3 Major Disadvantages of Hotel CRM and How to Overcome It
These days it's hard to imagine any hotel without a customer relationship management (CRM) solution. This must-have software can help your property with everything from strengthening customer relationships, creating high-converting marketing campaigns, and accessing key metrics (and more!) in one place.
But while we so often like to highlight the advantages of them. It's wise to be aware that every coin has two sides. The system does come with its challenges, and it is important to address them if you want to fully utilize your CRM.
In this article, we'll present 3 disadvantages of CRM for hotels, and give you concrete strategies to overcome these.
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Why Is It Important to Talk about the Challenges?
Even though hospitality CRM solutions have come a long way in the past decades, it's important to be aware of the solution's disadvantages. Because, unlike other hotel technology systems, the CRM will be one of the biggest technology investments you will make. In fact, it is predicted to become the largest segment of IT investments by 2023.
We’re not just referring to the investments in terms of financial resources. But also to non-financial aspects, such as the extent to which it will be embedded into your operations and current IT infrastructure, the time spent on it, and how detrimental it is to your strategic direction.
Neglecting the disadvantages of hotel CRM can jeopardize the success of the system in your property and the time and money you invest in it. But if you want to have a peek at the advantages, read our benefits of CRM software for hotels blog post!
What Are the Problems of a Hotel CRM?
There are a few things that can pose a challenge for a hotelier if they want to successfully implement and run a hotel CRM system. We'll take a deeper dive into these three aspects below.
1. Readiness of the Hotel Organization
We all know how great CRM in hotels is for nurturing customer relationships. But at the end of the day, the system's primary function is to support your property to adopt a customer-centric business culture dedicated to winning and keeping our guests.
This change in mindset will require a substantial change in business processes and the organization itself. And this is where the readiness of your organization plays its role.
How supportive is the top management of the system?
Are employees motivated and well-trained to handle the system?
Do your organizational processes need to be changed?
One of the hurdles is to get everyone on board. After all, it is a labor-intensive system and some employees may be reluctant to use the tool, change their processes, or lack knowledge of these systems. In fact, research conducted by H2C confirms an underutilization of targeted marketing of hotels using the system.
Image: By H2C
2. Data Cleansing Process Is Difficult
One key component of CRM in a hotel is that it is a guest data management system, whereby the establishment holds all guest data in one centralized place. And the data stored in the system can come from a multitude of sources, such as Social Media, PMS, Surveys, and more.
While many like to brag about their great service, fantastic hotel facilities, and cleanliness, they often forget to mention the importance of data handling. Dig into the hotel customer database and you will soon encounter incomplete profiles, duplicate guests, and miscellaneous dummy profiles.
In fact, as many as 10-25% of contacts in a CRM database contain errors. Even today, many hotels use manual data cleansing processes and face big struggles with unstructured or inaccurate guest data.
Image: By H2C
Deploying the CRM on a centralized database with accurate data from multiple sources is detrimental to its success. We at Metasphere offer data cleansing services as part of our onboarding CRM process for hotels.
3. It Is Costly to Adopt a CRM
Let's be honest: hospitality CRM solutions are not like other software. They're similar to your PMS system, in that they're often centralized databases that store sensitive customer information.
These systems typically come with higher implementation costs and monthly fees. There are vendors out there offering cheap solutions. But, given the complexities of the hotel industry, where most hoteliers still use a legacy PMS, you will need a software that can integrate with your PMS system and contain core hotel-specific functionalities.
And this is where things can quickly get very expensive. More than eight out of ten surveyed said their investments in CRM will rise.
You'll need to keep an eye on the following costs when you're looking for a vendor:
The actual software subscription
PMS interface costs (both from the vendor and your PMS provider)
Data cleansing costs
Yearly maintenance or support fee
Other installation costs
With that being said, is it possible to overcome these challenges?
How Can Hotels Overcome the Disadvantages of Hotel CRM?
Luckily, there are a few things you can counter these disadvantages.
Strategy 1: Create a Synergy from Top Management to Business Process before Implementation
As far as the readiness of your hotel organizational structure, you need to ensure the vendor you're picking is aligned with your strategic objective. Hence, the scope of the functionalities needed in the system can differ depending on whether you are an individual property or a hotel chain.
For example, if your property's long-term goal is to increase the number of repeat guests and brand recognition, then you need to have a system fully equipped with a loyalty membership program. But if your goal is to increase the guest satisfaction, then a software with data management capabilities may be sufficient
Think of it as a bottom-down approach.
Align your top management.
Set a strategic objective or goal for the CRM.
Create a plan to increase employees' knowledge and resistance to the tool.
Redesign your business process, including relevant SOPs to support the implementation.
Apart from this, have a look at the user experience of the systems and demo them with a few vendors to see which one is more appealing. Because at the end of the day, systems that are easy to use will make it easier for you to onboard your employees.
At Metasphere, we spent a lot of investments into making our CRM software for hotels intuitive and easy to navigate. For example, our system containing centralized guest profiles consolidates the guest's data - across all your properties - and display them in an easily readable view.
Strategy 2: Outsource the Data Cleansing Process
Your hospitality CRM solution must contain accurate records, as discrepancies can have a negative effect on the organization. This is especially true if you wish to use the system for advanced data reporting or targeted marketing initiatives.
The easiest way to relieve your IT managers from this task is to outsource it to the vendor you are choosing. At Metasphere, we include an affordable automatic data cleansing service as part of our onboarding process.
This ensures all our clients start off with a CRM packed with accurate and useful data to support them in their business growth. You can click on the link below and schedule a free demo with us today if you want to learn more about our process.
Strategy 3: Choose a Modular or Tiered-Pricing CRM
Take a closer look into your current systems and think of how many functionalities you actually use and how many are just left there.
CRM is packed with functionalities. But when it comes down to it, you will probably only use a few of those. In fact, research shows seven out of ten companies only use 50% of the CRM functionalities after 12 months.
Avoid underutilizing the system by choosing a vendor that has either modular functionalities or a tiered-level pricing structure, so you easily can upgrade or add more functionalities as your business grow. That way you'll get a better cost-benefit ratio.
Conclusion: 3 Major Disadvantages of Hotel CRM and How to Overcome It
CRM systems have become a must-have for hotels that seek to strengthen their customer relationships. But as with everything, every coin has its two sides. In this article, we took a deep dive into the top 3 disadvantages of hotel CRM and gave you tips on how to overcome these problems.
#1 Overcome the lack of organizational readiness
Create alignment and synergy across the board, from the top management level, strategies, employees' skillsets, and the actual business processes.
#2 Data Cleansing Process / Integration
Your PMS is packed with incomplete or duplicate guest profiles, so you need to remove these - before you start with your CRM. You better leave this job to the CRM vendor.
Many CRM vendors are known for their sky-high integration fees and monthly fees, so these systems are out of reach for many smaller hotel groups or individual properties. But things don't have to be like that.
At Metasphere, we have chosen a tiered-level pricing structure for our competitively priced CRM. It will make it easier for you to find a package containing functionalities you actually need.
With over 100+ hotels worldwide using us as their preferred vendor, we consider ourselves to be an expert in the CRM area. Reach out to us today if you want to know how our clients can create high-converting marketing campaigns, foster loyalty, and improve their satisfaction levels.