The customer life cycle | TravelResearchOnline

The customer life cycle

There are 5 things to think about in the life cycle of a customer.  Where do they come from? How long will they stay? What’s the value of that customer? How can I get more revenue from them? How can I replace them?

Every business large and small faces these questions constantly. Our everyday existence is intertwined with the constant tug of customer and supplier needs & wants. We seem to be swimming against a current in order to satisfy the demands of others. What if we could reverse the process momentarily and see if, by addressing some of our needs, we could become more productive business people.

Perhaps if we integrate into our business planning processes the routine of addressing the 5 customer questions, we could design a business model which routinely acquires new customers, monitors their expectations, measures their yield and seeks their replacement.

Isn’t this what business is all about? Sure, but in small business, neither the time nor the resources tend to be available to formalize most of these procedures.

So how do you leverage the one obvious advantage you have over large businesses?

You actually know the customers! Personally! And by personifying some of the customers’ questions you can make your small business healthier.

Where do my customers come from?

Start with facts. Where do they live? What do they do? Can they be classified as Church members, Civic Organization members? Active in some leisure activity (golf, dancing, hiking, cooking) Do they belong to a certain age group? What kind of cars do they drive? Do they own homes or rent? Do they have children? How old are their children? While these seem like rather obvious questions, you’d be surprised at how few businesses ever take the time to take a precise snapshot of their customers. This is vital, since you can’t satisfy their travel need if you don’t know who your customers really are.

Your competition to making a travel sale might be a luxury car dealer or a college tuition bill. Customers who are busy satisfying non-travel needs, have no time for you.

How long will a customer stay?

The lifecycle of a customer depends on many factors. Every interaction starts with expectations on both sides. As the cruise lines point out, only 20-30% of cruisers return to the original agents.

This is a major problem—but is also an opportunity for travel agents. CLIA statistics tell us that the average satisfied cruiser will take a cruise every 2.5 years. Said another way, a customer books a cruise with travel agent #1 and then, two and a half years later, when they decide to book another cruise, there’s only 1 chance in 4 of using the original agent.

I have news for you, during those mythical two and one half years these people are still traveling!

There are weddings, funerals, reunions, weekend escapes and trips to Vegas which happen. If you are not willing or able to participate in managing this travel, simply remain silent and wait for the 1 in 4 who might return.

Or find a way to remain engaged with these customers, tell them about all the services you provide. Remind them that travel is an ever changing tableau on which, only you can find the right match for their needs.

What’s the value of a customer?

Not all customers are equal. The bottom shoppers, the constant complainers, the know-it-alls, and the hobbyists, are just some of the types we know to avoid.

The trick is to take a customer over time, and total their value to your business. A Cruise, a Caribbean vacation, a honeymoon trip to Europe all will yield different amounts to your business.

A customer must be seen as the sum total of all their purchases, not just the current trip.

Soon a pattern will develop, and you will begin to see clearly who your best customers are. You might also begin to see a pattern of profitable travel purchases such as certain destinations, tour operators and cruise lines.

This will soon enable you to focus on the customers & suppliers best for you!

How do I get more revenue from my customers?

Agents have a hard time with this one. In spite of seeing what the cruise lines have done to increase on-board spending and how the airlines have generated billions in new fees, travel agents fundamentally believe that it is their obligation to save the customer money.

Hogwash!

It’s their responsibility to provide value in the purchase of travel. Many times the lowest price, or the cheapest option is not what the customer wants, or needs.

A successful agent knows his customer and places them with a brand and price which matches the customer needs.

An agent can and should “merchandise” a customer just like any other business, offering and charging more for value added services. Clever business people will develop a repertoire of value added services which will not only enable them to customize every travel purchase, but to differentiate themselves from local or online competition. Success in selling these services will increase the agent’s revenue per transaction, a key determinate in economic success.

How to replace customers?

Customer churn is inevitable in all businesses. Rather than taking a “wait and see” or guessing approach, why not plan on a customer replacement percentage?  If you start every year planning on replacing 25% of your customer base, you will allocate the time and resources necessary up front. Customer prospecting will become an ingrained activity for you and your employees.

But where to find them? Because you have detailed and personalized your customer base you now have a perfect place to find similar people.  Not only that, but you now know where these people like to go, and are likely to go.

You also know which vendors and destinations they like the best. Oh, and don’t forget that the suppliers and destinations are most willing to help you attract new customers if they are aware of your commitment to them. They might give you added resources in coop marketing.

And now you have a very different outreach message. No longer would you try to be all things to all people, but you will talk only to your target market of high potential/yield customers about your skills, knowledge and services–not how cheaply you can work for them.

Understanding your customers and their lifecycle is one of the most critical steps you can take to help your business grow and prosper. Attracting and keeping high yield customers can satisfy your need to have a travel business that is growing, prosperous and a great place to work.

Bill is a veteran of over 30 years in the travel & tourism business. He has worked on both the supplier and agency sides. Most recently he served for over a decade as the CEO of ASTA. He is currently associated as a Senior Consultant to Partner Concepts, an Annapolis based marketing company serving Fortune 500 companies and many National Tourism Organizations (NTO). He lives in Alexandria, VA., where he also manages WAM Strategic Development. You can find him on Twitter @WldTrvlBill

  One thought on “The customer life cycle

  1. Mary Peters,CTC says:

    I, personally, found much merit in Mr. Maloneys article. Our agency’s follow are of advanced age, we talk about the situation a lot but not sure we are doing enough it. This article reminded me to take some action, need to be more in touch with our clients on a regular basis. The best was “How do I get more revenue from my customer”. Love it. Good article, Bill.

    M.

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