For a long time, agencies, seeking to increase revenue, opted for increasing sales volumes, reasonably believing that the more you sell, the more you earn. Even though profitability was negative on some issued tickets, overall, this approach has long been effective. It paid off for a while. But the world has changed, and the market dictates new rules.
In a climate of increasing competition, agencies are finding it increasingly difficult to maintain profitability, making it crucial that each booking generates the maximum possible revenue. This means efficiency, not volume, is now paramount.
Of course, changing strategy and, in many ways, even business approach is a challenging process, raising many questions for agencies. Is it worth it? How can you find the precious time and resources to develop and implement a revenue optimization strategy that only promises to maximize profits? How can you evaluate whether a new approach is working? Can you handle it yourself or should you hire consultants? Together with experts from the global technology company Sabre, we decided to explore these questions.
Assess your business for efficiency and hidden opportunities
Sabre consultants note that when changing strategy, it's not a good idea to rush headlong into a new direction. Regardless of agency size, it's best to start with fairly simple steps: assessing current revenue sources. Typically, these include commissions, rate surcharges, and service fees. By breaking everything down, you can often immediately identify promising opportunities and bottlenecks that require adjustment. These can be used as a guide to determine your ideal path to profitability. For example, consider how the highest-yielding products are displayed on the search screen and analyze how you can present them to buyers or agents to attract their attention.
It's also helpful to evaluate the agency's performance and sales approach. What obstacles might stand in the way of increasing revenue? How much freedom do agents have? How flexible are their client approaches? How many options and pricing plans are offered? Answering these questions will help identify any obstacles to implementing a well-designed strategy.
Focus on first-class service
A satisfied customer is the key to success for any business. In the tourism sector, the cost of attracting new customers is steadily rising, so agencies seeking to increase profitability need to consider new strategies through the lens of quality service.
How can you turn a request into a conversion? How can you give travelers exactly what they need? Technologies for collecting, processing, and analyzing consumer data come to the rescue in these areas, helping to create customer profiles, assess their current and future needs, ensure flexibility in service selection, and implement more profitable products for the agency.
Maximize your profit margin on every sale
Once you've determined your customer service approach, you can begin to increase revenue per booking. This includes commissions, price markups, and service fees. Knowing your costs and the market's price sensitivity for each product, it's important to find the perfect balance between revenue streams and how they're perceived by the customer.
On the other hand, effective profit growth can also be achieved through cross-selling, flexible rate management, and the integration of additional services. However, with so many parallel processes, it's crucial to take a comprehensive approach and understand the big picture using a single technology solution. This is precisely what the new Sabre Red Workspace agency platform, which will be available next year, is designed to facilitate. It is designed to simplify and automate many operations, including yield management.
Improve your offer with every booking
The key to success is selling products that benefit both the agency and the client. This content is a priority, and travel consultants should always have it at their fingertips. Consider a supermarket: the most profitable products are displayed on shelves at eye level, making them more likely to be added to a shopping cart. Similarly, in an agency, key offers should always be visible. Monitor this to ensure that these are the ones being offered to travelers, and then you can be sure that the company is receiving the maximum possible revenue with every sale.
It's also important to understand the customer's tolerance level. For example, what should you do if the difference between a profitable and unprofitable rate is only five dollars? The new strategy requires aligning not only point-of-sale operations but also more broadly promoting high-value products through marketing and advertising.
Make it a habit to regularly monitor performance
When implementing any new strategy, it's important to regularly evaluate results, especially in the initial stages. Rapid revenue growth is easy: adjust service fees and highlight your most profitable products within the first six weeks—results will be noticeable within the first six weeks. It's important to share these initial successes with the entire team to motivate them to fully embrace a change in their approach.
Evaluate your successes
Typically, after six months, an agency develops a deeper understanding of the effectiveness of the new process and, importantly, customer reaction. For example, a strategy might emphasize selling a specific airline, which is willing to offer the agency special rates and increased volume commissions. However, if this airline isn't popular with travelers, the idea will likely fail. In other words, six months is the time it takes for an agency to clearly understand which ideas have yielded results, what changes need to be made, and how to automate and scale the business with a focus on increasing revenue. It's also important to consider incentives for employees who adhere to the new rules, as their motivation and energy are crucial to business profitability.
According to Sabre estimates, implementing a revenue optimization strategy increases profits by an average of 20%. Within just one year, with a smart approach and fine-tuned processes, an agency can see not only a significant increase in revenue but also a systematic expansion and strengthening of its client base. Crack the champagne, but don't rest on your laurels. Even the best strategy needs to be rethought and updated to keep up with the times and uncover new opportunities along the path to success.
Source: trn-news.ru