Surviving slower periods in business takes agility. Many companies look to business strategies that incorporate special offers, discounts, bulk-buy deals and more, this is certainly the case in tourism, the industry having to adapt over low season to ensure business longevity. This kind of business strategy requires careful consideration and planning to ensure that it does as intended – maintaining profitability.
Straightforward discounting comes with challenges. The discounts come straight off the profit margin, so in order to make the same amount of profit, you’ll have to sell more products or services. If your customers are in hibernation, that makes it difficult to maintain a certain level of profitability. Indeed, some SMMEs make the mistake of discounting to the point that they’re subsidising what’s being sold.
Discounts and other short-term promotions can work with additional marketing to increase traffic, but then the marketing costs must also be taken into consideration.
Loyalty programs, on a grander scale (since they require significant buy-in from a large consumer base), can ensure ongoing business during slower business periods. For example, the world’s biggest loyalty program in hospitality is that of Marriott Rewards, with over 100 million members and an additional one million new members every month. Elite members of that program are staying for anything between 25 and 100 bed nights per year, indicating the value of reaching out to loyal customers with premium offers.
While this is a successful, ongoing program, shorter campaigns can come with challenges.
Wynand Smit, Chief Executive of INOVO, a Cape Town-based company that specialises in customer experience within contact centres mentions some of these:
“Sales and marketing campaigns require strategy to be implemented that ensures that customer experience is consistently optimised. Short-term campaigns must take into account that these may be popular, requiring that products or services must be available according to the increase on demand and that adequate customer care services must also be available. If you’re offering a massive discount, can your contact centre and website accommodate the increased traffic? Have you ensured that there will be enough support staff on hand to provide the customer service your loyal customers expect? If you haven’t provided for that, the damage to your reputation could outweigh the short-term profitability of a campaign. Explore beforehand what the demands on your business will be, and make provision for that.”, Smit recommends.
Partnerships and collaborations can help smaller concerns through the leaner months. An example of this is the Love Cape Town City Breaks [ http://www.capetown.travel/city-breaks ] campaign that brings together collections of experiences for visitors in partnership with kulula.com and Flight Centre. This is designed to encourage travel among those who may otherwise have opted to stay at home.
Collaborating could mean anything from getting a wine farm to come and do tastings at your restaurant to adding an experience to a tour. Creating events, festivals or conferences in low season can also be a means of generating business.
Adding value during quieter periods is a great step in the right direction, bearing in mind that your business must at all times be customer-centric, whether your market is international visitors or locals who are your biggest fans – remember their needs, expectations and preferences and you will be able to retain them through the slower weeks and months. Your business model will be more sustainable for you and your employees.
Enver Duminy is CEO of Cape Town Tourism
