Despite all the conventional methods of analyzing the customers with all the physical and social and other factors, the actual statistics seem to differ tremendously from the estimated outcomes. This is because we as humans seem to bank heavily on emotions.
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This emotional umbilical cord is very powerful as it is one of the easiest and the most effective ways to maintain customer loyalties. As they say, it is easier to retain the existing customers than it is to create new ones. The existing customers would always walk in with that feeling of homeliness and once this feeling of theirs is respected and catered, all the outlet has do is cash in. Existing customers don’t mind paying a little extra also because they’ve already grown used to the ambience and the way the outlet is run.
Therefore, it should be profoundly important for the hotels and restaurants, to see to it that they lock in the customers as their regular guests. The hotels have to work hard to make sure that the customers don’t take away the business elsewhere. The loss of a regular customer is colossal. The hotel is just not losing that one customer but a lot more than that. All those people whom he had recommended the hotel in course of years would also develop negative thoughts and opinions about the outlet. This might be a very serious issue and often devastating for the hotel chains.
Loyalty as such is the key factor in most businesses, but its impact is more clearly visible in the business of hospitality and hotel management. When compared to several other businesses, the one fact that stands out here is that the hospitality industry has a lot to do with how the customer actually feels about being at the place. This might include the food, the ambience, the customer satisfaction and several other factors. Hospitality has more to do with experience as against those of other industries who just sell products.
There can be many ways in which this can be done, some hotels prefer giving free gifts, some give special privileges to their regular customers, some others give huge discounts. All these methods are simply aimed at encouraging customer loyalty. The hotels and restaurants should never miss a chance on maintaining and pleasing loyal customers given the fact that this emotional attachment is so very delicate yet powerful enough change the very course of several businesses. Research Problem:
It is because of these above stated reasons that it becomes immensely important for the managers to study the science of loyalty management and learn how to implement it thoroughly. Discussion: Important concepts and theories, the background of the study: In simple terms, it can be said that in spite of all what the company the customer has an inherent tendency to keep looking for better alternatives, the analogy here is given by Leahy where the characteristic customer behavior is compared to that of a cat. A dog considered being man’s best friend because come what may it does not swerve its loyalties.
However the customer behaves more like the cat and is always on the lookout for softer and more comfortable lap. The need of the hour is that the hotels should see to it that they provide this soft lap to the customers and always keep increasing the standard of their services. Leahy here compares the restaurants to the airlines; the airlines have been far more successful in maintaining loyal customers than the hospitality industry. Airlines have several clubs where the members are classified as gold, silver or other such members. The members of such clubs are offered free up gradation from economy to business class if the seats are free.
However no such practice is noticed among the hotel managements. The article takes evidence from US consultancy Colloquy, noting that restaurants are lagging far behind other businesses in developing loyalty schemes. The article notes that in the United States, only 27. 2 million customers are part of restaurant loyalty schemes, while airlines have over 254. 4 million members for their loyalty schemes. Leahy further emphasizes that loyalty issues are to be taken very seriously in the restaurant business and it is very important to retain regular customers.
The General Approach: There are many ways to retain regular customers, one such prominent way is the loyalty card, a technique which has now caught on even in big showrooms and jewel stores. The simple technique here is that every time the customer buys something, he is given certain points and once these points reach a certain value, the points can be exchanged for discounts or special offers. This not only keeps the customer coming back to your store but also helps in maintaining good relations.
Once again this idea was an innovation of the aviation industry and it still needs to be implemented to a greater extent in the hospitality industry. According to CEFF (2007), loyalty cards schemes are a key factor in determining choice of hotel, airlines and restaurant chains by leisure travelers. Surveys have revealed that even though there are some customers who don’t quite bother about these loyalty cards, a good percentage about seventy percent of them admit that the loyalty cards played prominent roles in them determining their hotel or airlines.
Literary Reviews and Opinions: Gomez, Arranz and Cillan (2006) argue that these loyalty programs yield two important results of interest, which may be applied to the hotel and restaurant hospitality sectors. Such a program creates to genres of customers. The first class of customers includes those who display more behavior loyalty than the others simply because they are emotionally aware that the hotel considers them more important than their counterparts which are not enrolled in any of the loyalty schemes.
As in all businesses, emotion plays a very prominent role even in the hotel and management industry. Yet another thing that needs to be borne in mind is that the customer will not simply walk in to your outlet just because you have all these cards and offers. For example, however captivating and encouraging might be the scheme; the customer will come to your restaurant only when he feels like eating. You can never force the customer to increase the number of his visits, directly or indirectly.
Research that compares consumer behavior before and after the introduction of a loyalty program show that there is no real difference in the number of visitors, or the amount of purchasing done (Gomez, Arranz, & Cillan, 2006). Here it is once again argued that loyalty program don’t quite generate new loyal customers but just help in retaining the existing loyal customers. As in any other business, the sole objective and the motive behind your business should be very clear, for example, if the customer doesn’t like your product, then all the management tactics in the world will not help him come to you.
The bottom line is that what you offer the customer must stand up to his expectations. Trust and satisfaction are won by genuine effort and determination, there are no shortcuts, and the customer is smart enough to figure out what the actual standard of your restaurant is. According to Gomez, Arranz and Cillan (2006), effective loyalty can only come from customer attitudes such as satisfaction, trust and commitment. Loyalty based on simple repeated behavior is not very effective. Ethical Considerations: Unwanted effects of biased management:
Some researchers argue that even though loyalty is a very important issue, it is very difficult to impress the customer through these roundabout techniques; the management needs to focus more on other basic issues like the maintenance and the quality of service. All these schemes and offers can only assist the growth, they can never be the sole reason for the growth and a sensible manager should never depend upon any of these. Lacey and Sneath (2006) argue that customer loyalty programs are not always fair to all consumers.
The argument is assisted by the fact that such loyalty schemes only focus on a certain class of customers and not all customers. This creates negative hype and ill feeling among. The firm spends all the resources on pleasing the existing customers whom they assume to be loyal where as the new customers who might prove to be loyal customers in the future are just left to themselves. If this methodology is practiced in the long run, the organization might stand to lose many customers, the organization was so very considered about pleasing the existing customers that they forgot that they even have to generate new customers.
"One of the basic principles of the company is remembering what it is that guests prefer when they are in your hotel," explained (Ritz Carlton) spokeswoman Vivian Deuschl. Such an approach can even be dreadful at times. It is argued that the same quality service should be given to all the customers. Never should the restaurant make the mistake of pleasing one class of customers at the expense of others. Such a treatment might be very pleasing to the regular customer but even he will hesitate to recommend the restaurant to others because he knows that new customers are not treated well over there.
Apart from all the above-mentioned ill effects, this practice is strongly condemned even on ethical grounds. The safest and the best alternative are to provide uniform treatment throughout to all the customers. This generates a positive attitude and helps a lot in business. There is no substitute to genuine hard work, determination and honest implementation of policies. As Jack Welch in his book Winning quotes “sorry, there are no shortcuts”. Hypothesis and Questions: The prime objectives:
Rather than concentrating on these hypothetical concerns, the restaurant should be bothered more about improving service delivery, bakery products, and cooking. Lacey and Sneath further argue that customers who are not a part of such loyalty schemes are often discriminated against and this is very unpleasant for the customer as well as a loss in revenue for the management. Langenderfer & Cook (2004), Petty (2000) throw light on a very important aspect here. The customer databases are rich with information and are excellent resources and if by chance this data ends up in wrong hands, t can be very taxing for the customers.
If such a thing happens, then it would be a clear exploitation of customer rights and a breach of moral and ethical values. The customer would then obviously hesitate to become a member of any such loyalty schemes in future. Wendlandt & Schrader (2007) come up with yet another intriguing question, they argue that all these schemes at times might even backfire and in fact cause more loss to the organization. As an able manager, the first that needs to be firmly affixed in mind is that we as humans are more effected by emotional happenings than anything else.
Once the person is emotionally troubled or if he even perceives that he is being manipulated, even the most loyal of the customers will give up. The customer might get frustrated by all these and begin to think that all these tricks only serve as gimmicks and in fact react exactly in a way opposite to what is expected of him. Smartly designed loyalty schemes however can actually avoid reactance of this type. For example, a loyalty scheme that offers long-term financial rewards that have to be gathered over repeat visits will probably avoid reactance (Wendlandt & Schrader, 2007).
However, long-term loyalty schemes can also be less effective at retaining regular customers. Kirby (2007) has yet another way of seeing the same scenario, the argument here is that it is more beneficial to serve customers as people rather than targeting on their customer profiles. The argument here is that rather than treating loyalty as just another part of the charm game, the hotels should earn repeat business by offering excellent services based on remembered and recorded client preferences (Kirby, 2007).
If hotels invest in tracking guest preferences and provide a superior service through the use of Customer Relationship Management (CRM), the customer will automatically be retained. Weinstein (2004) further argues that the ambience and the feel of the place are also very important. Always remember that the customer might forget what he came for, why he came, when he came etc but he is never going to forget how it felt to be there with you.
In the book the “Ice Cream Maker”, a book on the concept of six sigma, the author argues that in a departmental store or a shopping mall, it takes an average of seven to eight seconds for the customer to pass by your restaurant, it is in this minute fragment of time that we have to impress the customer that our outlet is actually worth a visit. To make the customer ‘feel’ something is an enormous challenge in its own right. Therefore, it is well worth going the extra mile to provide extra amenities to impress guests into engaging in repeat business (Weinstein, 2004).
Some of the 5 star chains in Dubai follow this strategy, hoping to get repeat business by pampering even walk-in customers. Research Questions: To summarize we can say that all the literature on loyalty is divided into two categories both conflicting each other. The first category, is those who advocate the loyalty schemes to lock in customers and make sure that they patronize and prefer certain restaurants in place of the other. Some researchers even argue that such a type of management might even be unethical.
The second category of advisors are those who emphasize on the importance of personalized service, remembering customer preferences, and offering amenities to keep customers coming back. They note that rather than discriminating customers, their stand is that hotels, restaurants and other businesses should keep service standards high across the board. As a manager we are faced with the question that when and to what extent which of these methodologies or logics are to implemented? What is to be given more importance and how are customers, both old and new to be dealt with? Should the approach to both these parties be same or different?
What is it that needs to be done so that all the parties are happy and content? How are we going to satisfy the emotional requirements of our customers? Jang and Mattila (2005) throw light on yet another trend. Their basic argument is that the manager must learn to understand the customer needs and requirements and react accordingly, for example, if the customer is expecting monetary benefits, then he must simply be given so, instead if the hotel argues that the customer be given only the free spa session or a free buffet lunch against his will, then it is only obvious that none of the parties is happy.
The customer is displeased because he is given something free of cost something he actually has no desire for. The hotel has used up its employees and other resources for the same purpose, which was not at all fruitful. Thus, such a decision has a negative impact on all parties. Jang and Matilla further note that at times immediate cash discounts are also not the solutions to the problem. Also, while customers may want immediate rewards, it usually suits managers to delay gratification in order to ensure repeat business.
Also, there is less guilt associated with luxury rewards if they’ve worked up to them over a period of time. It is also noted that there is a very strong potential for developing such programs in the hospitality industry. The transactions involved and the formalities taken up during the process of loyalty offers should be made very convenient and comfortable. The customers should not be penalized to show their loyalty cards every time; the hotels should remember the customers and work towards serving them better.
Data Management and Analysis and Budget considerations and timelines: Statistics will provide all sorts of data from all sorts of places. This data might vary over decades of research or even more, the right management comes from the fact that the manager should be able to pick up the right data and study it accordingly, wrongly directed research or haywire policy implementation is sure to spell doom for the company.
Therefore, it is of profound importance that the right data be chosen from all perspectives, the implementation schemes should not be so costly that the management suffers because of these, after all management is all about producing the best possible results in the minimum possible expenditure. Also, the time limits should also be adhered to very strictly. What might be a huge success in summer might be a complete failure in winter. If the set goals are not achieved within the given time limits, then the entire purpose of research is flawed. Conclusion:
There is no dearth of literature as far as the loyalty issue is concerned. Managers realize very well that there is more to management than just analyzing theories, real problems need real and innovative approaches, and not everything can be solved from the books. Able managers know for a certainty that all what is in research papers is just conjectures and even if a particular scheme or technique worked very well in a particular hotel or restaurant, there is no guarantee that it will produce the same or similar results elsewhere or even the same hotel the next year.
Trends change, people change, their needs and expectations change, every year researchers come up with new theories. The key to being a successful manager is to have the right instincts and realize where to draw the line. It might be noted that the manager should not go to extremes, as an example he might be so puffed up with confidence that he turns a deaf year to the researchers or for that matter is so engrossed in the research that he forgets that he has to deal with real life situations.
Coming to the issue of hotel management and the hospitality industry, the first and the foremost thing that should be firmly affirmed in the mind is that unless and until the product and services are up to the mark and stand valid in front of the customers’ expectations, no amount of management hoopla can help the cause. The hotel management should be more concerned about the quality of service and other basic but very important factors. Only when these issues are properly and sensibly addressed to and resolved can the management think of anything else.
The loyalty considerations are also to be dealt with great care and delicacy. It is but natural that the older customer will expect better services and the new customers would want their privileges to be on par with those of everyone else. This is where the elegance of the manager comes handy
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