Are you measuring the right metrics?
Tour operators selling online will have numbers coming out of their ears. There’s data from Google Analytics, social platforms, OTAs and reservation systems to pore over. With so many different numbers to measure it’s important to know what metrics are important and should be measured, and which ones you only need to keep half an eye on.
This is important because a lot of people only pay attention to numbers that have no real business importance. Platforms will give you numbers, such as likes, followers and traffic, that are nice when they’re going up but don’t tell you whether you are spending your money correctly. These are called vanity, or engagement, metrics.
Actionable metrics are the numbers that should be focused on. These relate to the amount of money you are making online and include figures such as occupancy rates, product margins, conversion rates, review scores, and the number of bookings that come through an OTA. Metrics like these help you decide where to place your resources to increase sales.
What metrics should operators focus on?
The numbers that you want to focus on to increase sales are those most related to your business. Occupancy rates and profit margins are numbers that should be closely examined, as are your yield, booking abandonment rates and cost per acquisition.
Direct Bookings vs OTAs
It is likely that different channels will deliver different profit margins. For example, a direct booking through your site will have a higher margin than through an OTA because of the commission it takes. Some operators are thrilled to rely on bookings with OTAs and consider the commission to be a marketing expense. Others use them as a way to keep their occupancy rates high. In this case, a limited number of seats will be released to an OTA, while the majority of bookings are taken through direct channels.
Occupancy rates
Keeping your occupancy rate high is a good way to ensure your yield is high. The way to calculate this is to work out the amount of money you earn and divide that by the maximum amount you would make if every seat is taken. You can maximise your yield throughout the seasons by manipulating your profit margins. By doing so — depending on your market to a certain extent — you can minimise the impact of seasonality.
Conversion metrics on your travel website
Google Analytics will show you the number of conversions your website makes and your conversion rates. These numbers are significant because it is likely that this is your most profitable sales channel. Whether you are happy or unhappy with the number of conversions your site makes, look at your conversion rate and ask yourself if it could be better.
Conversion rates in travel are generally low. A LittleData survey in September 2022 found this was just 0.2% on average. Any site with a conversion rate of more than 2% was in the top fifth of the businesses surveyed. Therefore, if this rate is below 0.2%, you should be looking at how you can do better. Every site should be aiming at that 2% mark. Travel website conversion rates tend to top out at around 3.4% to 4%, depending on the source of information. If that’s you, keep at it.
To increase your conversion rates look at how the traffic flows through your website and your abandoned cart rate. If you have a lot of traffic landing on your homepage or blogs but these potential customers are not making it to your sales pages, this needs to be rectified.
Booking abandonment rate in travel
According to SaleCycle, the booking abandonment rate in travel is a whopping 85% on desktop and 91% on mobile. That means, at best, one in ten people are getting as far as deciding to buy one of your products before bailing out for some reason. The Baymard Institute says that the biggest reason for this across every industry selling on the Internet is that the extra costs are too high. That means all the shipping costs, taxes and fees that are added on once the customer reaches the checkout.
One way around this would be to include these costs in your prices so that there is no surprise for the customer at the checkout. You could also waive fees for bookings over a certain value. Depending on how you collect customer information on your site, or if you have a high number of repeat customers, you could also set up an abandoned cart email. This would remind people that they had left your site without making a booking.
When it comes to online advertising, the most important number to keep an eye on is the cost per acquisition, or CPA. This tells you how much you have spent to acquire one customer. The conversion rate on an ad could be amazing, but if the CPA is more than the profit margin of the product you are losing money. You should always be aiming to keep the CPA as low as possible.
Do keep an eye on the vanity metrics
Vanity metrics do have a purpose, they’re just not directly related to your business making money. You can use them to judge whether branding and advertising campaigns are working, and use them to optimise your site. They will often be the first signals you receive that your site and social media are working, or not.
For example, posts on Instagram that garner a lot of likes, comments and followers — and therefore reach — are building your brand. Use the techniques that led to a successful post over and over again. It isn’t easy to track how these directly affect sales. Hopefully, as an Instagram page grows, you will see traffic and sales grow through other channels, but it’s not a given.
The more click-throughs from different channels and traffic you have on your site, the better you can see how it’s working and what people are interested in. If lots of people are clicking on an article, it’s good. Measure that traffic and where it goes on your site. If people aren’t reaching your sales pages, ask yourself: “Why not?” What work needs to be carried out to make those people buy your products?
When it comes to social media advertising and search engine marketing, click-throughs and traffic will be the very first metrics that show if an ad is working. These are important signals at the very start of a campaign. People will take a bit of time to consider their purchase, and this could range from days to weeks. If your click-through rate and traffic are low at the beginning of a campaign, it is unlikely to improve and the ad should be turned off.