Net profit is the true measure of any organisation, as the saying goes profit is sanity, volume is vanity
In order to increase the bottom line profit figures in the tour operations sector you must have a multiple sales channels and you must forensically analyse the contribution from each distribution channel.
In the travel industry, there are two main distribution channels:
- Online / Offline Direct sales:
- Travel products are sold using your own website through a booking engine, or
- Interacting with a travel agent – your company representative sales the product by phone, e-mail, live chat or walk-in your office.
- Online / Offline Indirect Sales: These sales are achieved through
- the travel trade (travel intermediaries) or
- 3rd party websites (e.g. Online Travel Agents, Global Distribution Systems).
Usually, direct sales alone are not enough and a combination of both is desirable. However, remember that: if you invite a large number of hungry people to eat, you will have less cake for you!
Direct and indirect sales strategies will have both positive and negative impacts on your net profit. Your indirect sales will reduce your profit margins. You will have to offer reduced rates to your travel intermediaries or guarantee a percentage of your gross earning.
By selling directly you remain in control of the branding, promotion, price and customer buying experience. However, you are also responsible for the cost of generating a sale.
Depending on your expected growth and your direct sales strategy (online or offline), you may consider outsourcing your marketing or customer support activities. A 24 by 7 contact centre can provide you with a dedicated team who can deal with first call resolution on basic queries by phone, email, webchat and social media.
The use of an outsourced contact centre as part of your direct sales strategy would have a positive impact on your net profit. It is achieved by:
- Controlling cost: You can benefit from different models depending on your business seasonality and/or requirements. You can avail of a flat rate (using dedicated agents) or a fluctuated one (agreeing on a price per call or per minute). Avoid the headache of hiring seasonal staff and the associated complications.
- Increasing sales: Additional resources can be provided as required by business need and guaranteeing 24 by 7 customer support. Your customers still need the human touch when making online sales bookings. Making holiday decisions is an extremely emotional purchase. Customers want to be reassured that they are booking the right holiday for them and with the best tour operator. It validates your company and service offering if you are available to them on a 24 by 7 basis.
In conclusion, there are different approaches to generating sales and increasing your profits.
For a positive growth strategy, it is paramount that you evaluate the cost of sale for each distribution channel and plan accordingly.
Direct sales allow you to remain in control with traditionally a higher return on investment; however, indirect distribution channels are a must do for many tours operators, hotels, transport and travel agencies as a valuable sales channel.
A good compromise is to partner with a contact centre to support your sales team as it allows you to control expenses and provides you with a flexible team available 24 by 7.
A full list of services designed to support sales and repeat buyers for the travel industry can be found here. You can also request a free quote.