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Archives of Business Research – Vol. 9, No. 6
Publication Date: June 25, 2021
DOI:10.14738/abr.96.10351. Pathmananathan, P. R., & Aseh, K. (2021). Identifying How Customer’s Loyalty and Retention Influences Relationship Marketing in
A Hotel Industry. Archives of Business Research, 9(6). 141-152.
Services for Science and Education – United Kingdom
Identifying How Customer’s Loyalty and Retention Influences
Relationship Marketing in A Hotel Industry
P. Ravindran Pathmananathan
Unies Group
Khairi Aseh
Unies Group
ABSTRACT
In today's diverse global market place, relationship marketing has been recognised
as an excellent way to develop an exclusive long-term relationship with their
clients. Many organizations, on the other hand, struggle to systematically measure
and monitor customer retention and the factors that influence it. Personal
connection and service quality are becoming increasingly important to a growing
number of businesses. The aim of this research is to emphasize the significance of
personal connection and service quality in the service industry. This research was
conducted using a questionnaire that was distributed to 200 hotel guests in urban
areas such as Georgetown and Penang. It can be concluded that customer loyalty
and customer retention play an important role in relationship marketing. As a
result, the higher the degree of personal connection and service quality, the more
likely it is that a customer will return to the hotel and recommend it to others.
Keywords: Relationship Marketing, hotel, industry, customer, personal connection,
service quality, retention
INTRODUCTION
Company is no longer about manufacturing, selling, and supplying products in today's major
industries, as it once was (Gilbert & Choi, 2003). Advocates of the traditional 4Ps marketing
approach, which focused on twigging one or more marketing mix components, have had bad
experiences treating customers as a "bunch" of homogeneous market segments (Ahmad, 2000).
Dutch Bank used its reputation to draw new customers by offering cash rewards. After the
minimum stay period had elapsed, the bank discovered that the same customers had left. As a
result, traditional marketing falls short of capturing the essential elements that must be
emphasised in order to build and sustain long-term relationships.
Relationship marketing, according to Gilbert and Choi (2003), is focused on the premise that
satisfying and retaining customers makes financial sense because the intensity and length of
the relationship are directly proportional to the resulting profitability. Furthermore, it will be
difficult for competitors to replace an agency that builds and maintains positive customer
relationships, offering a long-term competitive advantage. Effective marketers, according to
Zineldin (1999), see a first-time sale as the start of a relationship with a customer, rather than
the end of a process. He goes on to say that a company needs to create and maintain long-term
customer relationships in order to protect added value.
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Overview of Hotel Industry
The management of a hotel service is considered a major business operation. Larger hotels may
have a management structure similar to that of a large corporation, with a CEO, department
heads overseeing various departments, middle managers, administrative staff, and line-level
supervisors. Hotel management research, a business degree, and/or certificate programmes
are all designed to train hotel managers for careers in the industry. (2016, Fukey.L, Kumar.J,
Pathil.J, Kandappan.B)
The Ritz Hotel in London, United Kingdom, is one of several hotels that have become popular
as a result of their association with Irving Berlin's song "Puttin' on the Ritz" The Algonquin
Hotel in New York City is known for hosting the literary group the Algonquin Round Table, and
the Hotel Chelsea, also in New York City, has been the subject of many songs and was the site of
Nancy Spungen's stabbing" (allegedly by her boyfriend Sid Vicious). The Waldorf Astoria and
Statler hotels in New York City are named after the Muppets' Statler and Waldorf.
(Udunuwara.M, 2015)
According to Previndran Singhe of the Malaysian Association of Hotels (MAH), there are strong
signs of the hotel and resorts industry's potential growth in Asia, with 1.6 billion foreign
travellers expected in the area by 2020, nearly double last year's estimates. However, much of
this is contingent on the type of programmes that are consistently provided to clients.When
customers notice a lack of quality service in a hotel, they have the choice of moving on to
another hotel, which has an impact on the original hotel's business. (Krataithong. J
&Rakrachakarn. P, 2020)
Objective of this study
(1) To highlight how personal connection and service quality lead to customer retention.
(2) To present a detailed critique on how personal connection and service quality lead to
customer retention.
(3) To evaluate how relationship marketing is important in increasing customer retention
in the hotel industry
LITERATURE REVIEW
Relationship Marketing
Relationship marketing is focused on the concept of intensifying relationships with consumers
in order to create long-term and long-lasting relationships. The conventional disconnected
concepts of customer management are being altered in order to enable improvements.
Relationship marketing is concerned with the management of a longer customer relationship.
This situation has shown the factual importance of character, demonstrating that relationship
marketing will play a critical role in certifying potential marketing decisions. Relationship
marketing was first proposed by Berry (1983) as a long-term and long-lasting marketing
strategy. It stressed the importance of a long-term approach centred on customer retention. It
is primarily concerned with retaining customers who can have long-term value. Relationship
marketing prioritises customer retention over new customer acquisition. (Congram,1987).
Relationship marketing was not always effective, according to Barbara Jackson (1985). It would
be spectacularly fine in the opposite situation. Emily Chien, rewards business development,
said, "The assertiveness of supporting a bond with customers is at the core of nearly everything
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Pathmananathan, P. R., & Aseh, K. (2021). Identifying How Customer’s Loyalty and Retention Influences Relationship Marketing in A Hotel Industry.
Archives of Business Research, 9(6). 141-152.
URL: http://dx.doi.org/10.14738/abr.96.10351
we do."Brand superiority, labelling, customer service, and identification and compensation are
all variables in relationship marketing, according to her. Ms. Chien said, “We do our utmost to
ensure that the services and products are tailored to who you are and what you want, using
expertise to earn consistent interaction and customer feedback.” (Cara, 2001; Bashir et al.,
2021).
The operation of relationship marketing, according to Aderson and Narus (1991), is to
distribute resources based on individual client preferences. Certain consumers need robust
coverage and plan to stay with their providers for a long time. Furthermore, some customers
switch service providers due to unfavourable circumstances. In this case, the company will be
able to assist the customers by approving lower prices if the consumer is willing to tolerate less
service. As a result, the customer could be retained as an original partnership's operating base.
Well-organized relationship marketing yields major long-term and long-lasting benefits.
Improved earnings, according to So and Speece, lead to increased customer loyalty, fidelity,
incentive to use more and different services, increased productivity, and more
recommendations (2000). In addition, relationship marketing refers to the mutually beneficial
relationship that can be established between customers and hotels.
In order to achieve the Bashes Convoluted's objectives, relationship marketing (RM) seeks to
sustain and improve relationships with customers as well as other revenue-generating
activities. Mutual transactions and commitment fulfillment complete the picture.
(Gronroos,1994).
Harker (1999, p. 16) looked at 117 different references from the RM literature and
recommended that an agency's presence be positive. Creating, sustaining, and growing loyal,
collaborative, and successful partnerships with individual customers who are actively engaged
in relationship marketing. Additional study in the field of RM strategy has been conducted
(Harker, 1999); this article attempts to achieve the typical situation by analysing the theoretical
literature in the areas of RM. Improved RM studies were the product of this initiative. The
report also includes a comprehensive appendix that will be helpful to both researchers and
experts.
Relationship marketing is a strategy for attracting, retaining, and improving consumer
relationships (Christopher et al., 1991; Gummesson, 1991; Lindgreen et al.,2004). Berry (1983)
according to the theory of partnership marketing, which occurs in the fields of services
marketing and industrial marketing. Managing interfaces, relationships, and processes,
according to Gummesson (1993), is crucial. The aim of relationship marketing, according to
Gronroos (1994), is to determine, sustain, and create profitable relationships with customers
and other followers, which is why the events planned were convened. It is the aim, according
to Rapp and Collins (1990), to create and maintain long-term relationships between businesses
and their customers that benefit both margins. Following that, there is associated association
and obligation fulfillment (Ndubisi, 2006; Farah et al., 2018).To put it another way, the main
goal is to achieve temporary customer reliability, which Oliver (1999) described as a long-term
commitment to repurchase or patronize a desired product or service. Situational conditions
and marketing efforts have the potential to cause behavioral switching in either case. Blomqvist
(1993) suggested the following basic characteristics of relationship marketing: each customer
is evaluated as an individual's person or Units; firms' practices are primarily focused on current
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customers; The business will seek to achieve effectiveness by reducing customer purchases and
consolidating customer relationships, and operations will be focused on touch and dialogue.
Customer Retention
In recent years, vendors' concern about customer retention has grown. It is widely assumed
that keeping existing customers is less expensive than acquiring new ones. The lifetime cost of
a consumer should be considered, according to existing marketing literature. According to
Torres and Shery (2006), companies understand that missing a customer means missing more
than a single action; it means missing the entire rivulet of transactions that consumers would
like to make over the course of a lifetime of purchases.
As a result, the emphasis of this study will be on how the use of services as a relationship
marketing tool affects customer retention. They've spoken about how customer retention
trainers can't be noticed, but their willingness to stay, salary, suitability, and other factors can
help them be found. As a result, the rate factor is one of the most important influences they
want to keep as a business. In order to retain loyal customers, the company struggles to
maintain a "value for money" concept. The results of this study were determined using
customer satisfaction as a criterion, and the duration of stay as a criterion.
Personal Connection
It has to do with the quality of the entire employee complex in terms of distributing services,
especially staffs, managers, and temporary workers. Personal relationships indicate facilities
where customers can expect responsiveness, dependability, kindness, honesty, and capability.
Employees who are friendly and considerate are able to change customers' minds about the
hotel. The use of assurance, empathy, and responsiveness to show the standard of staff was
completed by (Padma & Lokachari, 2010). Andaleeb (2006) identified three of the five
dimensions of customer-staff interaction: "staff competence," "behaviour," and
"communication," all of which return the importance of the customer relationship. In their
studies on healthcare, Hasnin (2001) and Sower (2001) used the words "courtesy" and "valued
and loving" to reflect personal efficiency. According to Otani and Kurz (2005), "employee" was
more important than other factors in improving customer satisfaction.
Customer retention is often aided by informal relations, or Guanxi. According to So (2000),
personal relationships, also known as Guanxi, are a significant aspect of business in Chinese
unions. Strong confidence dependencies are one division of Chinese business society. Guanxi is
thus important as an ethnicity factor in many East Asian cultures, such as Japan, Korea, and
Southeast Asia; wherever there is significant Chinese inspiration; and in (superior) China,
including Hong Kong. She went on to say that Guanxi relationships are essentially personal and
social, and that "the preservation of close Guanxi involves constant social contact...", which
includes group visits, dinner or lunch invitations, and gifts (Tong and Yong,1998,P.81).Daily
entertainments were cited by Buttery and Wong (1999) as one of the elements in building
strong relationships among the Chinese in Hong Kong. Pornpiakan (1999) went so far as to say
that acknowledging demands for drinks and lunch was one of the acts that guided cultural
revision in Asian (Japanese and Thai) business styles.
This research will look at how Guanxi is used in the Malaysian context. Along with personal
relationships, the standard of all personnel involved in providing care, such as physicians,
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Pathmananathan, P. R., & Aseh, K. (2021). Identifying How Customer’s Loyalty and Retention Influences Relationship Marketing in A Hotel Industry.
Archives of Business Research, 9(6). 141-152.
URL: http://dx.doi.org/10.14738/abr.96.10351
nurses, paramedical, and support staff, is essential. Customers expect customers' service
providers to be attentive, dependable, kind, truthful, and competent. Customers expect
customers' service providers to be attentive, dependable, kind, truthful, and competent. The
hospital's impressions of the patients are developed thanks to the staff's friendliness and
politeness.
Service Quality
As a general measure of service by consumers, service quality has been well articulated in
service marketing literature. The relationship between customers' prior perceptions of services
and their findings after actual encounters with service performances is thought to be the source
of service quality (Ganguli & Roy, 2010).In the service literature, the perception of service
quality has been debated as one of the most contentious issues. This is because it necessitates
agreement (Babakus & Boller, 1992; Gupta, 2005) in the manner mentioned.
Overall, service quality has been viewed as both a characteristic and an attitude (Rust & Oliver,
2003). (Cronin & Taylor, 2005). Service quality, on the other hand, is described as consumers'
specific evaluative judgments based on the service output they experience, according to the
literature (Dabholkar, Shepherd, Thorpe, Fetsu & Maxwell, 2006).
METHODOLOGY
A total of 200 hotel customers in Malaysia were chosen for this analysis. Penang is the subject
of this research. The data for this study will be collected by providing questionnaires to
customers of hotels in urban areas, such as Georgetown. The reason for selecting this location
is that these are commercial centres with hotels as a primary activity.
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SURVEY FINDING
Respondents’ Demographic Information
Table 4.1: Socio demographic backgrounds of respondents (n=200)
Characteristics Frequency Percentage
Age (years)
≤ 30 92 46
31 to 35 40 20
36 to 40 31 15.5
41 to 50 34 17
> 51 3 1.5
Mean ± S.D. 33.21 ± 7.29
Minimum 22
Maximum 51
Sex
Male 98 49
Female 102 51
Ethnicity
Malay 75 37.5
Chinese 74 37
Indian 39 19.5
Others 12 6
Marital status
Single 76 38
Married 112 56
Separated/Divorced 7 3.5
Widow/Widower 5 2.5
Occupation
Managers 21 10.5
Assistant Managers 25 12.5
Officers 83 41.5
Sales Staff 43 21.5
Admin Staff 28 14
No. of years using this hotel
≤ 1 33 16.5
2 to 3 56 28
4 to 5 50 25
6 to 10 46 23
. > 10 15 7.5
Mean ± S.D. 1.38 ± 0.62
Minimum 1
Maximum 22
According to Table 4.1, the majority of respondents are under the age of 30. (46%) Between the
ages of 31 and 35, 20% of those polled fall into this category. Just 1.5 % of those 51 and older
responded to the poll. Females make up the majority (51%) of the population, followed by
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Pathmananathan, P. R., & Aseh, K. (2021). Identifying How Customer’s Loyalty and Retention Influences Relationship Marketing in A Hotel Industry.
Archives of Business Research, 9(6). 141-152.
URL: http://dx.doi.org/10.14738/abr.96.10351
males (49 %). Malays make up 37.5 % of the population, followed by Chinese (37 %), Indians
(19.5 %), and other races (6 %). When it comes to marital status, married people make up the
majority (56 %), followed by singles (38 %).
Officers are the most common occupation among respondents (41.5%), followed by sales
employees (21.5%) and administrative staff (14%). When asked how many years of business
experience they have with a specific hotel, the majority of respondents claim they have two to
three years (28 %).Just 15 people (7.5 %) have worked at the same hotel for more than ten
years.
Correlation Analysis
Table 4.2: Correlation Coefficients between selected variables and Customer Retention
Variables r p
Age -.005 .939
Service Quality .376* .0001
Personal Connections .612* .0001
*Correlation is significant at the 0.01 level (2-tailed)
Table 4.3: Zero-order correlations between Service Quality, Personal Connections and
Customer Retention
Variables Y X1 X2 X3
Y Customer Retention 1
X1 Service Quality .376* 1
X2 Personal Connections .612* .298* 1
Notes: zero-order coefficients p < 0.01; Bonferroni adjusted alpha = 0.01 (0.05/3).
*Correlation is significant at the 0.01 level (2-tailed)
Regression Analysis
Table 4.4: Results of Multiple Linear Regressions on Customer Retention
(Stepwise Method)
Variables b Beta p
Intercept -1.022 - .451
Personal Connections .505 .509 .0001
F =92.02 R =.691
Sig-F =.0001 R2 =.478
This section summarises the study's results in relation to the theories proposed in Chapter 3.
The results show that the r value between Service Quality and Customer Retention is.376 (p
=.001) and that the relationship is positive, meaning that as Service Quality improves, so does
Customer Retention. As a result, H1 is approved for this review. The theory states that when
consumers are satisfied with the service quality, their expectation of service quality rises, which
increases the customers' level of retention in relation to the services rendered.
Personal Connections and Customer Retention have a substantial positive relationship (r =.612,
p =.001), according to the results. This suggests that the higher the number of personal
connections, the higher the customer retention rate. As a result, the study's H2 is also accepted.
This theory states that in order for a customer to be satisfied, there must be some level of
Personal Connections between the customer and hotel employees. As a result, the study's H2 is
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also accepted. This theory states that in order for a customer to be satisfied, there must be some
level of Personal Connections between the customer and hotel employees. Customer
relationship growth is viewed as a critical factor in a variety of markets, especially in the
organisational and service sectors.
A customer's estimation of the nature of a partnership is often influenced by the quality of
encounters with employees of a specific organisation; in this case, the hotel's employees. A
salesperson is thought to be the secret to determining customer satisfaction levels. The degree
to which a customer trusts a salesperson would be positively influenced by the belief that the
salesperson is acting in the best interests of the customer (customer-oriented), and negatively
influenced by the belief that the salesperson is acting in his own best interests (self-centered)
(sales-oriented).
Finally, loyal clients, according to Guru et al. (2000), will stay with a company for a long time.
The customer's assumption or impression that the quantity of service earned from one
organisation is greater than that available from other organisations will lead to loyalty
behaviours such as relationship continuation or scope, and referral to others. He went on to say
that loyal customers who see an abundance of value in the company's service offering would
almost definitely be pleased. As a result, the higher the excess quantity of value perceived by
the customer in the purchase of the organization's goods or services, the higher the degree of
Personal connection and Service Quality and, as a result, customer retention.
CONCLUSION & DISCUSSION
The quality of interactions with employees of a particular organisation, in these case hotel
employees, has a significant impact on customers' perceptions of the value of a relationship.
When it comes to determining Personal Connection and Service Quality, a salesperson is
thought to be the key. Customer confidence in salespeople is positively influenced by the belief
that the salesperson is acting in the customer's best interests (customer-oriented), and
negatively influenced by the belief that the salesperson is acting in his own best interests (self- centered) (sales-oriented).
The next aspect of Personal Connection, Service Quality and retention is that, according to the
study goal, the higher the level of customer satisfaction, the greater the likelihood of customer
retention in the same hotel. Customer satisfaction in the hotel can be measured using the
following criteria: For starters, a satisfied customer is more likely to stay at the same hotel
again. Second, the more time a customer spends at a hotel, the more amenities it offers. Finally,
acquiring a new customer is more costly than keeping a current one, and a satisfied customer
is less likely to switch locations. Customer satisfaction and retention are inextricably linked.
The higher a customer's level of satisfaction, the more likely they are to return and recommend
the hotel to others. Employee engagement, productivity, and profitability are all boosted by
customer satisfaction. You must first win your customers' confidence before you can boost
customer loyalty (Reichcheld and Schfter, 2000 as cited in Luck and Lancaster, 2003).
As a result, based on the study's goal, it can be deduced that customer satisfaction and customer
retention have a positive relationship. According to the study's target, there is a clear positive
relationship between customer satisfaction and customer retention, which backs up previous
findings (Mitroff & Denton, 1999); (Cronin,Taylor ,2006).As a result, according to estimates,
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Pathmananathan, P. R., & Aseh, K. (2021). Identifying How Customer’s Loyalty and Retention Influences Relationship Marketing in A Hotel Industry.
Archives of Business Research, 9(6). 141-152.
URL: http://dx.doi.org/10.14738/abr.96.10351
consumer loyalty is one of the most important results of all marketing practices in business
firms. It is well understood that satisfying a company's customers necessitates growing the
business, acquiring a greater market share, and cultivating repeat and referral business, both
of which lead to improved profitability (Kandampuly, 2005).
Suggestion and Recommendation
Relationship marketing in the hotel industry motivates and encourages customers to continue
with the hotel for a long time, according to this report. Customers who are satisfied with their
inner needs are more likely to be creative because they have more time to focus on and share
their satisfaction with the hotel as well as their desires with others. More importantly, hotels
have more time to evolve or expand instead of constantly thinking about their turnover and
attracting new customers. The hotel manager or any lower-level workers should order this
crucial transition, just like any other. Without a question, they are the most important variables.
Customers cannot be retained in a short period of time by mistake, just as they cannot be
retained in a short period of time by experts. As a result, experts should train new and even
experienced staff. Psychologists and sociologists, as well as seasoned executives, may be invited
to participate. Rather than attracting and retaining customers, they can assist and give various
guidance to staff.
Relationship marketing may be a promising field of research for some researchers interested
in the food industry or the food industry in halal restaurants, according to the findings of this
study. Managers should regularly review their data and share it with others without being
envious or optimistic. It encourages system-wide teamwork and encourages people to come up
with new ideas. Managers can be more patient when dealing with customer problems and ask
employees to handle them.
Instilling a sense of dignity, trust, and reverence in the hotel will help to reduce conflict,
turbulence, and aggression. A few monthly fights in a hotel seem common in the short term, but
long-term hateful behaviour is a different storey. This finding would help managers understand
how to interpret consumer expectations, especially in terms of customer loyalty and retention.
Training and assessment are also needed for crisis management. For hotels with a high
customer retention rate, this is a critical topic.
Limitation of the Study and Suggestions for Further Research
This thesis took a lot of time and effort to complete, but it has drawbacks, just like any other
study. Any flaws or limitations in the study should be addressed. There are some deficiencies
in this study. Despite the fact that Malaysia has a large number of hotels, only eight were chosen
for the study. The study's greatest mistake was collecting data from these hotels. It was difficult
to get into some of the hotels, particularly well-known hotels, let alone gather information. For
example, G Hotel and Evergreen Laurel each have their own set of rules. Obtaining approval
from the human resource department is needed and takes time. Despite the fact that hotels
provided 200 questionnaires, the sample size reflects just a small portion of the overall
population of the organisations. The study would be more robust if the sample size was
increased. Another important factor to consider is the age of the respondents, with the majority
(46%) being under 30, meaning that they lacked experience. In addition, 28 percent of
respondents reserved or used hotels in the Penang city, according to the work experience table.
Despite my best efforts, only a few surveys were sent to informed business customers as part
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of a sample of my findings. Since they were preoccupied with their business ceremony and
meeting for a few days and didn't have much time to directly address any of the questions, most
hotel customers were in a rush to answer all of the questions. The cross-sectional architecture
has some drawbacks in this study. A more complete picture would emerge from more research
based on triangulated data from different sources and data collection methods. Using several
methods at the same time may also improve the test's reliability.
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