By Bob Morrell, managing director of Reality Training
Over the last 20 years or so, many brands have been obsessed by price, or been convinced that their customers are.
What this means, is that now you have to increase prices because of genuine economic conditions, you will struggle to justify this to customers, which makes any travel consultants job very difficult.
What should you avoid saying?
The majority of travel professionals are not trained to increase prices. Most have been trained to sell in a value-added way – or to use discounts at the end of an enquiry to secure the booking.
There’s nothing wrong with this, but it simply doesn’t work when the customer says ‘Wow, that’s gone up a lot, hasn’t it?’ And you’re now not able to use the usual tools to sweeten the deal.
Now that price increases are inevitable, you must avoid, at all costs, hearing the following from your employees:
1. ‘Yes, it is more expensive’ (no it isn’t, it’s still great value!)
2. ‘That’s not my fault – it’s the same for everyone!’ (It’s nobody’s fault, it’s a fact of life)
3. Blaming world events/exchange rates/fuel prices etc. (When were there no world events taking place?)
4. ‘Let’s find you something cheaper’ (Do they want something cheaper? They may still want that option! So kill your chance of profitability)
5. ‘Let me throw something in for free’ (And damage profits further.)
If you cannot sell on price anymore then you have no choice but to sell on the value. ‘Yes, the price has increased and what you are getting is still incredible.’
“It is a training issue, it requires confidence, knowledge about the product and profitability”
For many this will be a leap too far. If you’re used to offering a discount then to suddenly limit that power will mean the adoption of new habits.
Travel people with a client base they know well, will find this much easier than those dealing with customers coming into a shop or ringing a call centre. If you have loyal clients, then they will be using you for reasons beyond price and will largely value and trust your advice and recommendations.
For transient customer types, this will increase enquiries to travel brands and lower conversions, as customers search for retro pricing.
What is essential is brand consistency. If you have different bits of a business offering variable price options you risk shooting yourself in the foot.
The industry faces a difficult period whilst the market gets used to new price levels. Plus, you are going to be worried that competitors will take the hit and maintain lower prices to buy market share, but what they’re doing is risking their own futures.
For many travel brands this is about fundamental changes they need to consider.
It’s a conversation with the customers, it is a training issue, it requires confidence, knowledge about the product and the profitability, and rather than have a situation where you say at the moment ‘You get all of this value, and you can have it at a discounted price, or I’ll throw something in.’ you move to a conversation where you say ‘You get all of this and it’s still an amazing price and still fantastic value.’
Profitability in low-margin businesses will be acutely affected by their ability, or inability, to drive this change across an organisation, achieve consistency, and to manage out the previous, ingrained habits.
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