Savvy customer acquisition needs a cost effective approach
Ahead of this week’s webinar, we hear from Civitatis which has found a niche delivering tours and activities to the Spanish speaking market
EyeforTravel’s State of the Industry Survey, which attracted over 1,600 responses from across our community, finds that the biggest challenge and priority for industry executives today is customer acquisition.
Luckily for Civitatis, an online platform for booking activities, day trips and guided tours in the most visited destinations in the Spanish speaking market, its customer base has continued to grow apace, despite launching during just before the economic crash of 2008. In 2011, the company had just 29,619 customers, but by 2018 that number had risen to 1.85 million with annual sales of €53 million; the group is looking to grow this to €88 million in 2019.
Chief operating officer Enrique Espinel, who will be joining this week’s webinar, along with Finnair, Bidroom and Pierre & Vacances Centre Parks Group, says that given the rising costs of acquisition, the key focus today must be cost optimisation. A key part of this is working with partners, and at a recent count the group had over 2,000 suppliers of tours and activities in 600 destinations in 80 countries. Espinel will be sharing more insights during Wednesday’s webinar and in an upcoming whitepaper but, in the meantime, here are some thoughts on third-party agreements, on managing budgets and improving attribution.
· Apply best practice to third-party partnerships
The group has been working with affiliates for years, and over the past year has been working closely with some 5,000 travel agents. Although Espinel admits both these channels have cut margin by about a half, this is something they were prepared for from the outset and, besides, “it only carries the same cost as search engine marketing (SEM)”.
Our current priority is to increase the number of collaborators, rather than strictly focus on optimisation
At the same time, agencies and the affiliate department are in constant contact with collaborators to generate more sales. “We apply certain best practices and so we’re at the forefront of their minds when making reservations. Having said that, as we’ve been working with other sales channels for a relatively short period of time, our current priority is to increase the number of collaborators, rather than strictly focus on optimisation.”
Civitatis believes that intermediaries are the cheapest way to maintain constant acquisition costs. According to Espinal, “we only work on the basis of successful sales with a pre-established commission”.
· Focus on cost effectiveness
The firmdoesn’t have a specific budget for client acquisition. Instead, it always considers the cost-effectiveness of its marketing activities. “That’s to say that we never have an acquisition cost that leaves us with a deficit, and we only do marketing designed to generate sales, always making it as cost-effective as possible. Our other major expenses are salaries and offline publicity, principally TV advertising,” he says.
With Instagram there are very few businesses who have enough followers to make it worth their while
The most important thing is to keep growing the customer base as fast as possible. Therefore acquisition and loyalty are both crucial to the customer journey, and equally important in the drive to be budget conscious and cost-effective.
So, when it comes to social media channels like Instagram, Espinel team is wary. He explains: “From my point of view, every time a new channel pops up, new staff members are needed to work with them effectively, increasing fixed business costs. With Instagram for example, there are very few businesses who have enough followers to make it worth their while.
· Use a range of strategies to lower costs and improve attribution
Among these are: better SEO positioning, better conversion rates, a greater range of products and destinations, the ability to pay in various local currencies, bidding for long-tail keywords instead of generic ones and, of course, focusing on client satisfaction. The aim is to build make all clients informal brand ambassadors.
When it comes to attribution, the first step is to track all the interactions between Civitatis and the group’s clients. “We must know where they come from, how they have arrived, and what points of contact we’ve had with them. With all this information, you can properly define a model of each client interaction, and assign value to it,” Espinel explains.
Join us for Wednesday’s webinar to hear more from Civitatis, as well as Finnair, Bidroom and Pierre & Vacances Centre Parks Group