How to Profit from a Discount Strategy for Tours and Activities

Amidst the corona situation, tour operators are tempted to lower their prices in order to stimulate bookings. But be careful, if not done right, giving discounts on your tours can be a bad idea.

On the one hand, discounts are good for reaching new customers, keeping cash flow during the offseason, and also for standing out amongst your competitors.

On the other hand, it can be harmful to your brand and profit when not well planned.

Furthermore, a bad discount strategy for tours and activities can lower the perceived value of your products and put the focus on the price rather than the quality of the experience offered.

In a previous blog we have discussed effective coupon strategies for tour operators. Now it’s time for you to implement them without harming your profit margins.

What you can do to ensure the profitability of your discount strategy for tours and activities

First of all, it’s very important to set the correct discount pricing for your tours and activities. Withal, you can use it to boost profits and expand your customer base. Let’s figure out how you can do that.

Keep your marketing costs low

When promoting a discount on a tour, keep an eye on costs to not overspend in your campaign. With reduced margins, that can simply cut off your profit.

Use email lists and your social media to announce the promotion. This way you will be reaching warmer leads who have more chance to book with you.

If you want to reach new audiences with your promotion, make sure to follow up on the expenses to not have surprises when the discount is over.

Segment your offers

Better using discount on tours to attract customers that would not normally book your product rather than groups that would do that regardless of the payment conditions.

That is a good way to preserve your margins at the same time expanding your customer base.

For that purpose, you can use tools such as Facebook Ads, which gives you total control over the segmentation of your advertisement.

Offer upsells

Upselling is a great way to increase your booking ticket and get back part of the profit you gave up for the discount.

You can do that by offering add-ons during the booking checkout, such as a special condition for a tour or customized souvenirs related to the experience.

Convert new customers to repeat customers

Depending on the nature of your products, this tip can be hard to implement. But the idea is to do everything you can to convert new customers to repeat customers.

This will increase the lifetime value of each customer, which compensates the higher customer acquisition cost for giving a discount.

Having repeated customers would be easier if you are targeting locals. For that reason invest in experiences that are attractive for this audience too.

Set a target sales volume

The ultimate goal of giving discounts on your tours is to increase your booking numbers. But that only makes sense if the total sales volume boosts your profit.

Setting a targeted sales volume helps you estimate your break-even revenue to minimize losses, and more importantly, to make a profit.

Conclusion

Giving discounts on tours can be great to increase the cash flow during periods of crisis. But tour operators should plan it very well in order to not hurt their profit margins.

If you have come up with the perfect discount pricing for your tours, Orioly can help you with the implementation.

Our online booking software has a coupon feature that makes it easy for adding discounts to your products. Learn more about this and other features in Orioly for Tour Operators.

ORIOLY
on February 9, 2021

by Felipe Fonseca