Customer Relationship Management: Tennyson Case Study

University Degree Business and Administrative studies

Introduction

This case study is based on Tennyson Ltd, which is a UK registered tour operator, and has trading names such as ‘Visit Asia’ and ‘Visit Vietnam’. Tennyson Ltd is also a member of the Association of British Travel Agents (ABTA) and the Pacific Association of Travel Agents (PATA). Tennyson Ltd is in an alliance with well-regarded tour operators, which are both publicly and privately owned (Visit Asia, 2008). They operate in the busiest areas in both central and Greater London, such as Colliers Wood, Fulham and Hammersmith. A wide range of activities including skiing, snowboarding, sailing, yachting, diving, mountain biking and walking are offered.

Tennyson Ski merged with Merryweather Sailing in 2002. Merryweather Sailing, which is another tour operator, targets a different group of customers such as novice and experienced sailors. Their hotels were located near water sports locations, which were a considerable distance away from the heavily commercialised holiday centres and were staffed entirely by Tennyson’s employees. However, according to the case study, the ratio of ski representatives to clients is 1:30, which shows a poor indication of good customer relationship.

Despite CRM’s importance as a business approach, there is no concrete definition of relationship marketing at present. However, (Parvatiyar and Sheth, 2001) defined relationship marketing as a method of acquiring, retaining and liaising with targeted customers to provide better value for both the organisation and the customers. The combination of marketing, sales and customer service and the distribution elements of the organisation in an integrated manner enable higher efficiencies and improved effectiveness, which lead to better value for the customers.

CRM evolved from direct response marketing, with emphasis placed on the building of long term relationships with customers rather than on individual transactions. Relationship marketing involves an understanding of customers’ needs and wants through their life cycles, and the provision of a range of suitable products and services.

The problem with the company is that Tennyson Ski, which is a part of Tennyson Ltd, is not CRM oriented. However, this is vital for the organisation in order to retain competitive advantage in the tourism industry. CRM is also key to the retention of Merryweather Sailing customers. According to Payne et al (1999) the managers and employees of an organisation is the most important single influence in ensuring the future success of the organisation. However, Tennyson Ltd did not acknowledge this as there are significant staff shortages, with a ski representative to client ratio of 1:30 in Tennyson Ski. This result in the neglect of customers, and therefore customers would perceive that they are not being adequately attended to. Lack of awareness in the market environment especially in the ski market and there was no clear strategies used in creating and maintaining a good relationship with their customers is also another problem for Tennyson Ltd.

Transactional marketing, which is dominant in Tennyson Ski, is an outdated approach. There is an urgent need to change strategies with a movement towards Relationship Marketing.

This report explains Tennyson’s potential for relationship marketing strategy, their attempts at building relationship market and what strategies can be adopted in order to improve their relationship marketing.

1.1 Features of Tennyson’s business

Merryweather Sailing

Merryweather Sailing has been in the tourism industry for a significantly longer period of time than Tennyson Ski. It therefore has greater control due to its knowledge of the entire holiday experience and a greater knowledge of consumer markets due to their belief that the key to success lies in the marketing culture that flows between the management and staff and from the staff to customers. This in turn feeds back positive attitude and knowledge back to the company, enabling it to refine its policy. Merryweather Sailing, which is a specialist tour operator, is responsible for the ‘hot’ holiday experience.

Tennyson Ski

Tennyson Ski however, did not have the same level of control over their holiday experience, with a distinct lack of customer focus. This is highlighted by the fact that the ratio of ski representatives to clients is only 1:30, compared to the significantly higher ratio of 1:8 for Merryweather Ski. The customer profile is such that a large majority of skiing and snowboarding holidays are booked at the last minute, with much of the tourist market being potentially classified as mass market tourism.

1.2 The potential for RM in Tennyson

Relationship building, which is vital for customer loyalty, recognises that multiple market domains can directly or indirectly affect a business’s ability to win or retain profitable customers. These other markets include suppliers, employees, influencers, distributors and alliance partners. (Christopher et al. 2002:5)

The main objective of marketing activity is to build relationship with customer and retain them.

Companies that are choosing to adopt a strategy of ‘customer intimacy’ will need to focus on developing a close and customised relationship with their customers. This depends on identifying those customers or segments that are interested in having a relationship with the company and how beneficial it will be for both parties. Such companies tend to focus on building relationship with existing customers with the greatest potential for growth and profitability (Christopher et al. 2002:201). Therefore, organisations should point their marketing activities less at the transactional marketing mode, and place its emphasis on the single sale, and ways in creating a long term relationship with their customers.

Tennyson made this attempt by talking “to their own customers, to people who had holidayed with competitors and to people who had fancied the idea of an activity holiday but had never taken one” and “looked at consumer trends”. This helps the company to better understand the changes within the holiday market, therefore targeting the right people.

Merryweather Sailing had a close relationship with their customers as “the service was highly personalised and care of the customer and service quality were of paramount importance”. Szmigin and Bourne (1998) state that the value of the relationship, and by implication the desire to commit to it, will depend on the nature of the service, the nature of the consumer and the nature of the situation.

However, Relationship Marketing is very expensive, more suitable to some markets than others so not all customers will want a relationship with a supplier. Therefore, companies should focus more on those customers with whom they will have profitable relationships.

Tennyson Ltd offers high quality product, and this means they need to create and maintain excellent relationship with their customers.

Although Merryweather Sailing offers an excellent relationship with their customer, Tennyson Ski is still struggling in the market. One of the main problems with Tennyson Ski is that they did not have a clear strategy of customer retention, customer care and service quality as evidenced by the case study “The snow market is quite different. Tennyson Ski did not have the same level of control over the holiday experience and were therefore unable to build up the same kind of relationship with their clients…Once clients had arrived they might not see a Tennyson Ski representative until the day of departure”.

This does not mean that the company do not have potential for CRM; in fact they do because the strengths from Merryweather Sailing can be transferred into Tennyson Ski, which will eventually make the relationship stronger with customers. As mentioned in the case study that research is being done to find out more about their customers (hot and cold) and found that the income profile for both groups were the same. “Some clients are experts and have advance knowledge of the entire holiday experience, while many of them are not sure which company they will holiday with in the future”. This clearly shows that Tennyson’s products and customer markets offer a relatively high potential for relationship marketing strategy as they know that customers, “want to relax by actively engage in an activity, and they are discerning, hate inefficiency and are happy to pay for quality” so, all Tennyson need is a strategy to help them to achieve this and make the clients more satisfied.

2.1 Relationship Building

This is a preview of the whole essay

2.1 Relationship Building

As the rapid and radical changes in today’s marketing environment resulted in an emphasis on relationship marketing, it is crucial that organisations build and maintain a close relationship with their existing and new customers to increase profitability and maintain customer loyalty. reported that more and more firms are capitalising on strong relationships between firms and customers to gain valuable information on how best to serve customers and keep them from switching to other competing brands. Hence customer relationship building creates mutual rewards () which benefit both the firm and the customer. By building relationships with customers, an organisation can also gain quality sources of marketing intelligence for better planning of marketing strategy. More and more companies are realizing the need for in-depth and integrated customer knowledge in order to build close relationship with their customers. The emergence of new channels is affecting how companies interact with their customers, therefore an approach to develop full knowledge about customer behaviour and preferences will continually enhance the business relationship (Parvatiyar & Sheth, 2002).

Understanding the consumers and their buying behaviour is important and a good condition to work out a proper relationship building plan. But increasing competition within service sector, especially the tourism industry and the knowledge within customers demand is a main driver behind relationship building. The fact is, getting one new customer costs five times more than retaining a current one and at the same time switching power of customer has also increased (Gordon, 2004 and Payne et al, 1999).

2.2 Tennyson’s relationship building attempts

Value has come to mean different things to different people, (i.e. what may be valuable for one person, may not be for another person) and is difficult to change. The purpose of relationship marketing is to provide a superior package in terms of what the customer really wants on a continuous basis. According to Christopher (2002) customer value can be defined as the way the organisation delivers its service to its customers based on one’s own value chain, e.g. Will customers buy from you or from your competitors? Most of the time customers will choose the company that offers them the best value, i.e. the most useful benefits at reasonable prices, which clearly means ‘adding value’. Different customer’s perception of value, give organisations an opportunity to target the right markets.

Tennyson knows that a new strategy was needed in order to gain consumer intelligence due to there being two main obstacles of having no clear strategy and the non-profitable elements would have to be identified and eliminated, in order for the two brands Merryweather sailing and Tennyson Ski to operate seamlessly as one brand. So their first attempt at relationship building is to segment their market based on groups of customers who share common value preferences by asking “Who are our customer? What market are we currently in - Mass or Specialist?” This means that they are finding out about their brand personality (i.e. who their customers perceived them to be).

Consultancy for customer feedback, desk research, management interviews and workshops was conducted so that information can be “gathered directly from current and potential customers - their own customers, people who had holidayed with competitors and people who fancied the idea of an activity holiday but never had one” to find their likes and dislikes and the consumer trends. The company can use this information to indicate what exactly consumer wants when they are planning a holiday, how much they are prepared to pay and how they can meet the expectations of their clients.

Understanding the economics of customer acquisition and retention and their relationship with customer lifetime value is fundamental to the concept of customer value (Christopher et al. 2002:208). Tennyson, recognise that their success is not just coming from the quality of their products but also with the total customer experience. So they try to build a relationship by “providing the ‘hot’ experience in the winter”. Ski Gurus were piloted in four resorts with the aim to socialise with clients and build a relationship with existing and potential customers. More services were available such as Tennyson Ski School, where teachings were available for non-skiers which encourages new clients to holiday with Tennyson. A hire shop was available so that skiing equipment can be rented, which means that even though clients are not geared up for this type of holiday, there is not much to worry about as everything is already sorted. Other activities for the improvement and development of guests’ skills are also available such as technique sessions, resort ‘base’ at central properties which provide convience and increase engagement with the guests.

Relationship marketing emphasised on building bonds between the organisation and all stakeholders, especially the employees who played a significant role in its operations. Tennyson’s uniform way in delivering its services to customers across all its business and their partnerships with high quality manufacturers of sports equipment proves another attempt of building relationship with their customers. This provides ‘trust’ within the company itself, because no matter where the clients book their holiday, they are sure to have the same level of service and high quality sports equipment available for their security. Staff training and development encourages young people who have an interest in the holiday industry, will want to work with Tennyson “and become part of that quality team”. This becomes valuable for the company as excellent staff equals to excellent service, which means satisfied customers. And logically, satisfied customers means repeat purchase and loyalty, therefore a relationship is formed.

3.1 Relationship marketing plan

The RM plan is a statement outlining the company’s future direction, strategy and monitoring and control mechanisms in building relationships with customers and potentials (Little & Marandi, 2003). Control is important because the company can make amendments at an earlier stage if, for any reason things were going wrong in the first place. Organisations engaged in a number of relationships with different partners at different stages, therefore it is essential to manage a relationship portfolio. However, this depends on the capabilities of the company, i.e. which strategy they are able to use to reach their target. First of all, it is vital to know the target type, either short term or long term customers, as not everyone can afford or will want a relationship with the company, therefore they need some kind of strategy to re-energise their relationship. Winning new customers is important, but retaining them is crucial to the financial health of the organisation. And, as it costs considerably less to retain a customer than it does to win a new one, focusing on retention strategy makes perfect business sense. CRM in Travel, TTi Spring Conference found the following strategies which organisation should adopt in order to improve the relationship with customers:

☞ Developing a solid retention strategy based on the value of the customer and integrates it

into long term (strategic) planning.

☞ Make the best use of data profiling and segmentation to deliver marketing communication,

so that the right message meets the right people at the right time.

☞ Create a customer focused culture throughout your company and empower your staff

to make customer retention a reality.

3.2 Tennyson’s potential for CRM strategies

“In January 2008 a survey from money portal fool.co.uk showed that UK consumers spend more time planning their holiday than researching their mortgage options. More than a third of the sample invested ten hours selecting their holiday, while only a fifth would use the same period choosing a mortgage” (www.mintel.co.uk). This clearly shows that the travel market is increasing, but does Tennyson have the potential for CRM? They certainly do, as there are many opportunities available out there.

Mintel research shows that holidays have become a high-engagement purchase and increasingly, the research and booking stages are as much a part of the holiday experience as the actual holiday itself. In recent years, the holiday landscape had undergone considerable upheaval as more people create their holidays online.

Tennyson knew they needed a new strategy, but this is not simple to achieve, as many research is needed. They want to be positioned as “the great instructors with whom it is a pleasure to learn and develop skills…” but a number of changes need to be made in order for this to be successful. However, their competitors are successful, so if Tennyson adopts their strategies, it is recommended that they can achieve their goal.

3.3 Competitors’ review

In a market place where consumers have a wider travel choice, many tour operators are reviewing how they can create competitive advantage by building higher levels of customer loyalty to their brand. Tennyson Ltd is operating in a highly competitive environment; therefore it is very important to understand their customers perception of their company.

Cyrstal Ski is the UK’s number ski specialists covering 140 resorts in 14 countries worldwide, with a range of accommodation including chalets, club hotels and apartments. The company enjoyed a 20% sale increase during 2002 / 2003 (mintel.co.uk).

One of Crystal Ski strategies of relationship marketing is to offer child-focused activities in the guise of ‘Pepsi Penguin Crèche’ and ‘Whizz Kids Club’. This helps to create a lifetime value for those customers (i.e. the kids), because in another 20 to 30 years from now, those kids who have really enjoyed their holiday with Crystal Ski, is more likely to become loyal when they grow up, and encourage their kids to holiday with Crystal Ski. Another strategy is offering their customers the chance to track their movements on and off the slope in 15 European resorts and has signed up to the carbon-neutral scheme where customers can compensate for the emissions that flights create. The company position itself as a “company that cares” therefore increasing the trust level within their customers. And finally; although maintaining a relationship with the current customers, Crystal Ski is adding new destinations in Kirchdorf in Austria pitched as an all-inclusive resort for first-timers. This strategy encourages non-skiers to start holiday with the company which is the beginning of a new relationship with more customers.

Thomas Cook is one of the world's best known and respected brands in travel and offers packaged tours, holiday components and services that are tailored to meet specific personal needs of their customers. The group serves approximately 17 million customers annually across 30 tour operator brands through a network of 4,000 travel companies worldwide.

Getting closer to their customers and maintain and good relationship is vital for their success. They have many strategies which help them to get there, but more importantly continuous communication with their customers is what really counts. The company has invested in the new online customer relationship management technology (mySAP CRM) in a bid to cut costs and respond to their customers faster (travelweekly.co.uk). And centralise their Customer Communications in order to reduce the waiting time for a respond. (www.crmmanager.net).

Thomas Cook Tour Operations Ltd is a member of the Thomas Cook Group and is the fourth largest ski operator in the UK with over 25 years experience in providing top-end ski holidays. In addition to what the parent company is offering to its customers, they also offers a family representative service in selected family-friendly resorts with staff on hand to pass on information about the resort, and a leading service to allow the customers to familiarise themselves with the slopes. To guarantee satisfaction to the consumers, Thomas Cook Tour Operations Ltd has a “Learn to Turn” resorts, which offers a guarantee of money back for customers who decide winter sports is not for them.

3.4 Tennyson’s benefits from successful competitors’ initiatives

Although Customer Relationship Management is philosophically in line with relationship marketing, the focus is particularly on technology which enables the organisation to manage the customers’ touch point and facilitate the integration of datatbase systems to provide a single picture of the customer i.e. the customers’ needs, preferences, buying behaviour and price sensitivity which allows the company to focus on building a good relationship profitability (Peppers and Rodgers, 1995; Rylas and Knox, 2001).

A Mintel research reveal the fragile environment that ski holidays thrive in, is under severe threat from development, global warming and increasingly unreliable snow coverage. This could be an opportunity for Tennyson to include in their new strategy to position themselves as a brand that cares, as Crystal Ski did. As more and more, people are trying to save the earth, this means that there will be more snow coverage across all ski holiday destinations, so that customers will always have a cold holiday even in the summer.

Since that the case study did not mention anything about children, Tennyson can benefit from Crystal Ski strategy, and introduce child-focus activities, which will begin a lifetime relationship with the kids. Although, they have “consistent delivery” Tennyson can also do the same as Thomas Cook Operations Ltd, to centralise their communication, which makes it more efficient in consumer response, as it can be annoying waiting for ages on the phone, and being put through to several different department, before one can actually get an answer to their query. Tennyson Ski has a major staff shortage, and this can lead to customers being dissatisfied. A poor customer experience, will more likely lead to them switching to competitors, because when you spend your money on something, you want to have value for it. Therefore in the decision of the new strategy, Tennyson can benefit from Thomas Cook Operations Ltd, of having family representative service where there will be staff to pass on information to clients, especially new ones who don’t have any experience at all.

Conclusion

Tennyson Ltd need a new strategy in order for Merryweather Sailing and Tennyson Ski to operate seamlessly as one brand – Tennyson Ltd. The company made several attempts at building relationships with their customers, by conducting research to find out what the customers really want and piloting ski gurus in selected resorts to socialise with the clients. Staff training and development encourages young people to be part of the holiday market, which gives Tennyson the best ‘choice’ of staff to provide the best customer service. However, this attempt did not fully meet their goals “to be known as the experts for beginners / improvers...to experts”.

Their competitors Crystal Ski and Thomas Cook Operations Ltd is very successful, as they have most of the things which Tennyson do not offer, such as child focused activities, centralised communication system and family representative service in selected holiday resorts. In addition to what Tennyson currently offers, these strategies can become hugely beneficial in order to achieve their goals, as this will show a sign of value for the customers both internally and externally.

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7 Relationship-Building Strategies for Your Business

Tactics which get customers to think of your company first.

By Kim T. Gordon | January 05, 2004

Available online at: [last accessed March 23, 2008]

Successful businesses don't just communicate with prospects and customers for special sales. Today, making your company indispensable is a vital key to marketing success. It's a terrific way to add value, enhance your brand and position against your competition. Here are seven relationship-building strategies that will help you transform your company into a valuable resource:

1. Communicate frequently. How often do you reach out to customers? Do the bulk of your communications focus on product offers and sales? For best results, it's important to communicate frequently and vary the types of messages you send. Instead of a constant barrage of promotions, sprinkle in helpful newsletters or softer-sell messages. The exact frequency you choose will depend on your industry and even seasonality, but for many types of businesses, it's possible to combine e-mail, direct mail, phone contact and face-to-face communication to keep prospects moving through your sales cycle without burning out on your message.

2. Offer customer rewards. Customer loyalty or reward programs work well for many types of businesses, from retail to cruise and travel. The most effective programs offer graduated rewards, so the more customers spend, the more they earn. This rewards your best, most profitable clients or customers and cuts down on low-value price switchers-customers who switch from program to program to get entry-level rewards. Whenever possible, offer in-kind rewards that remind your customers of your company and its products or services.

3. Hold special events. The company-sponsored golf outing is back. With the renewed interest in retaining and up-selling current customers, company-sponsored special events are returning to the forefront. Any event that allows you and your staff to interact with your best customers is a good bet, whether it's a springtime golf outing, a summertime pool party or an early fall barbecue. Just choose the venue most appropriate for your unique customers and business.

4. Build two-way communication. When it comes to customer relations, "listening" can be every bit as important as "telling." Use every tool and opportunity to create interaction, including asking for feedback through your Web site and e-newsletters, sending customer surveys (online or offline) and providing online message boards or blogs. Customers who know they're "heard" instantly feel a rapport and a relationship with your company.

5. Enhance your customer service. Do you have a dedicated staff or channel for resolving customer problems quickly and effectively? How about online customer assistance? One of the best ways to add value and stand out from the competition is to have superior customer service. Customers often make choices between parity products and services based on the perceived "customer experience." This is what they can expect to receive in the way of support from your company after a sale is closed. Top-flight customer service on all sales will help you build repeat business, create positive word-of-mouth and increase sales from new customers as a result.

6. Launch multicultural programs. It may be time to add a multilingual component to your marketing program. For example, you might offer a Spanish-language translation of your Web site or use ethnic print and broadcast media to reach niche markets. Ethnic audiences will appreciate marketing communications in their own languages. Bilingual customer service will also go a long way toward helping your company build relationships with minority groups.

7. Visit the trenches. For many entrepreneurs, particularly those selling products and services to other businesses, it's important to go beyond standard sales calls and off-the-shelf marketing tools in order to build relationships with top customers or clients. When was the last time you spent hours, or even a full day, with a customer-not your sales staff, but you, the head of your company? There's no better way to really understand the challenges your customers face and the ways you can help meet them than to occasionally get out in the trenches. You'll find it can be a real eye-opener and a great way to cement lasting relationships.

Thomas Cook: an overview of the company

Thomas Cook is one of the world's best known and respected brands in travel and offers packaged tours, holiday components and services that are tailored to meet specific personal needs of their customers. Last year, the Group was the only travel company in the UK to be offering customers access to its products and services across five platforms: travel shops, telephone, Internet, WAP enabled technology and Interactive TV. They recently launched their own TV channel, Thomas Cook TV. The group serves approximately 17 million customers annually across 30 tour operator brands through a network of 4,000 travel companies worldwide.

The company’s vision is “To become the Number 1 company in all their Core Businesses through Customer Focus and Teamwork” and their mission is “To perfect the personal Leisure Experience”. Their service strategy is “they will deliver exceptional service to all internal and external customers by being, Proactive, Speedy, Flexible, Transparent, Reliable, and Creative...By providing Professional Service and, Ensuring Personal Care”

Getting closer to their customers and maintain and good relationship is vital for their success. They have many strategies which help them to get there, but more importantly communication with their customers is what really counts. So the company has invested in the new online customer relationship management technology in a bid to cut costs and respond to their customers faster. Andrew Doe, head of the online operations, said the more you can respond to customer enquiries online, the more you will save both time and costs. The technology will be rolled out in stages and fits with Thomas Cook’s strategy of directing customer enquiries online (travelweekly.co.uk). With the implementation of mySAP Customer Relationship Management (mySAP CRM), Thomas Cook has a solution that not only fulfils its immediate business objectives but also has the right amount of flexibility to grow with future business needs and can now reach more customers at a lower costs thus, having potential for relationship with more customers (Wegmann).

Another strategy to relationship marketing is that Thomas Cook centralises their Customer Communications without major system redesign in order to reduce the waiting time for a respond. (www.crmmanager.net). The company was seeking a solution that could offer co-ordinated Customer Communications Management (CCM) with four objectives: taking in customer data from many sources, making it available through different systems, creating and standardising documentation for more efficient and effective production and distribution, and finally storing an archive of customer communications that can be automatically updated and retrieved to help answer customer service queries.