From Guanxi to customer relationship marketing: How the constructs of Guanxi can strengthen CRM in the hospitality industry

Abstract

Business today has recognized the cost advantages of customer retention. In reaction to decades of industrialization and mass production, the pendulum has slowly swung back toward more one‐to‐one customer relations and mass customization. One‐to‐one personal attention and relationship building is widely perceived as a desirable method for increasing customer loyalty. Such concepts, however, are not new. Over thousands of years, the Chinese have been practicing “Guanxi,” which Davies (1995) defines as the social interaction within a networked group where repeated favor exchanges ensure a measure of trust among the participants of this network. The constructs of Guanxi, namely bonding, trust, empathy, and reciprocity, can be combined with customer relationship marketing (CRM) and strengthen what a business can offer its customer. This paper, therefore, discusses the history and development of Guanxi in China and its similarities to customer relationship marketing that is practiced today in the Western world. It also presents how the constructs of Guanxi can be combined with CRM. Tips for good Guanxi and CRM to ensure success are also highlighted.