Customer Relationship Management (CRM) has emerged to be among of the most rapidly expanding business technology solutions in the past decade. As such, it is an essential tool for businesses looking to achieve long-term, sustainable commercial success (Guerola-Navarro et al., 2021). CRM is becoming more and more crucial for businesses as they look to increase revenue through long-lasting connections with consumers. CRM become a focus of scientific research (Foltean et al., 2019; Gil-Gomez et al., 2020; Rahman et al., 2021; Guerola-Navarro et al., 2020; Soltani et al., 2018; Rahimi & Kozak, 2017; Sofi et al., 2020) because CRM is a crucial business practice used to manage interactions between a company and its customers (Das & Hassan, 2022; Haislip & Richardson, 2017; Dalla Pozza et al., 2018). It involves analyzing customer data to retain them and boost sales, ultimately improving the company's relationship with its customers (Soltani et al., 2018). Implementing CRM can improve firm performance and predict new product success (Foltean et al., 2019; Josiassen et al., 2014). Companies that invest in CRM technology improve CRM capabilities, resulting in improved company performance and profitability growth rates. Markets, as well as workplaces settings, and company structures are being transformed by digital technologies (Cortez & Johnston, 2017; Foltean et al., 2019; Josiassen et al., 2014). Recent advances in media technology enable organizations to physically reach out to, connect with, and personalize communications with customers, resulting in them being critical for the CRM process.
CRM implementation is crucial for hotels to improve performance, customer satisfaction, and loyalty (Sofi et al., 2020; Rahimi & Kozak, 2017; Law et al., 2018; Mohammed & Rashid, 2012). It helps organizations collect and process customer information for useful knowledge and intelligence. CRM initiatives are necessary for hotels to build long-lasting relationships with customers (Sofi et al., 2020) and maximize their lifetime value (Rahimi & Kozak, 2017). The hotel industry requires an efficient and effective CRM implementation due to the high involvement and frequency of purchase in their services. Building mutually beneficial relationships between organizations and customers is crucial for success.
In today's competitive hotel market, offering diverse products and services to a diverse customer base is essential (Rahimi & Kozak, 2017). CRM allows hotels to customize offerings for individual customers and streamline order processing (Mohammed & Rashid, 2012; Meyer & Schwager, 2007). CRM is a successful marketing strategy in the hotel industry, known for enhancing customer satisfaction and retention (Rahimi & Kozak, 2017; (Wu & Lu, 2012). While it offers numerous benefits, there are challenges in implementing CRM, such as being time-consuming, expensive, and complex (Rahimi & Kozak, 2017). Hotels can gather customer information through various channels and guest cycles, using CRM as an opportunity to improve service quality and customer relationships. This leads to higher levels of customer satisfaction and retention. Luxury, business, and budget hotels have all recognized the benefits of implementing CRM strategies.
The hospitality industry, particularly the segment of five-star hotels, operates in a highly competitive market where achieving customer satisfaction and maintaining strong market performance are critical.
Numerous prior studies have examined the application of CRM in various industries, including the food industry (Al-Weshah et al., 2019) banks (Hanaysha & Mehmood, 2022; Iriqat & Daqar, 2017; Abbas & Hafeez, 2017; Bhat & Darzi, 2016), hospitals (Alshurideh, 2022), hotels (Mohammed & Rashid, 2012; Leena et al., 2015; Bahri-Ammari & Nusair, 2015; Sofi et al., 2020; Rahimi & Kozak, 2017; Wu & Lu, 2012) and telecommunication (Rafiki et al., 2019; Al-Weshah et al., 2019). As a result, even though there are many studies that deal with CRM, it became clear that there is a gap in the literature due to the lack of studies that address the concept of CRM and market performance with the mediating role of customer satisfaction in Ethiopia in five star hotels. This study closes that gap in the body of knowledge. To the best of the researcher knowledge, this study is one of the first to examine the effect of CRM on market performance with the mediating role of customer satisfaction in hotel industry in Ethiopia.
This paper is structured as follows: The next section delves into the existing literature and theoretical concepts that form the foundation of our research. The methodology and empirical results are presented, followed by discussions on managerial implications and suggestions for further research.