Industry Update
Opinion Article 2 June 2020

The Path Towards Customer-Centricity In Hospitality

By Alessandro Inversini , Associate Professor in Marketing at Ecole hoteliere de Lausanne

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Customer-centricity - or guest-centricity - should be one of the major concerns of managers in the hospitality industry. In fact, in my experience, when interviewing or engaging with hotels directors on this topic, almost all of them have the perception of being fully guest-centred. This is very interesting as our industry needs really to cater to guests during all the stages of their customer journey. However, looking at the academic literature in the field, what appears clear is that there is scant evidence of organizations really addressing customer-centricity in every aspect of their service delivery and operations. Often there is a glaze of cosmetic customer-focus towards the clients, but actually the organization is not really examining the question properly.

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What does it mean to be customer-centred?

Customer-centricity deals with a deeply embedded mindset and norms that make customer relationships the top priority within a hospitality organization. Being serious about this issue means to redefine the whole organization's orientation and culture, encouraging employees at all levels to engage with customers, generating value for them and for the establishment. Focusing on the hospitality industry, it is possible to argue that often the success of these particular businesses resides in the differential value the organization is able to provide to their guests, thanks to relationship-building and personalization of certain aspects of the service.

One of the seminal academic pieces on customer-centricity (published in 2006 entitled " The Path to Customer Centricity") describes the areas of intervention for achieving customer-centricity in practice: (i) leadership commitment; (ii) organization realignment (i.e. cultural and operational shift); (iii) systems and process support and (iv) revised metrics (i.e. key performance indicators).

In a recent exploratory study, we attempted to understand (i) how independent hoteliers are dealing with customer-centricity and (ii) what is the added value for hospitality organization engaging in customer-centred practices. In order to do so, we partnered up with hoxell.com, a Swiss-based company providing an advanced Customer Relationship Management solution for hospitality, aimed at fostering customer-centricity by working on explicit and implicit customers' preferences. Here below are some of the relevant findings from the research.

Independent hoteliers and customer-centricity

Thanks to a series of interviews, a few hoteliers had the possibility of expressing their opinion about customer-centricity. They agreed on the importance of focusing on guests in their daily activities, highlighting the key role of the hospitality ethos in building a true customer-centric organization. General discourses were related, for example, to (i) the role of leadership in gearing the business towards guest-centricity, (ii) the possibility of impacting the organizations' culture by putting staff 'on stage' as the main characters for the experience delivery and (iii) the need of considering guests' voices to support customization of their stay.

However, when confronted with all the factors enabling customer-centricity, there were quite few surprises: All the managers interviewed agreed on the critical role of leadership for customer-centricity, the importance of organization realignment in terms of culture and operations, as well as system and process support (also in terms of digital technology implementation to foster relationship-creation and management). Despite that, what generated misalignment was the issue of revised metrics towards how to measure customer-centricity. The interviewees acknowledged the importance of using customer satisfaction in terms of key performance indicators, but were more concerned with financial metrics that could better represent the success of their business. This conversation was very interesting because it showed the tension our industry is experiencing between customer satisfaction and profit.

Let's be clear, the implication here is not that profit-related metrics should be disregarded for metrics about guest satisfaction. However, it seemed that when dealing with high-level strategic discourses related to guest-centricity, general managers had a very clear vision of what should be done; nevertheless, when trying to translate this into successful and practical measurement metrics, there are clearly some adjustments to be made especially regarding performance indicators.

The effects of customer-centricity in hospitality

In our recent publication, we also looked at what value customer-centricity can bring to the hospitality organizations. We analysed the performances of two independent hotels implementing a smart CRM tool which facilitates customer engagement before, during and after the stay. In essence, by looking at the variation of the customer reviews on tripadvisor.com, we recorded that before the installation of the tool neither of the two hotels experienced a significant improvement in guest ratings over time. After the adoption of the tool, both hotels experienced a significative rise in the average ratings on tripadvisor.com. Moreover, the results further suggested an incremental positive effect associated with the intensity of the digital tool usage, especially in relation to the ability of hotels to secure excellent guest ratings.

Furthermore, there was an indication of a possible cultural shift in the properties under investigation. This was demonstrated by the automated text analysis conducted on the online reviews: There was a clear shift in topic-centrality from discussions about 'room' (i.e. the physical assets of the hotel) to discussions about'staff' (i.e. the experience enablers within a hospitality establishment), supporting a more active role for the staff delivering the service experience.

In a nutshell

Due to their characteristics, hospitality organizations should be leading the way in customer and guest-centricity. However, a full understanding and implementation of the importance of the guests should encompass all the aspects of the hospitality business, in particular successful metrics. The implementation of digital tools to foster customer-centricity could impact the way the organization responds to input from the customers and result in a better level of satisfaction (e.g. tripadvisor.com), as well as an empowerment of staff as the key element for delivering memorable and fully guest-centred experiences. The clear impact customer-centricity has on online reputation could therefore further influence average daily rate, occupation and revenue per available room.

This article is based on:

  • Inversini, A., De Carlo, M., & Masiero, L. (2020). The effects of customer-centricity in hospitality. International Journal of Hospitality Management, 86, 102436.
  • Shah, D., Rust, R. T., Parasuraman, A., Staelin, R., & Day, G. S. (2006). The Path to Customer Centricity. Journal of Service Research, 9(2), 113-124.
  • Ulaga, W. (2018). The journey towards customer centricity and service growth in B2B: A commentary and research directions. AMS Review, 8(1), 80-83.
  • Anderson, C. (2012). The Impact of Social Media on Lodging Performance. Center for Hospitality Research Publications. Retrieved from https://scholarship.sha.cornell.edu/chrpubs/5

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Alessandro Inversini

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