-fixed activities that are implemented at the rate that the organization can handle and manage successfully. Generally, the areas of highest ROI are implemented first in order to show early benefits and build further support for the project. 30
10 IT Infrastructure and Systems The existing IT infrastructure and systems that are in place and used by the organization. Integration with legacy systems Most organization at the time of implementing CRM already has other information systems that include legacy systems that contain customer data. The CRM System needs to be integrated with the other systems that contain customer details in order to create unified customer profiles across all systems. Analytical tools Analytical tools that enable analysis of the large quantities of data to discover meaningful patterns and relationships. Multi-channel integration The integration of all customer contact points within an organization in order to create a unified view of the customer across all channels. Here, the organization also needs to decide the most appropriate and effective channels that should be integrated. This should be done after a careful analysis of the existing channels used by the organization and their effectiveness. Quality of data The accuracy, consistency and completeness of data that exist in different systems in the organization that act sources of data to the CRM System Sharing data among hotels in a chain The extent to which guest detail and profiles are shared among the hotels in a chain. Training The training given to the front-line employees on the usage of the system 31
11 Performance Monitoring Customer/ Employee and Shareholder Value Monitoring of the value gained by the customer/ employee and shareholders to ensure the organizations strategic aims in terms of CRM are being delivered. Carrying out performance monitoring enables organizations to identify the effectiveness of the strategies, identify possible flaws in the strategies/ processes and also to set the basis for future improvements 3.5. Semi-structured Interview Questionnaire The study being a qualitative research, the data collection mechanism has mainly been via semi-structured questionnaire administered on a one-to-one basis with selected individuals from the industry. This approach was chosen since it gives the participants the opportunity to respond to questions in their own words, rather than selecting from a set of limited responses. This approach also allowed the author to probe into responses given by participants in order to gain a deeper understanding. The questionnaire consisted of a series of open and closed ended questions which the author used as a guideline to conduct the interviews. The questionnaires were developed based on the conceptual framework presented in the previous section, which ensured that all aspects that affect the area of research are included comprehensively. Two separate questionnaires were developed for the two main target groups (stakeholders) in this study: Senior/ Front Office Management IT Management Table 3.2 indicates the type of questions based on the main concepts targeted at each stakeholder. 32
12 Stakeholder Type of Questions Senior/ Front Office Management Strategy development Organizational and human aspects Financial aspects Performance monitoring IT Management Technology and implementation Organizational and human aspects Table 3.2: Stakeholder questionnaire mapping 3.6. Sample Selection A sample of 20 hotels consisting of hotels, hotel chains and luxury boutique hotels were selected for the study using a purposive sampling method. The main reason for adopting a purposive sampling method was to ensure that the participants chosen would be different from one another and their views will reflect this difference and provide a good qualitative study (Creswell and Plano Clark, 2007). The sample included hotels where CRM has been implemented as well as hotels where CRM implementation was in progress. This sample was selected using the hotel classification published by the Tourist Board of Sri Lanka. Since CRM implementation requires a substantial financial investment, a majority of the selected sample consisted of high end hotels. However, a number of mid-range hotels too were also included in the sample. Table 3.3 indicates the breakdown of the sample based on the hotel classification. The 2-5 star hotel sample also includes hotels belonging to three local hotel chains in Sri Lanka. Hotel Classification Number of Hotels 5 star 6 4 star 5 3/2 star 4 Luxury boutique hotels 5 Table 3.3: Breakdown of sample based on hotel classification 33
13 3.7. Data Collection Interviews The main data collection mechanism was via one-to-on interviews based on the semistructured questionnaire. During the interviews, the interview proceedings were audio recorded with prior permission from the participants. This was done to ensure that the responses are captured in the exact words of the participants and also to ensure that all information is recorded. However, when audio recording was not possible, the responses were noted by the author Observations Apart from conducting interviews, data was also gathered by observing how the frontline employees used the CRM System when serving guests in order to gain a deeper understanding of how the system is used in the natural social setting. The observations were carried out in the guest check-in counters and at the restaurants where a significant amount of guest interactions take place. The observations and interactions with the front-line employees enabled the author to gain first-hand knowledge of the practical issued faced by employees when using the system, and also served to ensure the validity of the information gathered during the interviews Data Analysis and Recommendations Since qualitative research generates a lot of descriptive textual data, the interview voice recordings, paper-based interview responses and observation notes were organized in order to facilitate easy analysis. In order to do so, all audio recording and paper-based data were reviewed and transcribed to enable categorizing of data. Prior to analysis, the data was thoroughly reviewed in order to become familiar with the data. During this process, more notes and memos were added into the existing database containing the initial thoughts of the author. The analysis of data was carried out by attempting to find patterns, themes, distinct differences within categories of 34
14 data in order to interpret the data. The research also analyzes the applicability of existing CRM implementation frameworks to the Sri Lankan hospitality industry, and proposes recommendations for a localized framework, which can be adopted by the Sri Lankan hospitality industry. 35
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