When it comes to third-party digital sales of tour and attraction products, it’s still fairly early days.
While hotels and airlines have been selling to consumers through online distributor partners for over a decade now, tour and attraction suppliers have only recently embraced this sales channel.
Whether suppliers seek off-line or online distribution partners–including online travel agents or online travel agencies – they can be a fantastic way for tours and attractions to increase their marketing reach and revenue potential.
When partnering with distributors, however, suppliers also need to proceed from a position of strength, armed with important information to take into their negotiations.
Distributors can make great business partners, but they’re also keen to make the most money off suppliers as possible… or as much as you will let them.
Smart suppliers know how to foster deep, successful relationships with their distributor partners but still command control.
Know your business inside and out
If all a supplier considers upfront are costs, they’re actually taking the first steps in relinquishing control of their business.
Control doesn’t rest in expenses alone; control comes from knowing the bottom line and other intangibles like who owns the customers, who owns the marketing content, who owns the data, and how much access and exposure to the supplier’s back-end business dealings and operations does the supplier retain.
To ensure an even playing field during negotiations and retain total control of their business, suppliers first really need to know it inside and out.
This means prioritizing the customer. Fire up your curiosity – ask a lot of questions and strive hard to understand your customer:
- Who are they?
- What’s the common profile or demographic?
- How did they find you?
- How many looked versus booked?
- What inspired them to book with you?
- Did your marketing efforts bring them in or are these sales incremental to your own efforts?
- What are the products they most popularly bought from you?
- How much did it cost to acquire them and how much did they ultimately spend with you?
- Did your customers book other activities at the same time?
You can gather this information from a number of sources:
- Your web analytics.
- Your reservation or ticketing system.
- Pre- and post-experience communications.
- By literally asking them during their redemption or in-experience process.
- By reading traveler reviews.
Your existing distribution partners should also be collecting and sharing this information with you – it not, ask them for it.
Create an internal process where all of this information is funneled to the appropriate people, for instance, to sales, marketing, customer relations, on-site staff, and whoever is working with your distribution partners.
Everyone in your business who touches the customer needs to contribute to your overall customer understanding.
Use this information in two ways: to roadmap your customer journey and to define your distribution strategy.
Alter the balance of power
Right now,for tours and attractions,the balance of power inopportunely lies 100% with the OTAs.
When you give away so much power, it’s ultimately your business that loses. Suppliers need a wake-up call – they need to take back some power and control.
Suppliers need to control how much of their inventory they want to give away, who they’re giving inadvertent visibility to their business strategy, and if a distributor is bringing true incremental revenue or merely cannibalizing existing business the supplier already has.
Look for distribution partners that can help you reach audiences that wouldn’t otherwise find you and be able to book direct.
You want to work with distributors who are going to be your marketing partners, not your marketing competitors.
Consider, for example, the actions of Amsterdam’s The Van Gogh Museum, which no longer pays commissions to OTAs.
After three years of growing concerns that the ineffective free-sale (un-timed entry), commission-generating vouchers sold by OTAs were not only generating a terrible pre-entry experience for visitors and making direct ticket sales literally impossible, but also that those commission dollars were being used to market their competitors equally.
Furthermore, the museum also realized some of their partners represented too much of their sales and might, down the road, try to use this sales power to squeeze more commission out of the museum.
The solution? Selling timed ticket entry and instead of paying commissions, the museum now pays OTAs co-marketing dollars and works with their distribution partners to create new white-labeled solutions. Now that’s taking back control!
Don’t be afraid to probe deeper and do your due diligence with a potential distribution partner.
There is no one-size-fits-all formula. Their platform might look attractive to sell through, but does it make good business sense for you?
You’re the one with the product – the more relevant, unique and popular it is, the more you should demand. A platform without product to sell sells nothing at all.
Ask them upfront questions like:
- What’s your customer mix (domestic vs. international)?
- Can you provide data to support that you can reach my audience?
- How do I manage my product information and rates for/with you?
- What is the consumer journey like booking through your platform?
- How do you market yourselves?
- How will you market my business?
- Will you keyword bid against my brand name in search engines?
- How are you going to differentiate my product from my competitors on your platform?
- Do you offer additional services to help me sell my product and do those come with an upcharge fee?
- What kind of customer service/account representation will I have on your platform?
- What kind of analytics and reporting do you provide to me?
- What are your commission rates, and do you charge the same rate to every supplier, and if not, why not?
Once you feel comfortable that a distributor is a good fit for you and your business, you’ll want to know what tools they have or that you need to adopt to ensure that your strategy is being deployed technically.
Do they work with your booking engine? Do they connect with all the solutions you need them to in order to run your business or will you need to incur additional expenses just to make all of that happen?
Run a cost-benefit analysis to ensure that the distribution partnership works well for you financially as well as strategically.
Remember that your strategy should come first even before the technology because you want your customers served consistently on their journey, regardless of what kind of technology, connectivity, or human services your customer encounters.
Deepening the relationship
No distribution relationship should end when the ink is dry on the paperwork. Don’t ever think of this relationship as a one-and-done situation.
In fact, it’s really only just the beginning. There should be a dedicated person in your organization – whether it’s the owner/operator or the director of national sales – who constantly checks in on each distributor.
The value the distributor brings is the incremental revenue they you over time, and you need to ensure they do so. Reach out monthly or quarterly for business reviews with your distribution account manager.
Find out how your product is performing in the market. Ask about what’s happening in your competitive landscape and the impact on your business, positive or negative.
Review the reporting together – discuss what the data shows:
- Is your pricing competitive?
- How much market share in your space are you controlling?
- Where the booking wasn’t made, what could be done to increase booking rates, either product development or marketing-wise?
- Do they have relevant new product ideas for you?
- Should you be developing seasonal promotions, and if so, what ideas can they bring to you?
If your distributor can’t bring this information to you, consider it a red flag.
Think about the real estate business – would you want to work with an agent who knows nothing about your market, the comps in your area, or has no ideas on how to position your property against the others being listed simultaneously, or doesn’t determine your unique value proposition that would allow you to demand higher pricing comparatively?
Is that real estate agent worthy of your commission?
Apply this logic to your tours and attractions business: a great partnership is one for which both parties have to work in order to ensure long-term mutual success.
As an industry, however, tourist attractions and activities are still striving for parity.
* Check out this interview with Meador recorded at the Arival Europe event in Berlin in March 2019.
Redeam on its big year and what to do next