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What is CRM and how does it work?

Section1.Researchtopic,theproblemandits setting

Good research starts from a good problem, so does a good research proposal. The research problem does not come from a void, there should be sufficient background information for a reviewer of your proposal to make an initial judgment of the motivation of your research. In other words, you should convince the reviewers that the problem you propose to solve is a real one and is currently being faced by some industry or is hampering the advance or adoption of some technology (this shows the importance of your research).  There are many ways for you to identify a suitable research problem. For example, to save you the effort of trying all sorts of approaches in all different areas, you first can restrict your research area to “(example topic) mobile commerce” then provide your set of readings, most of which are short research reports in the topic of mobile commerce. You can either repeat or extend one of those research projects and make it your own project for the purpose of this assignment. Creativeness is not an assessment criterion for this assignment.

In general, you may find your research topic by elaborating that “The impact of your topic on outcomes” or “The impact of important factors on your topic”. For example, if your topic of interest is mobile commerce, then you can explore “The impact of mobile commerce on companies’ performance” or “The impact of innovative technology on the effectiveness of mobile commerce.”

You should include the following in this section:
1. Statement of the problem and sub-problems
2. Your hypotheses or questions
3. The delimitations, the specific things that your own research will not address
4. The definitions of terms
5. Describe the importance of the study (background and motivation)

Section2.Theliterature review

Reviewing the accumulated knowledge about a question is an essential early step in the research process, no matter which approach you adopt. In this section, you are required to review peer-reviewed research papers – these papers must be equivalent to at least 70% of your total references. The rest could be technical reports, newspaper articles or online articles. Please note that most papers have a list of references at the end, it is fine for you to review some papers from the references. However, it is not acceptable for you to copy what the authors said about a referenced paper. You should find the original paper, read it and
make your own comments in the literature review. 
Bear in mind while you are doing the literature review that we don’t merely report the related literature, we should evaluate, organize and synthesize what others have done. You should also emphasize that the literature you are discussing is closely related to your problem. For some research areas, for instance “Security Technologies”, there is a huge amount of information you can find regarding this general area. Not everything you find is closely related to the specific problem you are trying to solve in this project. You will lose credit if you cannot justify the association of that paper to your topic. Therefore the first thing in a literature review is for you to devise an effective searching strategy to locate the most relevant papers. You can also find sample literature reviews from most research papers. The easiest way to find the papers is using UQ Library Portal. You also utilize google search, especially google scholar (scholar.google.com). Once you collect enough papers, please summarise them accordingly. You may utilize tables, figures, or bullet points to effectively summarise your literature review. The main objective of literature review is to find the gap indicating that relatively few studies have been devoted to your topic.

Section3.Yourownconclusions/suggestions

This section summarizes the main points you made in your problem etting (section 1) and review of the literature (section 2). You may present the importance of your topic to organisations, provide examples of strengths and weaknesses of your topic, and suggest the future avenues for research.  Your conclusion does not need to include any research plans and possible research methodology. In this section, it is important to have your own logical arguments based on your independent research on both section 1 and section 2.

What is CRM and how does it work?

1. Introduction

Customer relationship management (CRM) is a very important concept for the industries. This term refers to the practices, technologies and strategies that the organizations use for managing the relationship and interactions with their existing and potential customers (Wang & Feng, 2012). CRM enables an organization to collect data about the interactions with its customers throughout the customer lifecycle, manage and analyze the data with an aim to improve their customer service and deliver greater value to them. This system helps in retaining the existing customers and driving the sales growth for the organization. As stated by Kumar & Reinartz (2018), the CRM systems compile the data of the customers and interactions across various channels, or points of contacts between the organization and the customers and manage and analyze those. Effectiveness of CRM is heavily dependent on the CRM database and technologies. With the advancement of technology, the CRM systems or databases are getting improved and becoming more efficient for capturing and analyzing a large amount of data.

CRM is mostly used by sectors like hospitality, retail, banking, financial services, insurance, consulting and agriculture. All these sectors provide services to individual customers as well as to the corporate. However, CRM is highly effective in those industries, in which customer choice and behavior are extremely important for determining the sales growth (Rai, 2012). Since, the growth of the hotel and hospitality industry is completely based on the customer satisfaction, hence, it is essential to have an effective CRM system so that immense volume of customer interaction data can be stored, managed and analyzed efficiently to create more values for the customers. CRM systems are based on technology and innovative technologies are being used by almost all the sectors for increasing the value proposition (Nguyen & Mutum, 2012). Thus, the innovative technologies that are used by the CRM systems in various industries have an impact on its effectiveness. This research study will focus on the CRM in the hotel and hospitality industry and the impact of innovative technology on the effectiveness of CRM in that industry.

1.1 Background of the study

The growth of the hotel and hospitality industry is heavily influenced by customer satisfaction. As highlighted by Abdul, Basri & Shaharuddin (2013), the feedback from the customers helps an organization to assess the success of its products or services in the market and help them to make strategies and decisions. In the hospitality industry, customer feedback and satisfaction are extremely important and hence, it is essential to identify, build and maintain a dedicated customer pool to maintain a position in the market. Customer relationship management (CRM) plays a significant role in building a comprehensive database with all type of customer information and facilitating the organization’s long term growth by strengthening the ties with the customers. CRM is very much essential in the hotel industry. This industry not only deals with core customer services, such as, price, quality and delivery, but also deals with the friendly approach, prompt problem solving attitude and capability, and flexibility in services. These aspects add an extra edge in the business and also increase the customer’s perceived value (Wu & Lu, 2012). Hence, an effective CRM system helps a hotel business to exceed the customers’ expectations the aesthetic value to the services and thereby creates opportunities to build interpersonal relationships.

Why is CRM important in the hotel and hospitality industry?

On the other hand, effectiveness of CRM is influenced by the technology as well as knowledge of the people using the system. Effectiveness of the CRM improves the accuracy and quality of the decisions. To enhance the business performance, the hotels must expand their customer base and the growth can only happen when the hotels can establish a strong interpersonal relationship with the customers. This reflects the effectiveness of CRM system. The effectiveness can be measured by increase in the customer retention, increase in the number of customers staying overnights, increase in average spending per visit and increase in referrals of the new visitors by the existing visitors. Technology helps to increase the accuracy and efficiency of the CRM systems (Rai, 2012). However, the industry has started to use new and innovative technologies to deliver more value to the customers by managing and assessing the data to an in-depth level and hence, building a stronger relationship with the customers. Thus, it can be said that CRM is useful in the hotel industry but the impact of the innovative technologies must be assesses through this study.

1.2 Research aim and objectives

The aim of the research study is to explore the factors or components of CRM and examine the impact of the innovative technologies on the effectiveness of the CRM system, with a focus on the hotel and hospitality industry.

The objectives of the study are:

  • To explore the components of the CRM system and their relevance in the hotel industry
  • To assess the measurement techniques of CRM effectiveness
  • To evaluate the impact of innovative technologies on the effectiveness of CRM with a focus on the hotel industry
  • To suggest ways to implement the technologies in a fruitful manner to increase the efficiency of CRM in the hotel industry

Research hypothesis

H0 (null hypothesis): Innovative technologies do not have significant impact on the effectiveness of CRM in the hospitality industry

H1 (alternative hypothesis): Innovative technologies have significant impact on the effectiveness of CRM in the hospitality industry

Research questions

  • What are the components of CRM, used in the hospitality industry?
  • How is the CRM effectiveness measured?
  • How the innovative technologies are influencing the effectiveness of CRM in the hotel industry?
  • How the effectiveness of CRM can be improved by using innovative technologies?

The research study has some delimitation. The study will not address the effectiveness of CRM for multiple industries or sectors. That would make the study huge and robust. It is also not possible to study multiple sectors at a time within a limited time and budget. Thus, it has focused only on the hospitality sector to evaluate the effectiveness of CRM due to implementation of the innovative technology. Moreover, there are any components of CRM and technology is one of them. Since, it is not possible to study all the factors and their impact on the efficiency of the CRM, hence, only the factor of innovative technology has been picked out for the study. Thirdly, the study will be based on only secondary research, as collecting primary data is time consuming and there could be authenticity issue. Lastly, only qualitative method will be applied for analysis of the secondary data. The secondary data will be interpreted using qualitative methods, such as, thematic analysis, to get the findings.

How does innovative technology impact the effectiveness of CRM?

CRM: Customer relationship management refers to the system of gathering the customer data points through various points of contact with the business, managing those and analyzing those using appropriate methods to improve the values delivered to the customers (Mohammed & Rashid,  2012).

Innovative technology: This refers to new, advanced and creative technology that increases the efficiency of the existing technology and generates more value to the customers and for the business (Schiederig, Tietze & Herstatt, 2012).

Primary data: The data, which is collected directly from the field of study, is known as primary data. This data is collected using methods like survey, interviews, focus groups, observations etc. in which people are involved (McDaniel & Gates, 2013).

Secondary data: The data that is gathered from already published and authentic, academic and non-academic sources is known as secondary data. Literatures, datasets, facts and figures fall under the category of secondary data. The sources of data collection consist of books, journals, news paper articles, company websites, annual reports, government websites, government publications and magazines etc. (McDaniel & Gates, 2013).

Qualitative analysis: This type of analysis puts more focus on the words than on the numbers and interpretation skills and judgment of the researcher play a significant role in the explanation of the findings (Ezzy, 2013).

Thematic analysis: It is a type of qualitative analysis. Various themes are chosen based on the research topic and objectives and the interpretations are done and presented based on the chosen themes. It is a process for identifying, analyzing and interpreting the patterned meanings or themes in the qualitative data (Braun, Clarke & Terry, 2014).

The importance of the study lies in the contribution in the world of literature as well as in the hospitality industry regarding the innovative technology and its impact on the effectiveness of CRM. As the hotel and hospitality industry is dependent on the CRM, which in turn is based on technology, thus, it is important to know the technological aspects of the CRM systems, an how that could be improved by applying new technology. At the same time, technology has been going through rapid transformation, innovation and enhancement. These new technologies are often beneficial if applied in the correct manner. Through this study, the innovative technologies of CRM will be explored and their impact on increasing the efficiency of the CRM systems in the hotel industry will be assessed. This will not only contribute in the literature regarding the topic, but will also help the hotel industry to understand the effectiveness of CRM and the related factors, so that they can plan and implement appropriate measures.

What are the factors influencing the effectiveness of CRM in the hotel industry?

This section will illustrate the findings from relevant literature articles. The knowledge gained from the literature review will be used to develop the concept and foundation of the research study. Literature by various scholars, newspaper articles, reports and online publications will be explored and presented in this section.

2.1 Customer relationship management (CRM)

Kumar & Reinartz (2018) write in their book on customer relationship management (CRM) that, CRM acts both as a technology as well as a strategy. Initially it was a concept and over time, coupled with integration of technology, it has transformed into an application based technology and strategy. In the age of digital transformation, CRM has become an indispensible part of the modern economy and business world. According to the authors, CRM represents the strategic method of selecting the customers that a company can serve most profitably and shaping the interactions between the company and its customers. The principal agenda of CRM systems is to optimize the existing and potential value of the customers for the organization. Strategic CRM is mostly based on marketing principles, identifying the need for balancing the interests of the organizations and their customers. Hence, CRM is not only a technological solution, but also a strategic application. The authors also stated that CRM helps the companies to build an environment and a flexible support system to deal with issues regarding production, product innovation, globalization, customer expectations, acquisitions, deregulation, privacy issues, emergence of new markets, new competitors, and new technologies, convergence of traditional markets, and new points of contacts with customers. Hence, it can be inferred that CRM is a customer centric technological and strategic application to deliver greaer value to the customers by addressing their specific needs.

Heller Baird & Parasnis (2011) wrote about the impact of social media on the social CRM. In the modern world, social media is not only one of the most important parts of life of the individuals, but it is also an integral part of the business and marketing strategies of the organizations. Social media is an important medium to connect with the customers. The organizations now have a dedicated department for social media marketing, in which the executives focus on the data collected from social media and appropriate marketing techniques and strategies meant for social media only. Thus, it is a crucial point of contact for any type of industries. CRM also uses social media to gather customer feedback regarding any product, service or campaigns on marketing or any social issue, which are analyzed prior to any decision making. Since, social media helps the companies to reduce cost, increase revenue and efficiency through integration of CRM, it is also known as social CRM. However, through the study, the authors found that social CRM will be ineffective if the traditional CRM strategies and techniques are not modified through innovation. Hence, it can be inferred that the modern approaches of CRM has to integrate the aspect of social media for achieving further efficiency and accuracy in understanding the demands and expectations of the customers and delivering the value accordingly (Rodriguez, Peterson & Ajjan, 2015). It has been found that there is a perception gap between the customers’ expectations expressed via social media and the actual offerings of the companies. Hence, it can be further said that effectiveness of CRM does not only depend on the integration of social media in its strategies, but also on the ability of the organization to think like the customers to understand their expectations.

What is the research objective and hypothesis?

Another study by Choudhury & Harrigan (2014) showed that there were two perspectives regarding the social CRM. Theoretically the study enhanced the knowledge about the change in the communication pattern and quality between the organizations and the customers due to the usage of social media. The managerial perspective emphasized that the organizations should utilize the good quality customer information gathered from the social media for the more effective marketing.

The main components of a CRM system are salesforce automation, human resource management, lead management, customer service, marketing, workflow automation, business reporting and analytics (Taylor, 2014). All these components look after various dimensions of the CRM system in the organizations. However, technology is the most important factor or the foundation of all these components of CRM. Every activity is planned and implemented by applying appropriate technology. Starting from sales forecasting and automation, skill development of the human resources, monitoring of lead management, efficient customer service, marketing and PR, to the business reporting, workflow automation and analyzing the data for decision making, technology is the integral part of the CRM in any organization. Hence, effectiveness of CRM is highly dependent on the effectiveness of technology.

Regarding the impact of technology, it is said that the CRM system has evolved drastically over the past century. Due to very rapid technological advancement, the CRM has now systems for providing sophisticated and more precise analytical solutions by incorporating customer insights aligning those with the existing resource capabilities. Abdul-Muhmin (2012) showed in his study that in the emerging markets, like in Saudi Arabia, the organizations that were adopting the CRM technologies mainly used the analytical scope of the technology to gather the insights about the customers, value assessment and information tracking. There was high level of awareness of CRM and high usage of CRM technology among the large organizations, however, the service providing organizations were not using the CRM much than the non-service organizations.

On the other hand, Mohammed & Rashid (2012) studied the effectiveness of CRM in the hotel industry, which is predominantly a service sector. The authors found that there is relationship between the dimensions of CRM and the performances of the hotels, and marketing plays a mediating role in determining the effectiveness of this relationship. However, this study did not focus on any particular technology or innovative technology that is used by the hospitality or hotel industry for effective implementation of CRM.

Vila, Enz & Costa (2012) conducted a study on the Spanish Hotel Industry to illuminate the innovative practices. It was found that majority of the large Spanish hotel chains wanted to opt for innovative practices and technologies, mostly for process innovations, product innovations, management innovations and enhanced knowledge of market. However, the hotels put more effort on improving the management, although the actions taken mostly served the purpose of enhancing the knowledge of the market, which included identifying the new channels of sales and communication and improving those. It was also found that the hotels tend to plan and implement a new practice, which is innovative as well as exclusive, for delivering greater value to the customers. However, this study did not mention any particular innovative technology that the hotels use in their CRM system, except that CRM is used by the hotels to segment the customers and create different discount packages, offers and other type of targeted communication.

To improve the products and services of the hotel industry, various innovative technologies are now being used. Rapid advancement of technology has enhanced the quality of products and services of this industry, especially the customer support system and customized products. Some of the innovative technologies that are being used in this industry are the Cloud or Saas (Software as a Service), smartphone check in, remote control of the amenities in room, workflow management tools, mobile apps, technologically improved in-room hardware, apps for comparing hotel prices, free wifi, sharing economy etc. (Global Hospitality Portal, 2017). All these functions or activities involve hi-tech services. The Cloud or Saas enables the hotels to store infinite amount of customer data and manage those without investing in the in-house technical help.  The smartphone apps are not only helping the customers to have easy check-in, compare hotel prices, but also helping the hotels to collect data and provide support services faster and efficiently. The sharing economy, that is, growing popularity for Airbnb is revolutionizing the hotel business, and the hotels are bringing innovations in its services to retain their market position.

The hotel industry is highly influenced by customer satisfaction and hence, it must pay attention to the little details to increase customer satisfaction. In order to do that, the industry requires customer data collected from various channels and analyze those to find out the exact requirement. Hence, CRM is used in a more extensive manner in this industry. Maurya (2017) points out the advantages of CRM in the hotel industry. CRM is the one-stop database, that is, it contains all types of relevant data pertaining to the customers and those are updated frequently for accommodating any changes. This makes the problem solving aspect easier.

CRM also helps in enhancing the sales productivity as it automates the process of sending bulk emails and generating reports. The hotels can analyze the client information easily and can create lucrative offers for different segments of their customers and notify them in a short span of time. The hotel industry can also customize the products and services for target customers based on the CRM data analysis. For example, some customers are price-insensitive and prefer luxury and experience over money, while the others are price sensitive and they want value for money. CRM allows the hotels to segment these customers and offer customized products or services to deliver value to all the segments. The segmentation also helps the hotels to design their packages containing extra services, like sightseeing of the local region, or two days all inclusive packages for the loyal members. CRM is beneficial for customer retention. Customers leave one particular company primarily due to lack of personal bonds, followed by dissatisfaction from products or services and market competition (Maurya, 2017). It provides a base for referrals for the satisfied customers and lastly and most importantly, CRM is beneficial for building an efficient customer support system, which is used for providing fast and efficient assistance to the customers through calls, emails, chats and in-person.

From the above discussion it can be said that, CRM is an essential component in the service industries, like in the hotel industry. It helps in gathering the customer data from various connecting channels and managing them in an efficient manner. This is beneficial for addressing the customers’ needs and expectations in a shorter time span and in an accurate manner. Various new technologies are being used in this industry to improve its services. On the other hand, CRM is also used extensively in this industry for its advantages in improving the sales, market segmentation, paying attention to the special needs and expectations of the customers and retaining them.

Going by the literature review, it was found that various literatures have been written on CRM and its advantages, technologies in CRM, usage of CRM in the hospitality industry, innovative technologies and practices in the hotel industry, etc. however, the effect of innovative technologies used in hospitality industry on the efficiency or effectiveness of CRM was not addressed earlier. This research study aims to explore the impact of the new and advanced technologies on improving the effectiveness of the CRM in the hotel industry.

Section 3: Conclusions/suggestions

From the above discussion it can be concluded that effectiveness of CRM depends not only on the technology but also on the ability of the businesses to understand the needs and expectations of the clients. By applying the CRM systems, the originations can collect, store and manage the customer information and analyze those to understand the preferences of the customers. This is beneficial for reducing the time and effort taken for serving the customers in an efficient manner and also helps the organizations to improve their products as per the needs of the customers. Various new and advanced technologies are being used in the hotel industry and the CRM systems are also being improved to increase the efficiency. Thus, this study aims to evaluate how the innovative technology can influence the performance of the CRM, with a focus on the hotel industry.

The topic is particularly important for the hotel industry as they are continuously evolving their products and services to stay ahead of the competition. In the modern world, innovation is the key to success. Thus, not only technological innovation, but also the product and service innovations are also required. This research study will help the hotel industry to understand the advantages and disadvantages of the innovative technology used in the industry and how those new technologies can influence the performance of the CRM systems. Both the positive and negative impacts of the innovative technologies and factors of effectiveness of the CRM will be explored.

The outcome of this study will help the hotels in better decision making. In other words, based on the knowledge created by this study, the hotels will be able to understand the benefits as well as loopholes of the CRM systems and how those loopholes can be fixed to generate a more precise outcome in terms of customer service. For example, the hotels can identify the specific needs of a particular segment of the customers by applying CRM and it should also be able to identify which technology must be applied to meet the needs of that segment. If customer satisfaction is improved, then it can be said that application of innovative technology has improved the CRM performance or effectiveness. On the other hand, there are other components of CRM also than only technology, which will not be explored in this study. Hence, the performance of CRM depends not only on the technology, but also on the performance of the other components. This aspect will not be addressed in this study, which is a weakness of this research.

The future researchers can further explore the other components of CRM to evaluate its performance or effectiveness. Effectiveness of CRM depends on the combined performance of all the components. Since, this study only focused on the technological aspect of the CRM system, the other factors shall also be evaluated to measure their impact on the effectiveness of CRM in the hotel industry. Moreover, the researchers in the future can also find the impact of innovative technology on CRM in some other industry, such as, retail, banking, insurance, financial sector, agriculture etc. This will benefit those industries regarding the usage of CRM and generating more values for the customers by providing better services.

References

Abdul, A. M., Basri, R., & Shaharuddin, T. (2013). Assessing the influence of customer relationship management (CRM) dimensions on organization performance: An empirical study in the hotel industry. Journal of Hospitality and Tourism Technology, 4(3), 228-247. DOI: 10.1108/JHTT-01-2013-0002

Abdul-Muhmin, A. G. (2012). CRM technology use and implementation benefits in an emerging market. Journal of Database Marketing & Customer Strategy Management, 19(2), 82-97. DOI: https://doi.org/10.1057/dbm.2012.13

Braun, V., Clarke, V., & Terry, G. (2014). Thematic analysis. Qual Res Clin Health Psychol, 24, 95-114.

Choudhury, M. M., & Harrigan, P. (2014). CRM to social CRM: the integration of new technologies into customer relationship management. Journal of Strategic Marketing, 22(2), 149-176. DOI: https://doi.org/10.1080/0965254X.2013.876069

Ezzy, D. (2013). Qualitative analysis. Routledge.

Global Hospitality Portal. (2017). Top 10 Innovation in the Hospitality Industry. Retrieved from https://www.soegjobs.com/2017/11/13/top-10-innovation-hospitality-industry/

Heller Baird, C., & Parasnis, G. (2011). From social media to social customer relationship management. Strategy & leadership, 39(5), 30-37. DOI: https://doi.org/10.1108/10878571111161507

Kumar, V., & Reinartz, W. (2018). Customer relationship management: Concept, strategy, and tools. Springer.

Maurya, N. (2017). The Need of CRM in Hotel Industry. Retrieved from https://cynoteck.com/blog-post/the-need-of-crm-in-hotel-industry/

McDaniel, C., & Gates, R. (2013). Marketing research. Singapore.

Mohammed, A. A., & Rashid, B. (2012). Customer Relationship Management (CRM) in Hotel Industry: A framework proposal on the relationship among CRM dimensions, Marketing Capabilities, and Hotel performance. International Review of Management and Marketing, 2(4), 220-230.

Nguyen, B., & Mutum, D. S. (2012). A review of customer relationship management: successes, advances, pitfalls and futures. Business Process Management Journal, 18(3), 400-419. DOI: https://doi.org/10.1108/14637151211232614

Rai, A. K. (2012). Customer relationship management: Concepts and cases. PHI Learning Pvt. Ltd..

Rodriguez, M., Peterson, R. M., & Ajjan, H. (2015). CRM/social media technology: impact on customer orientation process and organizational sales performance. In Ideas in Marketing: Finding the New and Polishing the Old (pp. 636-638). Springer, Cham. DOI: https://doi.org/10.1007/978-3-319-10951-0_233

Schiederig, T., Tietze, F., & Herstatt, C. (2012). Green innovation in technology and innovation management–an exploratory literature review. R&d Management, 42(2), 180-192. DOI: https://doi.org/10.1111/j.1467-9310.2011.00672.x

Taylor, M. (2014). Components of Customer Relationship Management. Retrieved from https://crm.walkme.com/components-customer-relationship-management/

Vila, M., Enz, C., & Costa, G. (2012). Innovative practices in the Spanish hotel industry. Cornell Hospitality Quarterly, 53(1), 75-85. DOI: https://doi.org/10.1177/1938965511426562

Wang, Y., & Feng, H. (2012). Customer relationship management capabilities: Measurement, antecedents and consequences. Management Decision, 50(1), 115-129. DOI: https://doi.org/10.1108/00251741211194903

Wu, S. I., & Lu, C. L. (2012). The relationship between CRM, RM, and business performance: A study of the hotel industry in Taiwan. International Journal of Hospitality Management, 31(1), 276-285. DOI: https://doi.org/10.1016/j.ijhm.2011.06.012

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