July 12, 2007

CRM the 'Must Have' for all Tourism Companies

Way back in 2002 the Canadian Government released some findings on how the Retail Travel and Service Industry (RTSI) was undergoing drastic changes. They were picking up on the fact that, yes, customers are price sensitive, but retaining customers is a much more effective way to grow your revenue stream. The Canadian Government noted that the tour and travel industry is composed of some early stage adapters they still mention that one of the most critical challenges facing the RTSI is the adoption of the new e-commerce economy.

Some interesting findings that can be taken from the report are:
  • It is six times more costly to service a customer through a call center than via the Internet, a tool that the RTSI is adopting rapidly.
  • It is up to 10 times more costly to generate revenue from a new customer than from an existing customer.
  • A 5% increase in retention rate can increase company profits by 60-100%.
  • Referred customers generally stay longer, use more products and become profitable customers faster, a consumer pattern familiar to most stakeholders of the RTSI.

It is becoming very clear that to excel in this modern e-commerce economy, one must set up a great CRM program, focus on relationship building and hold on to those customers for the long haul. The report states that an effective CRM plan "...translates into faster service, higher customer satisfaction, customer retention, customer acquisition, repeat purchases, lower cost and profitability."

Fred Reichheld spoke to the advantages of the "The Loyalty Effect":
  • Customer Retention: CRM enables a company to retain loyal and profitable customers and channel members. According to the International Data Corporation, it costs online merchants from $0.90 to $2.67 to get a visitor to their website for the first time. These companies must find a way to achieve repeat business in order to justify their initial acquisition expenditures. CRM through its extensive data warehousing solutions could help companies attract and retain customers.
  • Customer Acquisition: Based on known or learned client characteristics, CRM may assist companies in acquiring the right customer through effective targeting and segmentation.
  • Lower Cost: The automation process minimizes paper work and manual labour.
  • Customer Loyalty and Satisfaction: One of the prominent features of CRM is its ability to create the opportunity of mass customization. Increasingly, today's traveler wants customized products. When the service is personalized and tailored to meet the preference and choice of the customer, client satisfaction can be expected to increase. Customer satisfaction, over time, builds allegiance.
  • Profitability: All of the factors listed above translate into profitability. Annual customer profits increase over time as the client - agency relationship expands. CRM can offer additional items to the companies that provide new profitability curves.

It just makes sense to take care of those that you are already servicing, and advocate for your product is worth 10 times the amount spent on attracting your initial customer. There are many practical (and inexpensive) ways to ensure you have an effective CRM plan, here are a few small tips that come to mind:

· Invite dialouge: Have a blog, a forum or a public rant wiki on your website, people need to feel that you are listening, and do listen!! Take what is said seriously, and respond to every posting.

· Keep them up to date: Have a newsletter that is more then a sales message, help and educate them with articles and personal experiences, this gives your business a warmer relationship with your clients. Update your website!! Keep your clients interested in what you are doing by staying fresh and continuously updating.

· Personalize all information: It is so easy to have an auto-filler that will help you customize all of your contact messages. It ads a personal touch, very worthwhile.

· Check up on your stars: Routinely, proactivly contact the greatest 20% of your client list, don’t wait for something to go wrong before you say ‘hi’.


Fabienne Rabbiosi said...

With regards to CRM's for Destination Marketing Organisations and Convention Bureaux, iDSS http://www.idss.com provides a web-based system that is specifcally taylored to convention bureaux.

You can read more about how I have rolled out iDSS at my current workplace, Gold Coast Tourism in Australia on my blog: www.fabies.com/blog