THE INFLUENCE OF CUSTOMER RELATIONSHIP MANAGEMENT (CRM) ON CUSTOMER LOYALTY IN JW MARRIOTT HOTEL SURABAYA Fransisca Andreani, Yesslyn Sumargo, dan Chen Lie Faculty of Economics, Petra Christian University, Surabaya, Indonesia Email: [email protected] Abstract Customer Relationship Management (CRM) is one of strategies to retain customers. By maintaining the relationship with customers, hopefully they will be loyal to companies. The objective of this study is to determine the influence of CRM on customer loyalty in JW Marriott Hotel, Surabaya using multiple linear regression analysis. The results of this study show that CRM, including financial benefits, social benefits and structural ties have positive effects significantly on customer loyalty in JW Marriott Hotel Surabaya. The most dominant factor influencing customer loyalty in JW Marriott Hotel, Surabaya is the structural ties. Keywords: Customer Relationship Management (CRM), Customer Loyalty JW Marriott Hotel Abstrak Customer Relationship Management (CRM) merupakan salah satu strategi untuk mempertahankan pelanggan. Dengan terjalinnya hubungan yang erat diharapkan pelanggan menjadi loyal pada perusahaan. Penelitian ini bertujuan untuk mengetahui pengaruh CRM terhadap loyalitas pelanggan di Hotel JW Marriott Surabaya dengan teknik analisis regresi linier berganda. Hasil penelitian menunjukkan bahwa CRM yang meliputi financial benefits, social benefits dan structural ties berpengaruh positif dan signifikan terhadap loyalitas pelanggan Hotel JW Marriott Surabaya. Faktor yang berpengaruh dominan terhadap loyalitas pelanggan Hotel JW Marriott Surabaya adalah structural ties. Kata Kunci: Customer Relationship Management (CRM), Loyalitas Pelanggan, JW Marriott Hotel. INTRODUCTION customers. According to Kotler and Armstrong (2004), Customer Relationship Management (CRM) Due to rapid hotel development, the rivalry in is a process of building and maintaining long range hotel industries is getting tighter. One of the five-star relationship which is beneficial for both customers hotels in Surabaya, JW Marriott Hotel, a rebranding and companies. Hotel and airline industries as well as of the Marriott International also tries to compete with retail companies have also implemented CRM by other hotels by focusing on retaining its customers. providing financial, social benefits and structural ties This is appropriate as loyal customers may provide to their customers. consistent revenue by making repurchases and can JW Marriott Hotel in Surabaya has also reduce costs. The hotel can save its marketing cost. implemented CRM by having Marriott Rewards By doing so, the hotel can increase its profitability. Program. It is a program done for all hotel brands Shoemaker and Lewis (1999) stated that marketing under Marriott International, including JW Marriott, has shifted from customer acquisition to customer Edition, Autograph Collection, Renaissance Hotels, retention or loyalty. In addition, McIlroy and Barnett AC Hotels Marriott, Marriott Hotels & Resorts, (2000) state that the cost to get new customers is five Marriott Vacation Club, Courtyard Marriott, Fair- times more expensive than the cost to maintain field Inn & Suites Marriott, Springhill Suites Marriott, existing customers. Loyal customers will always give Residence Inn Marriott, TownePlace Suites Marriott, positive comments and recommendation about the and The Ritz Carlton®. company to others. Based on personal interview with Ms. Zoraya on Customer Relationship Management (CRM) is 24th February 2012, the objectives of Marriott one of marketing strategies popularly applied to retain Rewards Program are to maintain positive words of 156 Andreani: The Influence of CRM on Customer Loyalty in Jw Marriott Hotel Surabaya 157 mouth (WOM) from those who stay in the hotels, to relationship between the company and its make customers come back to the hotels and to customers become more effective. increase hotel performance and facilities. It can be 4. More profits from customers said that the main objective is to get qualified and As customers buy more, the company will get loyal customers. Furthermore, she stated that Marriott more profits. The increasing profits can be from Rewards Program uses earning points method for its up-selling, cross-selling, follow-up sales, and customers. For every single US$ spent for normal others as a result of the existing satisfied cus- room rate charge in JW Marriott Hotel Surabaya, tomers. members of Marriott Rewards Program will get 5. Increase customer satisfaction additional 10 points and will be multiplied accor- Customer satisfaction increases when costumers dingly. These points can be redeemed with rewards become loyal to the company, buy more than they provided by the hotels under Marriott International. use to be and repeatedly. Customers have more JW Marriott Hotel Surabaya has provided initiatives to maintain their relationships with the Marriott Rewards for almost 10 years and this company so that it increases customer loyalty. program has already been implemented by Marriott 6. Evaluate profits from customers International hotels around the world for about 50 The company will be able to know which years. But so far there is no research done to find out customers are profitable or not profitable as well the influence of Marriott Rewards Program as part of as which ones are more profitable in the future. It CRM towards customer loyalty in JW Marriott Hotel is very important as the key success in every Surabaya. That is why the writers are interested to business is to focus on retaining customers who explore the influence of CRM, especially Marriott are profitable and maintaining the relationship Rewards Program, on customer loyalty in JW with them well. Marriott Hotel Surabaya. This research is limited to the financial, social benefits and structural ties offered Kotler and Armstrong (2004) also state that by Marriott Rewards Program. Research problem in Customer Relationship Management (CRM) is a this study: do financial, social benefits and structural process of building and maintaining long term ties influence customer loyalty in JW Marriott Hotel relationship which is beneficial for customers. There Surabaya? are three approaches to maintain and develop the company's relationship with its customers: 1. Financial benefits LITERATURE REVIEW AND HYPOTHESIS Customers will get financial benefits when the price of the product is lower than other Customer Relationship Management (CRM) is a competitors so they can save some money. The strategy to maintain relationship with customers in implementation of these benefits can be in the order to get profitable long term relationship between form of special discounts as a reward, especially companies and their customers. Each customer wants when customers buy in a big volume or when they to be treated differently according to his/ her needs. buy products on a regular basis. That is why a lot of companies start to use CRM as a 2. Social Benefits way to maintain their relationship with the customers Companies need to provide social benefits to their (Persson, 2004). customers. Social benefits help to improve In addition, Persson (2004) mentions the object- relations by studying customers’ needs and desires tives of CRM are as follows: and if possible by giving something personal or 1. Cost savings to get customers individual (personalization). Hotel industries have Cost allocation to get customers can be decreased implemented these benefits by remembering the as marketing costs also decrease, including the customers’ names and putting guest preferences in expenses to get new customers and to serve the database so that hotel staffs can easily access customers. this information when serving the customers. 2. No need to get new customers in order to stabilize 3. Structural ties business operation The benefits of structural bonding (structural ties) The number of loyal customers will grow more is to build long term profitable relationships with and automatically the need to get new customers customers by providing a structural bond that can be less. allows customers to transact with the company. 3. Reduce promotion costs These can be implemented by providing online Promotion costs can be reduced as existing access to the company so that customers can get customers become responsive. Besides that, the any information from the company easily. They growing number of new distributors will make the will feel appreciated and be part of the company. 158 JURNAL MANAJEMEN DAN KEWIRAUSAHAAN, VOL.14, NO. 2, SEPTEMBER 2012: 156-163 Furthermore, according to Grewal and Levy items, and invitations to special events sponsored by (2010), companies that practise value-based market- the company. Second, the marketing costs of reaching ing use a process known as Customer Relationship loyal costumers are much lower because the company Management (CRM), a business philosophy and set does not have to spend money on advertising and of strategies, programs, and systems that focus on promotion campaigns to attract these customers. identifying and building loyalty among the com- Loyal customers do not simply need persuasion or an panies’ most valued customers. Companies that extra push to buy the companies’ brands. Third, loyal employ CRM systematically collect information costomers tend to praise the virtues of their favourite about their customers’ needs and then use that products, retailers, or services to others. This positive information to target their best customers with