E-Tourism in Europe The E-CRM and ITCs adoption issues: how to retain customers?

6.2 The perceiWed barriers to the adoption of e-CRM solutions

Barriers for implementing e-business in the tourism sector⁴

Obviously, the maturity of the market, the financial resources required and the prevailing structures and modes of practices within organisations are the most important barriers to the adoption of e-CRM solutions.

4 Source: Vincent Heung, Internet usage by International Travellers, 7/2003

In many places throughout Europe local customers are not familiar with the purchasing online and are not prepared to make reservations without a human interface.

Considering that the tourism industry operates with low margins, the important financial investments in the introduction of e-CRM solutions is a barrier to the adoption of these systems. For some companies the investments must be justified to shareholders and thus compensated in a reasonable period of time.

The tourism organisations culture and organisational structure is another barrier to the adoption of eCRM solutions. The organisations are not always ready to adopt these solutions as some departments show a resistance to change and slow down the adoption. That is the reason why a common vision must be developed in order to eliminate conflicts between new and traditional sale methods.

According to a survey conducted on CRM in the global travel industry by KPMG in 2001, few software-based CRM solutions are designed to meet the needs of the travel industry. Consequently, the travel industry considers that technology vendors and suppliers lack the critical technology skills and knowledge of the tourism industry operation processes.

The complexity of travel products and the periodic changes in consumer tastes and behaviours are considered as additional barriers to the adoption of e-business methods in CRM. As a matter of fact, some destinations become fashionable for a certain period of time while travellers' tastes and demands evolve over time. Consequently, the "industrialisation" of tourism products is a difficult task to handle.

6.3 The step-by-step implementation of e-business methods

Considering all the barriers described above, many tourism organisations remain cautious in the implementation in the e-business methods. That step-by-step approach aims to take into account the company's identity and image with customers.

Even if e-commerce implies cost savings and the deepening of relationships with regular customers, some companies consider that their adoption of e-CRM solutions must follow the market and the industry circumstances which are highly impacted by unforeseable events (e. g terrorist attacks, tsunamis, Sras).

Nevertheless, the vast majority of the tourism organisations are willing to extend e-business in their organisation within the next two years. They believe that as customers will get more used and confident in the Internet, they will extend the implementation of their e-business solutions. Some companies consider that the expansion of e-business is the strategic choice which would help them becoming the leading players in the online market.

According to the Socio-economic Trends Assessment for the digital Revolution (STAR)⁵ survey conducted in 2002⁶, tourism organisations just begin to experiment e-CRM applications. As a matter of fact, traditional sales methods still account for over 90% of their revenues. However, the fierce competition within the industry seems to be one of the drivers of e-CRM solutions. As some companies pioneer in the adoption of eCRM solutions, the others feel that they must follow the trend in order to remain competitive.

Still, all the players of the industry see the Internet more as an efficient tool of communication and interface with customers than as a new business model. The vast majority of companies interviewees during the STAR research reported that any functional changes brought about as a result of e-CRM solutions were essentially

5 STAR is an initiative of Key Action II "New Methods of Work and Electronic Commerce', one of four key actions of the User-Friendly Information Society Programme. The IST Programme is part of the European Union's Fifth Framework Programme for Research and Development,

6 Issue Report N. 22, October 2002, www.databank.it/star

extensions of existing business practices to new sales channels. As a matter of fact, the functional changes generated by the adoption of e-CRM solutions were mostly extensions of existing business practices to new sales channels.

Obviously the increasing maturity of the market and the sufficient number of experienced e-customers are necessary to make the Internet channel a meaningful investment for all the industry players. That is the very reason why CRM strategies are considered as "peripheral activities" to the companies which are operating in the less mature and small markets. Investment in e-CRM solutions is not their top priority has they do not expect a large number of users and thus a very scare return on investment.

In spite of the fact that consumer are interested in surfing the Internet, the vast majority of e-customers still prefer the personalised service provided by travel agents. As they are overloaded with information the european customers mainly rely upon human interaction with travel agents. If we consider business customers, it seems that human interaction is not going to be replaced by online services as their travel arrangements are complex and often requires the "human touch" of an experienced travel agent.

However, a new 'web-savvy' customer emerges. This "web-savy" customer uses the web as a rich information medium. He seeks travel information, compares prices, and then proceeds to purchase complex travel products online. That is the reason why the leading players, including airlines and tour operators, have increasingly started to offer a variety of customer services online and they are particularly successful in attracting this "web savy" customer group indeed.

It seems to be too early to assess the real impact of e-CRM methods on the companies' competitive performance. However, we can assess that e-business technologies have facilitated the shift in the focus of companies from supply to demand while customer retention and satisfaction are shown to have improved as a result of companies' online presence.

In order to realise productivity gains, the tourism organisations have to increase the efficiency level of their back office operations. As a matter of fact, the value of CRM initiatives depends on back office processes and the flow of information containing important customer data between the front and back offices of a company. This strategy is let as it allows the companies to focus on the key customer groups which can generate additional profits.

For the tourism industry which witnessed the introduction of GDS 30 years ago, the e-business methods help to transpose the existing techniques on to cheaper distribution channels and thus developing sales potential. However, the e-CRM solutions and ITCs must bring benefits to a supply driven market meaning that it must manage the growth and the maintaining of a stable employee numbers, automate back office and fulfilment operations, standardise products and operations.

As a conclusion we can say that the real challenge is not the implementation of technology-based CRM solutions itself but rather the adoption of the necessary technological, organisation and cultural changes within the companies. Data-warehouses adoption must be coupled with customer intelligence systems. Concerning the organisation itself, they must be data integration inter-departmental communication and links with distributors and resellers. With regard to the corporate culture, the organisation must be customer-centric in order to provide the best service. All the ingredients would allow CRM to contribute to the productivity and profitability of the tourism organisations.