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CUSTOMER RETENTION MANAGEMENT IN THE HOTEL INDUSTRY: A

PROFILE OF THE HOTEL INDUSTRY IN MADURAI

A. SATHYA LEKHA, Assistant Professor in Commerce, EMG Yadava College, Madurai.

Abstract:
Customer retention management (CRM) is crucial for the success of today's Madurai hotel
industry, as maintaining valuable customers is more cost-effective than attracting new ones and
this is of high importance in the current economic climate. Currently, the Madurai hotel industry
is introducing CRM strategies which have been revised after the economic downturn. Customer
Loyalty Programs are the most common CRM approach used in the hotel sector, which theory
suggests that loyalty programs are common in the hospitality sector. In the Madurai hotel
industry, there is uncertainty in marketing and a factor causing this is the reduction in marketing
budgets and that marketing workers appear not to be managers. In order to be effective, client
retention management has essential elements. Customer satisfaction, marketing of partnerships,
loyalty schemes, data collection, facilities for addressing grievances, recovery methods and
follow-up after purchase. The investigator noted that it permitted the data from both stages to be
corroborated and analyzed by using triangulation in reference to the theory highlighted in the
literature review. The researcher suggests that hotels develop written marketing strategies that
integrate CRM initiatives with other marketing processes and use marketing metrics to assess the
effectiveness of all marketing activities to be cost efficient and effective in the marketing
budgets.
Keywords: Customer Retention Management, Hotel, Madurai

Introduction
The retention of customers relates to the practices and measures taken by firms and organisations
to minimize the amount of customer defections. The aim of customer retention strategies, mostly
through customer loyalty and brand loyalty campaigns, is to help businesses maintain as many
customers as possible. It is crucial to note that customer retention starts with the first interaction

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a customer has with a business and continues throughout the relationship's entire lifespan. While
most businesses typically spend more money on customer acquisition because they see it as an
easy and efficient way of raising sales, retention of customers is often quicker and costs up to
seven times less on average than acquisition of customers. Selling to clients with whom you
already have a partnership is also a more productive way to raise sales because businesses do not
need to recruit new ones, train them, and convert them.
It is also found to be a more effective process by businesses who turn their attention to customer
retention because they sell to consumers that have already shown an interest in the products and
are engaged with the brand, making it easier to capitalize on their interactions with the company.
Retention is essentially a more competitive business model that is important to sustainable
development. Customer retention is incredibly important for any company-the act of retaining
existing customers that you have already invested money gaining. On average, acquiring a new
customer costs five times as much as maintaining an existing one, and it can cost up to 30 times
as much to gain a new customer depending on the sector you are in vs. retaining an existing
customer! Growing consumer retention rates by just 5% raises income by 25% to 95% . Many
businesses do not understand how important retention is, concentrating instead on acquisition
and leaving their existing and loyal customers dissatisfied at times.
For the focus of this research, CRM in the Hotel Sector in Madurai is appropriate as the
researcher could not find literature on this particular field when choosing the research subject.
Tamilnadu, India, decided on literature that focused on the Madurai hotel industry. The analysis
was selective and no literature was found in the Madurai Hotel Sector on CRM. Theory indicates
that in the last ten to fifteen years, CRM and the achievement of customer retention strategies
have become gradually more relevant. It has been reported that attractive new customers are
much more difficult and expensive than retaining existing ones, and this has become well
recognized across sectors.

Review of Literature
 Ashraf et al. (2018) conducted a case study on five lines of business engaged in services,
hotels, hospitals, education, and banks in Pakistan, reporting a significant effect of
service quality on customer satisfaction. Furthermore, service quality has been found as
an important determinant of customer satisfaction in retail banking (Caruana, 2002), the

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game industry (Wu, 2014), chemical industry (Susanti et al., 2020), international medical
travel sector (Han & Hyun, 2015), and in cargo services (Arief et al., 2019).
 Adiati and Dinna (2014) conducted research in the internet service provider industry and
found a positive effect of switching barriers on customer retention. Risdianto (2017) as
well as Samudro et al. (2019) similarly showed a significant effect of switching barriers
on customer retention. Shamini and Ragel (2018) examined the telecommunications
industry and reported a positive effect of switching barriers on customer retention.
Furthermore, Kim et al. (2007) found the same relationship in the context of mobile
telecommunication services, whereas Danesh et al. (2012) reported the same findings in
hypermarkets.
 (Daneshfar et al., 2016), life insurance services (Nguyen et al., 2018), banking
(Ibojo, 2015; Mohsan et al., 2011), DIY retail loyalty program (Vessel & Zabkar, 2009),
telecommunication network operators (Gerpott et al., 2001), a continuous purchasing
setting (Ranaweera & Prabhu, 2003), and hypermarkets (Danesh et al., 2012). Posselt and
Gerstner (2005) also argued that customer satisfaction will improve customer retention.
 (Mosavi & Ghaedi, 2012), banking (Vithya, 2017), e-banking services (Chu et al., 2012),
and in international medical travel industry (Han & Hyun, 2015). Leonidou et al. (2008)
and Chen et al. (2011) reported the same results for the export manufacturers of industrial
goods and the retail industry, respectively

Important of the study

The importance of the customer Retention has become an essential business issue for the
organizations which have realized the significant outcomes that can be achieved for providing an
effective customer service. Regarding to the other industries the different researchers and
institutions have undertaken a lot of scientific and detailed studies. But Indian hotel business is
unable to draw the attention for the researchers with any noticeable extent. Hence the study has
been examining and analysing the customer Retention Management in the Madurai city. This
study can help the firms to employ the outcome for developing the appropriate customers'
retention policies.

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Statement of the Problem

The inspiration for this study is the researcher's background in the hospitality sector and interest
in customer retention. The researchers have also been made aware of these variables of the effort
necessary to create consumer loyalty. In the hospitality market, there are many rivals and there
are many alternatives or replacements to contend against concentrating on accommodation.
Another factor that encouraged the researcher to carry out this thesis is that while studying
It was evident from different databases and papers that there was no research carried out in
Madurai in this subject area for an appropriate research topic. There are several variables in the
service sector where consumers assess the quality of the service they offer, and this has a knock
on whether the company has been successful in maintaining customers. In order to achieve
efficiency, organizations have to rely on both observable and intangible factors while designing
customer retention strategies in the service sector. The research to be performed will concentrate
on the various strategies currently implemented by various hotels in Madurai. It will also reflect
on any past improvements to these techniques that have been made in order to remain successful
in the Present climate. It is hoped to recognize the common techniques adopted by these
companies from the results and compare them with the literature reviewed for the secondary
research process.

Objectives of the Study

The objective of this study to examine the efforts of the hotels in Madurai to retain existing
customers in the current economic crisis. Over the past decade business’ have began to focus
more on keeping customers rather than just gaining new ones. Companies have adapted to the
thinking that if companies keep their customers, build relationships and customer loyalty then
these customers will prove to be more profitable than a constant churn of new customers.
Therefore within the dissertation, there are a number of primary research questions that will hope
to be examined:
1. To Implemented Current customer retention strategies in the hotel sector in Madurai
2. To Recent changes in these strategies due to the current economic climate
3. To Involvement in external initiatives to increase marketing
4. To Measurement of CRM and external initiatives

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5. To Practical examples compared to those suggested by theorists

Scope of the Study

The main aim of the study is data will be collected only from the employees and owners who had
working and experienced at the particular hotel in the Madurai city. Hotels should then use the
most appropriate methods to develop the profitability of the target customers. The study
considers only customer retention of hotels in Madurai city, it should strategically choose which
customers are the most valuable and which customers they want to target with their CRM
strategies.

Methodology
The theory and research approach to research investigation will be illustrated in this report. It
will also illustrate the study approach and the justification for the choice of strategy. The
researcher took a descriptive approach, as the researcher used survey questionnaires, the
researcher concluded that this approach was suitable for stage one. Descriptive research helps the
researcher to distinguish different answers relevant to the subject of the research. When
providing conclusions regarding the understudy, it encourages the researcher to be descriptive.
(McNabb 2004) The researcher thought that, if it also followed an exploratory approach, the
research methodology would be more fruitful as well as descriptive. This is relevant to the
research process as the researcher’s objective is to examine the research topic from an internal
perspective and also an external perspective.

Sampling design
The study aims at analyzing the performance of Customer Retention Management in Madurai
city. Both primary and secondary data were collected. Primary data were collected from the
employees and owners of the hotels in Madurai city. The secondary data were collected from
books, journals, daily newspaper and published records. The questionnaire is collected from 50
respondents of employees and owners from the selected Madurai hotels through the Google
forms questionnaire link.

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Limitation of the Study

 The study was restricted to Madurai City only
 The sample size of the respondents is only 50
 The research only concentrate on customer retention in hotel industry
 The information will be collected valid until there is no any technical changes and any
innovation
 The result is assuming only based on information collected from the respondents

Data Analysis and Interpretation

Simple percentage analysis technique is used to identify the customer retention strategies and
then some tools like Chi square test, ANOVA, Cross tables, analysis to be used for comparing
the factors of the study.
Table 1 Number of Years in Operation
S.No No of years in operation No of respondents Percentage
1 0-5 years 15 30%
2 06-10 years 10 20%
3 10+ years 25 50%
Source: Primary Data
Table 1 shows the length of time in operation of the respondents hotels, it highlights
that the hotels in operation the longest have the highest response rate at 50%.

Table 2 Hotel Capacity

S.No Room Occupancy No. of Respondents Percentage
1 0-20 10 20%
2 21-49 18 36%
3 50-99 22 44%
Source: Primary Data

Table 2 reflects the capacity of the respondent hotels, showing that the highest
response rate received was generated by hotels with a room capacity of 50-99, totalled

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44% of responses.
Table 3 Marketing Personnel
S.No No of Respondents Percentage
1 Owner 12 24%
2 Manager 13 26%
3 Marketing Manager 10 20%
4 External 9 18%
5 Other 6 12%
Source: Primary Data
Table 3 reflects the personnel in charge of marketing in the respondent hotels. It identifies that
only 20% of the hotels have dedicated marketing managers. The majority of the hotels marketing
is managed by hotel managers (26%) or owners (24%).

Table 4 Marketing Strategies

S.NO No of Percentage No of Percentage
respondents respondents
1 Market Research 40 80% 10 20%
2 Marketing Planning 42 84% 8 16%
3 Relationship marketing 41 82% 9 18%
4 Online 47 94% 3 6%
5 Advertisements 46 92% 4 8%
6 Media Coverage 48 96% 2 4%
7 Marketing metrics 43 75% 25%
86% 7 14%
Source: Primary Data

In table 4 the importance of a number of relevant marketing activities is rated. 20% of

respondents identified that market research was either not important of not applicable to their
hotel. 18% of respondents also highlighted that relationship marketing was not important to their
hotel while 14%, one quarter of respondents identified that marketing metrics were not important
to their hotels.

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Table 5 Important Strategies of CRM

S.No Important Strategies No.of Percentage

Respondents
1 Customer Loyalty 20 40%
2 Customer Service 15 30%
3 Customer Complaints Handling 10 20%
4 Customer Data Collection 5 10%
Total 50 100
As evident in table 5 respondents highlighted that loyalty, customer service and customer
complaints handling were of importance while they identified that 5% classed customer data
collection as not important

Table 6 Current CRM Strategies

S.NO Current CRM Strategies No of Respondents Percentage
1 Loyalty Programs 12 24%
2 Discounts 5 10%
3 Customer Service Initiatives 8 16%
4 Customer Comment Tracking 12 24%
5 Follow Ups 10 20%
6 Targeted Promotions 3 6%
Source: Primary data
In table 6 it is evident that the hotels that operate CRM strategies that loyalty programs have the
highest usage with 24% of respondents who have CRM strategies in place stating that they use
loyalty programs. While 17% of respondents who state that they have CRM in place identified
that they use customer service initiatives in order to retain customers.
Facilitating Factors are highly induced the Factors Influencing CRM and Marketing
Strategies in the customer retention Management in Madurai hotels

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In order to find out the significance difference between the facilitating factors are highly induced
the Repeat Customer, Turnover per Customer with the Marketing Strategies in Customer
Retention Management, analysis of variance (ANOVA) was attempted with the null hypothesis
as “ There is no significance difference between in Factors Influencing CRM and Marketing
Strategies in the customer retention Management in Madurai hotels. The result of the ANOVA
are given in the following table.

One Way ANOVA

Sum of Squares df Mean Square F Sig.

Marketing Research Between Groups .003 1 .003 .008 .930

Within Groups 18.317 48 .382

Total 18.320 49

Marketing Planning Between Groups .010 1 .010 .025 .876

Within Groups 20.490 48 .427

Total 20.500 49

Relationship Marketing Between Groups .103 1 .103 .303 .585

Within Groups 16.317 48 .340

Total 16.420 49

Online Between Groups .255 1 .255 1.153 .288

Within Groups 10.625 48 .221

Total 10.880 49

Advertisement Between Groups .000 1 .000 .000 .986

Within Groups 7.380 48 .154

Total 7.380 49

Media coverage Between Groups .017 1 .017 .017 .897

Within Groups 48.163 48 1.003

Total 48.180 49

Marketing metrics Between Groups .022 1 .022 .169 .683

Within Groups 5.978 47 .127

Total 6.000 48
The above table shows the results of ANOVA based on facilitating factors are highly
induced the Repeat Customer, Turnover per Customer with the Marketing Strategies in

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Customer Retention Management, since the respective ‘p’ value of the facilitating factors are
highly induced the factors influencing with Marketing Research, Marketing Planning,
Relationship Marketing, Online, Advertisement, Media coverage, Marketing metrics are more
than 0.05. So Null hypothesis are accepted. Therefore it may be conducted that Factors
influencing CRM are not accepted with some facilitating factors are not induced by the
Marketing strategies in CRM in the hotel industry.

Chi Square Analysis between Year of operation and Factors influencing the CRM
In this part, Chi square test is used to discover the association between the Year of operation and
Factors influencing the CRM. There is no association between Year of operation and Factors
influencing the CRM

yearofoperation * Important factors inflencing CRM Crosstabulation

Count

Important factors inflencing CRM

Turnover per
Repeat customer customer Total

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 3.380 2 .185

Likelihood Ratio 4.991 2 .082

Linear-by-Linear Association .393 1 .531

N of Valid Cases 50

yearofoperation 0-5 10 5 15

6-10 8 0 8

above10 21 6 27

Total 39 11 50

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 a. 2 cells (33.3%) have expected count less than 5. The minimum expected count is 1.76.
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The result of Chi Square test between Year of operation and Factors influencing the CRM is
summarized in table. It shows that the Pearson Chisquare is 3.380 with the degree of freedom
at 2. Further, it is represented that the P value is 0.185. Since p value for chi square is more
that 0.05 for Year of operation and Factors influencing the CRM, It leads to accept null
hypothesis.

Findings:
The length of time in operation of the respondents hotels, it highlights that the hotels in
operation the longest have the highest response rate at 50%. The capacity of the respondent
hotels, showing that the highest response rate received was generated by hotels with a room
capacity of 50-99, totaled 44% of responses. The personnel in charge of marketing in the
respondent hotels. It identifies that only 20% of the hotels have dedicated marketing
managers. The majority of the hotels marketing is managed by hotel managers (26%) or
owners (24%). In table 4 the importance of a number of relevant marketing activities is rated.
20% of respondents identified that market research was either not important of not applicable
to their hotel. 18% of respondents also highlighted that relationship marketing was not
important to their hotel while 14%, one quarter of respondents identified that marketing
metrics were not important to their hotels. As evident in highlighted that loyalty, customer
service and customer complaints handling were of importance while they identified that 5%
classed customer data collection as not important. It is evident that the hotels that operate
CRM strategies that loyalty programs have the highest usage with 24% of respondents who
have CRM strategies in place stating that they use loyalty programs. While 17% of
respondents who state that they have CRM in place identified that they use customer service
initiatives in order to retain customers. the results of ANOVA based on facilitating factors are
highly induced the Repeat Customer, Turnover per Customer with the Marketing Strategies
in Customer Retention Management, since the respective ‘p’ value of the facilitating factors
are highly induced the factors influencing with Marketing Research, Marketing Planning,
Relationship Marketing, Online, Advertisement, Media coverage, Marketing metrics are more
than 0.05. So Null hypothesis are accepted. Therefore it may be conducted that Factors
influencing CRM are not accepted with some facilitating factors are not induced by the
Marketing strategies in CRM in the hotel industry. The result of Chi Square test between
Year of operation and Factors influencing the CRM is summarized in table. It shows that the
Pearson Chisquare is 3.380 with the degree of freedom at 2. Further, it is represented that the
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P value is 0.185. Since p value for chi square is more that 0.05 for Year of operation and
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Conclusion
The researcher has gained more knowledge in the field of CRM, the CRM method and also CRM
in the hotel sector in Madurai after completing this research dissertation. The researcher also
gained insight into the repercussions faced by the hotel industry in Madurai during the economic
downturn, and the researcher developed an understanding of the financial constraints that hinder
hotel marketing. It is also clear that the researcher has learned the latest CRM tactics used in the
hotel industry and also that the efficacy of the strategies they apply is not assessed by the
majority of hotels. The research method has not only allowed research to acquire knowledge in
the subject area, but also through literature research in related areas. In addition, the researcher
has acquired more knowledge of research methodologies, philosophies, and methods, and has
gained experience in research design. The researchers have achieved more than initially expected
from the research process.

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