Investigating the Effects of Airline CRM Service Quality on Airline Image and Passengers’ Future Behavioural Intentions

In the competitive travel industry, travel providers are undertaking initiatives centered on identifying, developing and retaining high-value profitable customers, under the overall banner of customer relationship management or CRM. The overall strategic business objective of CRM is to build loyal profitable customer relationships. Customer acquisition, development and retention are main points to consider. Now a day’s airlines have used CRM primarily as a competitive catch-up rather than a means of differentiation. Rushing to imitate the customer-oriented initiatives introduced by competitors many airlines have done little to determine the value to the customer of those initiatives, or to the business itself. Today, not only are frequent flyer programs a universal cost of doing business, but even recent innovations such as kiosk check-in, flight-notification systems, e-ticketing, virtual check-in and Web-based self-service have become commonplace. One of the primary goals of CRM is to differentiate a company’s services to the customer through personalization, yet in the airline industry, CRM—at least in the form in which it is practiced today –has become a commodity, with many services indistinguishable from airline to airline. Introduction Customer Relationship Management (CRM) is the core business strategy that integrates internal processes and functions, and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high-quality customer data and enabled by IT (Buttle, 2004). CRM is a business strategy to identify, cultivate, and maintain long-term profitable customer relationships. It requires developing a method to select your most profitable customer relationships (or those with the most potential) and working to provide those customers with service quality that exceeds their expectations. (McDonald, 2002)An organization’s survival depends largely on harmonious relationships with its stakeholders in the market. Customers provide the ‘life-blood’ to the organization in terms of competitive advantage, revenue and profits. Managing relationships with customers is imperative for all types and size of service organizations. A sound base of satisfied customers allows the organization to move on the path of growth, enhance profitability, fight out competition and carve a niche in the market place. Bennett (1996) described that CRM seeks to establish long term, committed, trusting and cooperative relationship with customers, characterized by openness, genuine concern for the delivery of high quality services, responsiveness to customer suggestions, fair dealings and willingness to sacrifice short term advantage for long term gains. Schneider and Bowen (1999) advocated that service business can retain customers and achieve profitability by building reciprocal relationships founded on safeguarding and affirming customer security, fairness and self esteem. It requires that companies view customers as people first and consumers second. Trust, commitment, ethical practices, fulfillment of promises, mutual exchange, emotional bonding, personalization and customer orientation have been reported to be the key elements in the relationship building process (Levitt,1986; Gronroos, 1994; Morgan,1994; Gummesson,1994; Bejou et al,1998 ). CRM refers to all business activities directed towards initiating, establishing, maintaining, and developing successful long-term relational exchanges (Heide, 1994; Reinartz & Kumar, 2003). One of the results of CRM is the promotion of customer loyalty (Evans & Laskin, 1994), which is considered to be a relational phenomenon, (Chow & Holden, 1997; Jacoby & Kyner, 1973; Sheth & Parvatiyar, 1995; cited by Macintosh & Lockshin, 1997). The benefits of customer loyalty to a provider of either services or products are numerous, and thus organizations are eager to secure as significant a loyal customer base as possible (Gefen, 2002; Reinartz & Kumar, 2003; Rowley & Dawes, 2000). Recent developments in Internet technology have given the Internet a new role to facilitate the link between CRM and customer loyalty (Body and Limayem, 2004). It is common knowledge that a dissatisfied and unhappy customer will share his unfortunate experience more than a satisfied customer. It is also observed that a fraction of unhappy customers choose to complain while others simply switch their loyalty to others service providers. Loss of customer is loss of business along with the opportunity for business growth and profitability. Feedback collection from the customer is essential for the supplier to ascertain customer satisfaction and scope for improvisation (Sugandhi, 2002).