Let’s face it. We’d all like Santa to wave this recession away and put new business under our tree. But the reality is that this economic downturn is not going to disappear any time soon. So what can the travel industry do to weather this storm? I recommend a 3-prong approach:
1. Focus on the business basics to survive the recession
2. Build your brand
3. Build customer loyalty
Focus on the Business Basics to Survive the Recession
“Volume hides all sins” was the favorite saying in our hotels and safari camps. What does that mean? It means that when business is strong, it’s easy to overlook the small details, like food cost increases, an increase in attrition or late payments. After all, what does it matter? You’re making money, right? Wrong. Since the margins are slim in the tourism industry, every penny counts. So now is the time to look at the details and focus on the business basics. For today’s blog, let’s look at one of the most important business building blocks: Cash is King. Here are some tips to keep your cash flow strong:
Get assertive with the Accounts Receivables; you can’t afford late payments right now. So give them a call and see what can be worked out. And don’t be shy about follow-up calls, if necessary. The squeaky wheel gets the grease, and right now you need the grease. You may even want to create a special discount allowing them a 1% payment reduction if they pay this week.
At the other end of the spectrum, work with your suppliers to delay your payments as much as possible. Pick up the phone and work out a win-win arrangement. If your suppliers can expect your check on a certain date, without hassle, they may be willing to let you pay 15-30 days later than normal.
One of the most important ways to monitor cash is to monitor your sales funnel regularly. Make this a company focus. Track and measure how many inquiries are being made, how many inquiries are being converted to sales, which itineraries are selling the fastest, and by which sales person. Sales is where the action is; lose focus on your pipeline and you lose focus on your business.
Be sure to monitor cash flow regularly and know your benchmark figures. If you lose a big client, or see a huge drop in sales in Q1, what are your back-up plans to find cash quickly? Create different scenarios with your team, so everyone knows what’s at stake.
Delay non-essential purchases. Take a good look at your inventory and see what items can wait to be purchased. “Just in time” inventory is the name of the game right now.
Build Your Brand
However, the “just in time” concept does not apply to building your brand, which I define as the invisible bond that drives the client’s buying decision. In fact, building your brand is something that should be done daily, if not weekly. If you spend time to improve your brand now, your customers will stay loyal to you no matter what the economic situation.
There are two parts of your brand: the invisible brand and the visible brand. The invisible brand is the experience or feeling in a buyer’s head about your product. The visible brand is the expression of that feeling with your colors, logo and tag line. Many businesses tend to focus on the visible brand, without even considering the invisible brand. Yet the visible brand is ineffective without the foundation of the invisible brand.
For example, Volvo’s invisible brand is “safety”; when people think Volvo, they think safety. What do you want people to feel, experience and believe about your invisible brand? Is it adventure? Consistency? Community? Intrepid explorer? If you’re not sure, now is the time to create a dialogue with your team and find the basics of your invisible brand. In the next blog, we’ll go more into how brand promises, brand values and the visible brand can help increase sales in any economy.
Build Customer Loyalty
In addition to business basics and building your brand, you need to also focus on building customer loyalty. My hotels had an 80% average occupancy, and a 50% repeat guest ratio. Before I sold those hotels, I hardly did any marketing at all, yet they were often sold out a year in advance for certain seasons. How did our team do that? We built customer loyalty one client at a time. Here are some effective ways to build customer loyalty without having to break the bank:
if you haven’t already done so, create a client profile on any customer that has traveled with you more than once. The basic information to note are name, spouse name, children’s names, physical description, travel likes and dislikes, preferred room, dietary favorites, travel friends and dates of travel. In addition, you want to note the little details, such as preferred part of the trip, favorite movie or favorite book. The most important part of the client profile is to use it. Ensure that every point of contact with the client has memorized the client’s profile and knows these details as well as you. Then when your team starts using these details in a conversation with the client, the client will feel valued and want to travel with you again.
In addition, a customer rewards program is key to creating customer loyalty. After every visit, be sure to send clients a hand-written note, thanking them for their visit, and giving them an incentive to book again. For example, if they book within 3 months of the letter, give them a “repeater discount” or make a contribution to a mutual charity. In addition, create gifts that increase in value for every visit. With today’s technology, you can create reasonably priced, personalized gifts such as personal photo albums, clothes and photo books of their trip on Shutterfly. You can also create customized gift baskets, clothes, and gear for each client. These gifts are priceless in terms of goodwill.
Finally, ensure that you contact your clients at least 6 times/year, in different ways. Emails, phone calls, newsletters, gifts, post cards, videos, focus groups, and online communities are just some of the ways to do this. The most important part of this campaign is to focus on THEM, not YOU. So don’t just tell them about a new product. Tell them how the new product will help THEM explore a new part of the world safely. Don’t just send an article; send an article on something that is important to that client. Always focus on THEM, not you. In return they will keep your pipeline full and buy from YOU!
So can I give you a magic wand to wave away this recession? No, but I can help you with my 3-prong approach: focus on the business basics, building your brand and building customer loyalty.