How might customer relationship management tactics directly impact the Revenue Manager’s job, and the company profit margin?

In recent times it has been observed that groups of customers do not correspond to defined buying attitudes and preferences (Yankelovic and Meer, 2006). Some differences have also been found between the traditional and the new on-line consumer decision making (Kozinets, 2002; O’Connor and Murphy, 2004), as the way of seeking information has considerably changed. The increased personalisation and individualism in consumer behaviour are hence determining a shift, from grouping customers into segments to the need of studying and deeply comprehending individualisms (Bailey et al., 2009). Clearly, it is worthy mentioning that market-oriented businesses tend to be more profitable, being their products defined from the customer’s perspective rather than their own interest (Bailey et al., 2009).

All these elements would suggest the need of a cooperation between the CRM and RM functions, to gain a better understanding of the highly changing and individualistic demand. Moreover, it has been observed how implementing RM, hence price discrimination, companies may not obtain a complete trust of the customers (McMahon-Beattie, Palmer and Yeoman, 2011): that’s why it RM techniques should be combined with CRM, which enhance trust and loyalty instead.

Some of the customer interactions’ outputs are satisfaction, loyalty, positive word of mouth and sales/profitability: that is why managing these relationships have become so important (Bitner et al., 2000). Nevertheless, academic research has started to link market segmentation to relationship management only for the last ten years (Dibb and Simkin, 2008). Firms are now paying more attention to their customer relationship management, especially trying to create co-operative and beneficial interactions. CRM permits to collect customer data rapidly and to personalise the product, identifying also the most valuable customers over time, to attract and retain them (Rigby et al., 2002). Particularly, e-CRM is implemented when internet is used for relationship marketing, integrating hence customer databases with websites (Chaffey et al., 2010).

Successful CRM applications should combine IT w business operations: integrate IT capabilities into CRM strategies, as IT are a catalyst for developing one-to-one experiences (Sigala, 2005). CRM would help in this way to customise the service.

This complete form of CRM, with a strong use of customer insight, could in fact lead to the creation of a customer insight management function (Wills and Williams, 2004) and the development of some applications such as content personalisation, knowing the customers’ preferences on the bases of their profiles and behaviour, and customer interaction management, which allows the business to treat its customers differently according to the information they possess about them (Hirschowitz, 2001). Knowing the consumers preferences through their profile would allow to develop specific offers and RM, and these CRM applications could be reasonably applied through the use of new technologies such as social networks and other types of interactive websites.

Web 2.0 and social software applications have in fact emerged as important components of Customer Knowledge Management (Zhang, 2011), which now offers incredible opportunities, concerning sharing and transferring information, to both consumers and organisations.

Zhang (2011) continues asserting that social software can be combined with companies’ storefronts, in order to create virtual communication boards and communities where information can be shared and current and future customers can interact, with benefits for the organisation.

All this brings again to a concept of a more personal and interactive relationship with the customer, and to think also about the possibility of a shift from traditional RM to other forms: apart from the traditional RM, other RM approaches such LTV based pricing, ad-hoc promotions and availability guarantees have been recently considered (Noone, Kimes and Rehaghan, 2003). This new methods can be very meaningful as the high D for a given day can determine, in the traditional RM, the denied availability, or a high rate, without considering the possible high value of the customer. LTV (Lifetime value) could be calculated on the bases of the customer’s lifetime duration, the total revenue flow during that period and the marketing costs associated. Moreover, the indirect contribution of word of mouth, endorsements, customer referrals is fundamental in assessing the value of a customer. If a key question is who should be targeted with the discussed CRM efforts, it can be argued that traditional segmentation requires to segment customers by their willingness to pay, whilst a segment-specific RM will require to consider also their lifetime duration and profitability (Noone, Kimes and Rehaghan, 2003).

Nevertheless, assessing the WTP of current and potential customers (to attract new demand) is still crucial (Varini, Engelmann, Claessen and Schleusener, 2002), given the importance of knowing the value each segment give to a different attribute (es. premium breakfast, view, computer facilities etc), concerning pricing and the possibility of customising the offer.

Varini et al., (2002) suggest, therefore, to consider a more segment-oriented approach, with the use of databases which permit to store and analyse customer segments’ characteristics.

Presently, a significant number of travel firms are indeed increasing their investments on CRM to enhance loyalty and maximise long-term profits, but not really integrating the function with RM! (Noone, Kimes and Rehaghan, 2003). Some evidence of integration between yield and CRM for personalising rates (merging yield w guest-history databases) has been found (Sigala, 2005); a company like Accenture has predicts that a customer-centric RM philosophy could increment revenue by almost 30% (Noone, Kimes and Rehaghan, 2003).

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