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. I have always advocated the very real need to have a limited scope of service (you need to create a niche) and I feel it is of the ultimate importance to partner with select suppliers in a symbiotic relationship. You may think you are doing well. The economy seems robust and stable. But don’t rest on your laurels. Never.
Pick your business apart
Do you know what makes up your business? Have you ever really taken a deep look and analyzed what makes money for you? What breaks even for you? What 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 just as important as the front office CRM.
Here are three exercises I do to dig a little deeper into my business, pick it apart and to help steer my ship on a steady course:
- Figure out what I sell the most. And then I consider if I can drop my focus on any particular travel type. I use air, hotel/car, cruise, tour, FIT and service fees for my 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 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 similar 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 the same product for the same price and earn 20% less? Not in my book. I identify my “a-list” preferred vendors and will go forward with them together to develop marketing strategies that work for everyone. I have a “b-list” too, and go to them when needed.
- Identify trends. 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
Real life example. A group of my single parents wanted to do two separate 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 all was said and done; and the families had traveled and had a terrific time on both trips, I analyzed them. I found out that I made 60% more commission on the dude ranch. And that was just on the financial end. When I looked at my time, it got worse. If anyone has ever dealt with a cruise line’s group department you know what I’m talking about. So, I shifted my focus to the dude ranch type groups where I could maintain my margin; and then re-focused any cruises that I sold to the longer ones which would increase my commission. Make sense?
I find that the secret is to not make huge sweeping changes, but to break down your business into smaller pieces to chew on. When you have the larger picture and a clear focus on the pieces that make up that 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 set you on the path to being more profitable.