Boosting Corporate Customer Loyalty

Hotels boost corporate customer loyalty through the service quality of the front office personnel INTRODUCTION This research, through a review of literature published on the subject, considers how hotel organisations might boost the repeat patronage of their corporate customers. Changes in the economy and the overall culture of corporate business travel, such as the increase in use of technology instead of trips, have significantly impacted the hotel industry in recent years. These changes “have altered the possibilities for service delivery and have heightened the importance of promoting a quality ethic” (Harrington and Akehurst 2000: 133). This is a particularly important consideration in UK hotel organisations, as they have been found to be more complacent and produce lower customer satisfaction than their global competitors (Meyer et al 1999: 374). As Meyer et al (1999) notes, in regards to satisfying the business traveller, “US hotels showed a better understanding than German or UK hotels of their customers’ wants and needs that in turn leads to more effective services, higher levels of service quality and customer satisfaction (375). The UK is responding, addressing the use of part-time staff and high turnover through initiatives such as Investors in People, which increases training provision to leisure and tourism workers, amongst others (Maxwell et al 2001: 738). A difficulty in the hotel industry, however, is the importance of providing both quality product and service, as both are integral to the customer’s experience (Haynes and Fryer 2000: 240). “Customer service is the only area over which the hotel’s product can be clearly differentiated from its major competitors’ products” (Haynes and Fryer 2000: 240). Therefore, to increase market share and remain competitive in the corporate lodging sector, hotels must focus on service quality.

Service quality, defined more fully later in the review of literature, is the ability of a hotel to meet or exceed the expectations of its clientele regarding service provision. Loyalty is the result of high service quality, the repeat patronage of customers to a hotel. It is the front office personnel that often have the most impact on the corporate customer. Jones and Haven-Tang (2005) conclude “ultimately, responsibility for high quality service provision rests with front-line staff” (7). Similarly, McColl-Kennedy and White (1997) report that “the behaviours of ‘front line’ service providers are crucial to the customer’s evaluation of the service (249). Haynes and Fryer (2000) report that customer exchanges and relationships with staff have a strong impact on hotel branding, and contribute directly to repeat patronage (241). This research seeks to consider what factors impact customer loyalty amongst business hotel travellers. It therefore provides a review of available literature on the service quality of front office personnel, and the impact of this quality on customer loyalty amongst the corporate traveller. As such, considerations of service quality and customer loyalty as a whole are undertaken, followed by specific consideration of the corporate traveller and three specific research questions addressing how hotels can boost customer loyalty in this customer group. RESEARCH QUESTIONS This examination of literature, therefore, seeks to address three specific questions related to how hotels might boost performance through the service quality of their front office personnel:

1. How strongly does training impact service quality, specifically in regards to the quality attributes that most increase corporate loyalty?
2. What is the impact of technology on service quality in relation to corporate customers?
3. How does employee empowerment effect service quality to corporate customers?

These three questions were selected because the researcher hypothesises that these three components are key to the establishment of service quality, and the loyalty that results from high customer satisfaction, in the corporate hotel customer. It is anticipated the results of this research will establish the importance of these three components. LITERATURE REVIEW The first area to be considered in this review of literature is a more complete definition of service quality, as many exist. Chung (1998) provides the following definition: “Quality is the degree to which a product or service conforms to a set of predetermined standards related to the characteristics that determine its value in the marketplace and its performance of the function for which it was designed” (190). Candido (2005) asserts that service quality must focus specifically on strategy and its use in meeting and exceeding customer needs (3). This is reinforced by Buttle and Bok (1996), who contend that the theory of reasoned action reveals service quality to be directly related to hotel customer expectations (10). McColl-Kennedy and White (1997) elaborate that customer satisfaction in terms of hotel service is typically an emotional response towards what was experienced in comparison to what was expected. If the customer’s perception is that service met or exceeded expectations, he or she experiences satisfaction, if expectations are not at least met, he or she is dissatisfied (250). Other theorists support this expectation-based view of service quality. For example, Johns and Tyas (1997) assert “Service quality is generally visualised as the sum of customer perceptions of the service experience” (474). Similarly, Gould-Williams (1999) states that “service quality is generally conceptualised as the gap between consumers’ expectations about a service and their subsequent perception of service performance” (101). For practical purposes, literature in the topic breaks down service quality into specific categories for consideration.

Citing Crane and Lynch (1988), Gould-Williams (1999) lists the areas of responsiveness, competence, courtesy, and interpersonal skills as impacting on service quality (99). Johns and Tyas (1997) breaks service quality into five attributes: “tangibles, reliability, responsiveness, assurance and empathy” (477). Matzler et al (2004) takes a broader view, using three categories. Basic factors, or dissatisfiers, are the minimum and entirely expected expectations of the customer. If these are not met, regardless of other service provisions, the customer will be dissatisfied (Matzler et al 2004: 1183). Performance factors are possible expectations, and may lead to increased or decreased satisfaction if provided or not provided, respectively. These factors are desired by the customer but not recognised as foundational to the service provision. Excitement factors increase customer satisfaction if provided by are not expected, and therefore do not decrease satisfaction if not provided (Matzler et al 2004: 1183). The most common categorization, however, is based on the research of Parasuraman, Zeithaml and Berry (1985, 1986). They originally identified ten factors, later reduced to five, that could be used in the definition and measurement of service quality: understanding, service standards, service performance, communications, and service quality (Tsang 2000: 317). Their service quality model is based on a ‘gaps’ theory, where the size and direction of each gap impacts the overall quality perception of the guest. For example, service performance measures the difference between the customer’s expectations of service quality and the service actually provided (Tsang 2000: 317). Their model provides equal weighting across the five categorise, an assumption challenged by Gould-Williams (1999), who reports that “even though products and services consist of many attributes, consumers tend to base their overall perception of quality on just a few attributes or in some cases just one” (98). Defining customer demographics and desires can define their expectations of service Inbakaran and Jdackson (2005) concur, concluding that it is often the customer group that determines which factors are most impacting on service quality (59). They conclude that grouping customers by demographics and desires can accurately predict their expectations of service (Inbakaran and Jdackson 2005: 59). In the corporate arena, as in the hotel industry as whole, Harrington and Akehurst (2000) find that quality “has replaced price as the determining factor in consumer choice” (134). Literature further supports that this focus on quality must lead to a continued consideration of the issue, with quality improvement being an ongoing aim of the hotel organisation (Chung 1998: 189). Customer loyalty is the result of high service quality and other factors that meet or exceed customer expectations.

When a business traveller books again and again at the same hotel, he or she displays loyalty to that organisation. Importantly for business travel, this loyalty typically transfers to the overall hotel brand, so that experience of high service quality at one branch location improves the repeat patronage across all brand locations (Buswell and Williams 2003: 47). Conversely, experience that does not satisfy basic factors and possibly even performance factors at one location may decrease loyalty across the brand (Buswell and Williams 2003: 47). Cano (2001) finds all the factors required for the building of a hotel’s customer loyalty to be dependent on service quality:

• service that meets or exceeds expectations, delivered dependably and accurately
• helpful and prompt staff who are knowledgeable and courteous, conveying trust and confidence
• the provision of caring, individualised attention
• and the maintenance of links with the customer during acts of service delivery

Inbakaran and Jdackson (2005) assert “It is an established fact that in the hospitality industry repeat patronage is directly related to the service quality and focused customer service” (53). However, they also note that customer service experience and the loyalty resulting from positive experiences is based to some extent on the segment of the hotel customer to whom the hotel is appealing (Inbakaran and Jdackson 2005: 57). That is, the service quality factors important to business travellers, such as immediate delivery of messages and concierge services, may not be as impacting on the perception of service quality in other customer groups. It can be difficult, however, to measure or assess service quality. First, as service quality is an experience between two or more people there are an uncountable number of factors that may play a role (Erto and Vanacore 2002: 165). “Measuring service quality is a very complex task because of the peculiarities embodied in the service product itself… a service is hardly reproduced consistently and exactly, because of the variability of service from time to time and from one customer to another” (Erto and Vanacore 2002: 165). Citing numerous sources, Gould-Williams (1999) similarly conclude there are a myriad of variables that can be considered, and ways in which service quality has attempted to be measured (100). However, a number of tools and methods have been used to assess service quality. The most common is the use of a style of customer questionnaire known as a SERVQUAL (Johns and Tyas 1997: 475). This is “one of the most widely accepted mcasures of service quality” in the leisure industry today (Gould-Williams 1999: 102). Based on the work of Parasuraman, Zeithaml and Berry previously mentioned, this questionnaire is created using specific attributes of service quality designated by the hotel organisation.

These typically range from fifteen to twenty-five areas, but can include thirty-five or more quality attributes (Tsang 2000: 319). Customers are asked to scale the quality they expected from each specific service attribute listed, then similarly scale the quality they actually experienced in the service performance of that attribute (Johns and Tyas 1997: 475). Such measures are important because the perceived factors important in customer service have been found to be different for staff and customers. For example, in one study staff ranked politeness as the most important factor, but this was seventh on the list for customers. Personal attention was most important to the customers, but ranked eleventh by staff (McColl-Kennedy and White 1997: 255). “Clearly, customers and employees have very different expectations from the customer service encounter” (McColl-Kennedy and White 1997: 255). Critical incident analysis is another form of evaluating service quality. This method does not examine the day-to-day interaction of staff and customers as much as focuses on the few specific encounters found to be most impacting on the overall perception of service quality (Johns and Tyas 1997: 477). Blum (1997) finds that the information such assessments provide to management can be excellent in revealing areas of high and low quality service (351). Although Bare and Turkel (2003) contend that inspection such as is provided by “mystery shoppers” or anonymous inspectors is important to quality service provision (32), Chung (1998) finds that inspection does not improve quality (191). Chung argues that quality must be built into the service system, that to measure it by inspection reduces quality factors to those specific to an individual or situation and therefore is of little use in the long-term (Chung 1998: 191). A good system does much to elimintate potential problems before they impact service quality (Chung 1998: 191). One way of creating such a system, and in turn measuring the quality of service provision, is benchmarking. Benchmarking is described as “the search for industry best practices that will lead to superior performance” (Cano et al 2001: 974). In the tourism industry, this is theorised to be undertaken using a six-step model: “decide what to benchmark, understand internal processes, decide on best in class, collect data, analyse results, and implement actions” (Cano et al 2001: 975). This is not an exclusive methodology, however.

Some researchers have combined benchmarking with SERVQUAL assessment, developing the questionnaire based on benchmarking findings and using it o fulfil the data collection step of the benchmarking process. Specific to corporate loyalty, business travellers do so more regularly and repeatedly visit the same locations than other customer groups (Buswell and Williams 2003: 47). Accommodations are also likely made for an entire organisation by one individual or group, increasing the importance of word-of-mouth and the satisfactory experiences of each traveller. As such, the experience of service quality the corporate customer has at one hotel has more impact on the overall hotel organisation than the impact of the typical tourist customer (Buswell and Williams 2003: 47). Corporate loyalty tends to be collective, the combined experiences of all the travellers in the organisation. Customer loyalty is vitally important in this customer sector, as it “gives improved opportunities for identifying customers and provides a means of closing the service gap by improving communication between service provider and consumer” (Cano et al 2001: 976). The number of similar hotels catering to the corporate customer similarly makes ‘hard’ standards less relevant, such as whether the bathroom is clean or the lights function. Instead, ‘soft’ standards, such as are embodied in service quality, that make the business traveller feel like a special guest, are more likely to contribute to repeat patronage (Erto and Vanacore 2002: 167). Gould-Williams (1999) finds that corporate customers’ ”behavioural intentions are not only influenced by global assessments of perceived service quality and value but are also affected by specific employee performance” and that the latter more likely to lead to increased loyalty (101). In the business sector particularly, “the correlation between service quality and employee performance remains high” (Gould-Williams 1999: 108). Of the employee groups, restaurant and front office staff were found to have the most direct impact on guest loyalty (Gould-Williams 1999: 111). One factor which this research anticipates to strongly impact service quality and loyalty is front office training.

Lashley (2005) finds that skill gaps in front office personnel correlates highly to lower service quality and customer satisfaction, which is has been shown would reduce loyalty (189). Maxwell et al (2001) go as far as to assert, “Quality customer service is clearly an imperative of Scottish tourism; staff training is the route to achieving and maintaining this quality” (743). Bare and Turkel (2003) found that hotel companies who increased training in times of workforce cuts and other economic hardship were more likely to remain profitable than those that did not, and a year later showed 80% higher profits than the latter group (32). In one study, a training programme implemented as part of greater HRM scheme improved customer satisfaction 13% in first quarter after implementation, and rose for two additional quarters, after which it remained high (Haynes and Fryer 2000: 246). Harrington and Akehurst (2000) found that cross-training and increased training improved service provision (151). “By equipping workers with the necessary skills and capabilities, they are in a better position to develop strong cross-functional links and provide high quality service in response to customer demands for greater flexibility” (Harrington and Akehurst 2000: 151). Unfortunately, literature reports training to be underemphasised by many hotel organisations. McColl-Kennedy and White (1997) report from focus groups with a number of hotels that “relatively little emphasis is given to staff training in terms of customer service” and “in all but two hotels, training consisted of the initial induction program, a monthly meeting of departmental staff, and a meeting with their respective supervisor once every three months to review their performance” (McColl-Kennedy and White 1997: 258). Also, in difficult times training is often one of the first areas to be scaled back in the typical hotel, and this is a mistake. Bare and Turkel (2003) argue that softness in occupancy and average daily rate should lead to an increase in training (Bare and Turkel 2003: 32). “In these difficult times, the hotel companies that spend the most on better employee selection, training, and mystery shopping services will win the prize” (Bare and Turkel 2003: 32). However, “organizations that recognize the importance of service encounters and in particular the interactions between front line service providers and their customers spend considerable effort, time and other resources in training their employees in service encounters” (McColl-Kennedy and White 1997: 249). The Ritz-Carlton, for example, provides at least one hundred hours of training for each employee per year. (McColl-Kennedy and White 1997: 249). Bare and Turkel (2003) assert ”better training helps find better employees and keeps the good ones” (32). Garavan (1997) finds that social skills training in particular has a positive impact on “the quality of customer service within a hotel environment” (75). “These findings suggest that social-skills training of front-line employees may lead to improved quality of service, in the short term at least. demonstrate the linkage between the power of behaviour change and service effectiveness (Garavan 1997: 75). In addition, he concludes that “training and development can be used to reinforce certain behaviours and attitudes which contribute to effective service while stressing the need for improvement in behaviours which do not facilitate the attainment of desired service quality goals” (Garavan 1997: 75). Technology was surprisingly found to have little impact on customer experience of quality, satisfaction, or loyalty, according to literature. Technology has been found to decrease the need for business travel, as the internet, conference calling and the like now replace many business meetings (Buswell and Williams 2003: 95). This further tightens an already highly competitive hotel industry. Use of technology has also increased competition in that business travellers can now book online, increasing the opportunities for local individual hotels to compete with larger, branded organisations (Buswell and Williams 2003: 95). Branded hotel chains could use computer databases of previous customers to improve personalisation of service to business customers, whilst an independent hotel could not.

However, few hotels seem to be capitalising on this area of competitive advantage (Buswell and Williams 2003: 95). Business travellers, however, seem more interested in how service is provided, rather than whether or not technology is employed. Jones and Tang (2005) find that although the physical portion of the product impacted by technology is important, the human element of service still carries the day in respect to corporate loyalty (7). Blum (1997) reviewed 109 articles in hotel and restaurant industry publications over a six-year period, and found that “despite massive investment by hotel operators in information technology, evidence of improved employee productivity is scant” (352). They do find, however, that many hotels are implementing technology to improve guest experience, such as speeding up check in and out, providing online booking, and similar (Blum 1997: 352). More current literature does not indicate, however, that technology has a strong impact on overall customer satisfaction and loyalty. In contrast, the literature reviewed strongly supports the impact of employee empowerment on improved service and resulting loyalty. Garavan (1997) fond that situational factors strongly influence the success of interpersonal interactions (73). As such, the empowered employee can respond to specific situations in a way that most effectively meets or exceeds the needs of the customer. Employees who are cross-trained and empowered to make circumstantial decisions themselves have been found to be not only more productive, but more motivated as they have a greater sense of involvement with the hotel in which they work (Harrington and Akehurst 2000: 151). Merrick (2000), for example, gives an example of a front office worker who loaned a guest an evening gown (the guest had forgotten hers). This type of decision-making ability and customer focus is only available where employees are empowered to act in situations not spelled out by organisation guidelines. The businesswoman in question reports her intention to continue to patronise this hotel. Buttle and Bok (1996) draw attention to the need of hotel organisations “to develop systems and processes which are guest-friendly, and which enable staff to identify, and exceed guests’ routine expectations of hotel performance” (10). They assert that hotels “should consider empowering customer-contact employees to do whatever is necessary to meet customer requirements” and “be pro-active in enhancing the interactive quality of the guest experience,” concluding “it is the quality of the guest-employee interactive experience in the hotel that determines whether there will be repeat business” (Buttle and Bok 1996: 10). Harrington and Akehurst (2000) find that often the departmentalisation of larger hotels, like those brands typically catering to the business traveller, leads to reduced empowerment of front office personnel and lower customer satisfaction (149). They conclude that formal structure that cannot be overridden to meet customer expectations impedes integration and service quality (Harrington and Akehurst 2000: 149). Cross-training and increasing the decision-making allowances for front office staff, particularly in areas that are not covered by specific guidance, both improves productivity and quality (Harrington and Akehurst 2000: 149). They conclude that employee resourcefulness has a high correlation with loyalty. “The effective delivery of service quality rests on the degree to which employees manage the interface with customers,” as “their competencies and skills in effecting such a task are strongly related to both the quality and degree of training offered by the organisation, and also to the extent to which management distributes power and authority within the company” (Harrington and Akehurst 2000: 150). Overall, employee satisfaction is found to be both higher when workers are empowered, and “one of the most important drivers of quality, customer satisfaction and productivity” (Matzler et al 2004: 1179). CONCLUSIONS Findings of this research reveal that training and empowerment are both documented in research to strongly impact service quality for corporate customers. As such, they are similarly important factors in the creation of customer loyalty in this traveller group. As corporate clients typically patronise larger organisations that market to their specific customer demographic, implementation of strategies that increase the training level and circumstantial decision-making functions of front office personnel are likely not only to boost loyalty at individual hotel locations but across the brand, and for multiple customers from the same firm or organisation.

Technology was not found to have a substantial impact on the business traveller. Whilst literature acknowledges an effect of technological advancements on a number of functions within the average hotel, most of these are found to be of significantly less importance than the human impact on service quality in the literature reviewed. As such, hotel organisations would be advised to concentrate quality initiatives on improving training for front office staff and to implement systems in which these workers have some decision-making responsibility by which they can best respond to and exceed the needs and wants of their corporate customers. REFERENCES Bare, M. and Turkel, S. 2003. Superior Service Sells Guestrooms. Lodging and Hospitality, May 2003: 32. Blum, S. 1997. Current concerns: a thematic analysis of recent hospitality industry issues. International Journal of Contemporary Hospitality Management, 9(7): 350–361. Buswell, J. and Williams, C. 2003. Service Quality in Leisure and Tourism.

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