Hopefully you have a business and marketing plan in place. In writing. And in use! Hopefully you are constantly revising it to maximize your agency’s potential and profit. We have mentioned the very real need to have a limited scope of service (you need to create a niche) and we have discussed the importance of partnering with select suppliers in a symbiotic relationship. If you are still around after the horrible (no need to sugarcoat it) downturn in the economy over the past 5 years, that is a testament to your hard work and good decisions. But don’t rest on your laurels.
Do you know what makes up your business? Have you ever really taken a deep look and analyzed what specifically makes money for you? What specifically breaks even for you? What specifically loses money for you? Do you have the right mix? Hopefully you have some sort of back office accounting program to track this information—it is equally as important as the front office CRM.
Here are a few exercises I perform do to dig a little deeper into my business and to help steer my ship on a steady course:
Figure out what I sell the most of and consider if I can drop my focus any particular travel type. I use air, hotel/car, cruise, tour, FIT and service fees for my travel types. I don’t look to eliminate necessarily; but seeing what you sell the most of is a good indication of what you are good at selling and, to a large extent, what you like to sell. Perhaps it makes sense for you to eliminate a travel type—maybe not.
Scour my vendors. I identify the vendors with comparable products and then compare the yields on each of them. I decide if I need to shift my focus to the vendors that make sense for my business. Does it make sense to sell an equal product for an equal price and earn 20% less? Not in my book. I identify my “a-list” preferred vendors and will go forward with them together as partners to develop marketing strategies that work for everyone.
I look at my business mix and identify trends. Am I selling more individual packages and cruises, FITs, or groups. Again, I look to see if I need to shift my focus. Two years ago, a group of my single parents wanted to do two trips with me—one was a short 4-night cruise and the other was a long weekend at a dude ranch. The cruise was pricing out at about $750 per cabin and the dude ranch was pricing out about $600 per room. After I analyzed the two groups, I found out that I made 60% more commission on the dude ranch. If anyone has ever dealt with a cruise line’s group department you know the time and hassles involved. So, I shifted my focus to the dude ranch where I could maintain my margin. I looked at longer cruises where I had the ability to increase my return.
I find that the secret is to not make huge sweeping changes, but to break down your business into smaller pieces so you can really see what lies underneath the big picture. It’s very similar to driving a car—sure on occasion you need to make a broad sweeping turn, but it is mostly little minor adjustments in direction and speed that bring you to your ultimate destination. When you have the larger picture and a clear focus on the pieces that make up the puzzle, you have a plan. Pull your business apart. Make some time to do it a little bit each week. I bet you will be surprised, and I also bet the conclusions you reach will surprise you set you on the path to being more profitable.