In this day and age, there are a lot of resources out there on how to improve your tour and activity business. In fact, on this very blog you will find so many articles and ebooks covering the subject that it would take a lifetime to read them all. While the barrier to accessing the right knowledge is relatively low, the real challenge is adapting all these strategies and best practices to your own reality. The main reason travel professionals struggle to execute their plans is that they often forget to set S.M.A.R.T. goals, define relevant Key Performance Indicators (KPIs) and monitor them continuously. But what do we mean by S.M.A.R.T. goals? And what are the most important KPIs for tour operators and activity providers? In the following sections, we’ll answer these questions and more.
What are S.M.A.R.T. Goals?
Before trying a new business strategy, you need to clearly define the goals you want to achieve, which can be more complex than you think. For this reason, we suggest you to adopt the “S.M.A.R.T.” framework, which is an acronym that stands for:
Setting a broad goal like “I want to sell more tickets” can be detrimental to your business because it makes it difficult for you and your staff to focus your efforts in a constructive way. You need to be as specific as possible, and the best way to do that is by asking yourself a few questions:
- What is the end result of this project?
- Who will be involved in the project? Can this be done internally, or will I need to hire outside contractors?
- What resources can I use to accomplish this goal? What is my budget?
- What are the best distribution/sales/marketing channels I should consider using?
Simply put, a goal is “measurable” if it has a number attached to it so you can easily track your progress. Monitoring these numbers (the tour operator KPIs we’ll talk about in the following sections) not only helps you stay focused and motivated, but it also allows you to see if you need to make adjustments to your original strategy before it’s too late.
You will never reach your goals if they are not realistic, even if you follow all the other principles of the S.M.A.R.T. framework. A goal is actually achievable only if you’re confident you have enough resources (in terms of manpower, money, and knowledge) to accomplish it in a given time frame.
Even if you work for or own a large company, you still need to remember that the resources at your disposal are limited, so you can’t afford to waste them on projects that don’t contribute to your bottom line in some way. In other words, when defining a new goal, ask yourself if reaching it will effectively have a positive impact on your business.
To really focus your energy on achieving a goal, you need to set a start and end date for your projects. Having a deadline will help motivate you and, more importantly, allow you to set the right priorities for your business.
Using these criteria, here are some examples of possible S.M.A.R.T. goals for a tour or activity company:
- Grow your email subscriber list by 25% in the next two months.
- Increase your social media followers by 40% in the next six months.
- Generate 15% more qualified leads from online advertising in the next three months.
- Increase website conversions by 10% in the next four months.
- Increase average booking value by 5% in the next two months.
- Improve online review scores on TripAdvisor by 0.5 points in the next six months.
- Increase click-through rate (CTR) on email marketing campaigns by 7% in the next three months.
The importance of tracking KPIs for tour operators
As we’ve seen, one of the most important aspects of the S.M.A.R.T. framework is that you must constantly track your results so that you know your progress and can adjust your strategies as needed. The best way to do this is to define a set of Key Performance Indicators (KPIs), which, as the name suggests, are quantifiable metrics of your company’s performance. If you’re wondering what the most meaningful KPIs are for tour operators and activity providers, read on!
KPIs for Tour Operators: Booking Volume
Booking volume refers to the total number of bookings made for tours and activities in a given period. This is a critical metric for tour operators as it directly relates to revenue generation and reflects the overall demand for their services. For instance, a steady increase in bookings suggests that an operator’s marketing efforts, tour offerings and customer service are resonating with its target audience and driving growth.
In addition, monitoring bookings helps travel companies identify seasonal trends and fluctuations, allowing them to adjust their strategies accordingly. When it comes to reservations, having a clear understanding of patterns and fluctuations allows operators to optimize resources, such as staffing and inventory management, so that they can efficiently meet customer demand.
KPIs for Tour Operators: Occupancy Rate
Occupancy – a metric traditionally used in the hotel industry – can be calculated by dividing the number of tickets you’ve sold for your tours and activities by the total amount of seats available. This KPI for tour operators tells you how effectively you’re using your resources and whether you’re maximizing your revenue opportunities.
If you’re not happy with your occupancy rate, consider the following strategies:
- Dynamic pricing: Implement dynamic pricing strategies based on demand, time of day or seasonality to incentivize off-season bookings.
- Offer last-minute deals: Encourage last-minute bookings by offering discounted rates for low-demand tours close to their scheduled start dates. This can help fill the remaining seats and improve overall occupancy.
- Adjust tour frequency: If certain tours have consistently low occupancy rates, consider reducing their frequency or eliminating them altogether. This will allow you to focus on promoting more popular tours with higher occupancy rates.
KPIs for Tour Operators: Average Booking Value
Average Booking Value (ABV) is the average amount of revenue generated per booking and it can be calculated by dividing total revenue by the number of reservations in a given period. ABV provides valuable insight into the effectiveness of your pricing strategies, and if it’s too low, it means you’re probably leaving money on the table.
The best way to increase your average booking value is via up-selling and cross-selling strategies: in other words, offer your customers the opportunity to upgrade their experience or add additional services such as transportation, meals, or equipment rental during the booking process. Alternatively, you can bundle tours or activities at a discounted rate to encourage customers to book multiple experiences at once.
KPIs for Tour Operators: Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) is the total cost of acquiring a new customer and is calculated by dividing the total marketing and sales expenses by the number of new customers acquired in a given time period. As you can imagine, monitoring CAC allows companies to gauge the effectiveness of their marketing and sales efforts. Unlike the tour operator KPIs listes in the previous paragraphs, you want to keep your CAC as low as possible. One cheap and easy strategy to reduce acquisition costs is to encourage satisfied customers to refer friends and family to your tours and activities. You can offer people discounts or free add-ons on their next booking to entice them to join your referral program.
KPIs for Tour Operators: Online Reviews and Ratings
Online reviews and ratings play a crucial role in the decision-making process of potential customers looking for tours and activities. As marketers know, they take advantage of a cognitive bias known as “social proof”: when people are undecided, they tend to copy the actions and beliefs of others around them. Regularly evaluating customer feedback through reviews is also essential because it provides critical insight into the aspects of your business that need improvement, as well as the areas in which you already excel. To build your online reputation, other than encouraging happy guests to share their experiences on TripAdvisor and similar sites, don’t forget to respond to both positive and negative reviews. Thank customers for their feedback, acknowledge any problems they may have experienced, and offer solutions to rectify the situation if necessary.
KPIs for Tour Operators: Website Traffic and Conversion Rate
Website traffic is the number of visitors who come to your website, while the conversion rate is the percentage of those visitors who complete a desired action, such as booking a tour or filling out a form to request more information. Traffic is a good indicator of the performance of your marketing efforts: the higher it is, the more prospects you’re driving to your site. On the other hand, the conversion rate shows if your target audience is effectively responding to your offer and/or if there are problems with your booking process.
For travel and activity providers, the most effective way to increase traffic and conversions is to implement a booking system. With Regiondo – the leading software in this category – visitors to your website can make a reservation with just a few clicks, eliminating any friction in the booking process. In addition, Regiondo’s robust analytics tools make it easy to track the tour operator KPIs mentioned in this article.
KPIs for Tour Operators: Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) is a metric that represents the total net profit a company can expect to earn from a customer over the course of their relationship. It takes into account factors such as average purchase value, purchase frequency and average customer lifespan. CLV is essential for tour operators because it provides a picture of the long-term financial viability of their business and helps guide marketing, pricing and customer service strategies.
As with the other tour operators KPIs, there is no magic formula for increasing CLV: the only thing you can do is focus on giving your clients the best experience possible, so they’re more likely to book additional tours or activities and recommend your services to others. You could also consider implementing a loyalty program by offering rewards, exclusive offers and discounts to returning customers: it’s a great way to encourage repeat business and foster a long-term relationship.
In summary, consistently tracking and analysing KPIs is paramount to the success of any tour operator or activity provider. KPIs provide valuable insight into various aspects of your business, allowing you to make informed decisions and implement effective strategies. By monitoring your progress against your S.M.A.R.T. goals, you can identify areas for improvement, optimize resources and ultimately drive growth and profitability.
If you’re looking for comprehensive reservation software that can help your organization track KPIs and optimize processes, consider scheduling a call with the Regiondo team. Our industry-leading software offers seamless online booking, real-time availability, and powerful reporting tools to help your company grow. Book your demo today and discover how we can help you unlock the full potential of your business.