PhoCusWright's Predictions on the Long Tail of Tourism

Long Tails
For those of you that are not familiar with the long tail of tourism, the Long Tail includes the more diverse, less popular travel and tourism products. The breadth of these companies makes it attractive for all of the niche markets that are growing. This is where the market is predicted to experience the largest growth.

New technology is benefiting the consumer to enable greater access these smaller companies, thus helping the industry as a whole.


PhoCusWright offers five predictions about the future of the Long Tail in travel:

Prediction 1: The Long Tail era will drive a new economy.
Prediction 2: The Long Tail facilitators – content providers, software suppliers and ASPs – are in pivotal positions.
Prediction 3: Technology and standards will evolve.
Prediction 4: The democratization of supply will open up new marketing and packaging opportunities.
Prediction 5: The success of the Long Tail in travel is directly proportional to the quality of search - making metasearch, geographically-oriented search and vertical search key enablers.

The potential for tour operators and software developers to great greater access to the end consumer is growing every day, you can only imagine what types if niches will be catered to. (Space Travel Anyone?)

CTC has UGC (And more initialisms)

It is becoming the most trusted source of information on the internet, and it is coming from a complete stranger. User generated content (UGC) is now the most trusted source of travel information on the internet (90% trust it, TripAdvisor).

This UGC was most often reserved for big travel sites like TripAdvisor.com and Expedia.com, well now Destination Management Organizations (DMO) are getting on board. The Canadian Tourism Commission (CTC) has just recently partnered with Real Travel to allow users to generate their real, travel stories about Canada. How the CTC will leverage this content in their marketing mix is yet to be fully seen, but I am glad to see the big guys jumping on this trend.

CRM the 'Must Have' for all Tourism Companies

Way back in 2002 the Canadian Government released some findings on how the Retail Travel and Service Industry (RTSI) was undergoing drastic changes. They were picking up on the fact that, yes, customers are price sensitive, but retaining customers is a much more effective way to grow your revenue stream. The Canadian Government noted that the tour and travel industry is composed of some early stage adapters they still mention that one of the most critical challenges facing the RTSI is the adoption of the new e-commerce economy.

Some interesting findings that can be taken from the report are:

• It is six times more costly to service a customer through a call center than via the Internet, a tool that the RTSI is adopting rapidly.
• It is up to 10 times more costly to generate revenue from a new customer than from an existing customer.
• A 5% increase in retention rate can increase company profits by 60-100%.
• Referred customers generally stay longer, use more products and become profitable customers faster, a consumer pattern familiar to most stakeholders of the RTSI.

It is becoming very clear that to excel in this modern e-commerce economy, one must set up a great CRM program, focus on relationship building and hold on to those customers for the long haul. The report states that an effective CRM plan "...translates into faster service, higher customer satisfaction, customer retention, customer acquisition, repeat purchases, lower cost and profitability."

Fred Reichheld spoke to the advantages of the "The Loyalty Effect":

• Customer Retention: CRM enables a company to retain loyal and profitable customers and channel members. According to the International Data Corporation, it costs online merchants from $0.90 to $2.67 to get a visitor to their website for the first time. These companies must find a way to achieve repeat business in order to justify their initial acquisition expenditures. CRM through its extensive data warehousing solutions could help companies attract and retain customers.
• Customer Acquisition: Based on known or learned client characteristics, CRM may assist companies in acquiring the right customer through effective targeting and segmentation.
• Lower Cost: The automation process minimizes paper work and manual labour.
• Customer Loyalty and Satisfaction: One of the prominent features of CRM is its ability to create the opportunity of mass customization. Increasingly, today's traveler wants customized products. When the service is personalized and tailored to meet the preference and choice of the customer, client satisfaction can be expected to increase. Customer satisfaction, over time, builds allegiance.
• Profitability: All of the factors listed above translate into profitability. Annual customer profits increase over time as the client - agency relationship expands. CRM can offer additional items to the companies that provide new profitability curves.

It just makes sense to take care of those that you are already servicing, and advocate for your product is worth 10 times the amount spent on attracting your initial customer. There are many practical (and inexpensive) ways to ensure you have an effective CRM plan, here are a few small tips that come to mind:

· Invite dialouge: Have a blog, a forum or a public rant wiki on your website, people need to feel that you are listening, and do listen!! Take what is said seriously, and respond to every posting.

· Keep them up to date: Have a newsletter that is more then a sales message, help and educate them with articles and personal experiences, this gives your business a warmer relationship with your clients. Update your website!! Keep your clients interested in what you are doing by staying fresh and continuously updating.

· Personalize all information: It is so easy to have an auto-filler that will help you customize all of your contact messages. It ads a personal touch, very worthwhile.

· Check up on your stars: Routinely, proactivly contact the greatest 20% of your client list, don’t wait for something to go wrong before you say ‘hi’.

Unlock Your Payment Gateway

Payment gateways are the doorway to e-commerce. You must have a payment gateway in order to accept bookings, reservations, and any e-commerce transaction. There have been a number of companies offering their services to facilitate online transactions, here is just a sample from wikipedia:

• Authorize.net
• Chase Paymentech (Orbital Gateway)
• Creditcall
• Cybersource
• iTransact
• LinkPoint (owned by FirstData)
• Network Merchants
• Payment Express
• Paypal
• PPI
  
• PSBill
• PayJunction.com
• Soeasypay
• Shift4
• VaultLine
• Verepay Technologies
• VeriSign Payflow (Owned by PayPal)
• Viaklix (owned by USBank)

With the large number of companies offering online payment gateways one would assume that it is easy to acquire an account that accepts all of the credit cards that your customers utilize. Unfortunately even larger companies with an established financial history will often have to use multiple accounts to accept just Visa and Mastercard for both Canada and the US.

Due to the nature of the travel industry; its dependency on environmental conditions, troubles with airlines, travel plans changing, it is no surprise internet processing companies are hesitant to enroll smaller independent tourism companies.

Things are changing for the better. Companies like PPI are granting accounts with no deposit, not extensive systems analysis, only 3 months of financial history and there are no transaction fees. This is paving the way to accommodate the travel industry, and tap into a new market niche.

Another alternative is using PayPal, this will allow a company to accept online payments without having to apply for an account. The draw back to this is that both the customer and the merchant will need to have a PayPal account, this will add another step in the booking process, and potentially could turn some customers off.

Unique Travel is the Perfect Online Niche

National Geographic Adventure publisher Francis X. Farrell recently had an interview with the Adventure Travel Trade Association and spoke about the emerging trends with adventure travel. The interview really is beneficial for those that are looking for new ways to market and package their unique and adventurous tours. He really is trying to shift the old marketing focus away from demographics and focus on consumers spirituality. This paradigm shift towards sustainable authentic experience is driving the new wave of the tourism industry.

Sites like gapadventures.com and adventures-abroad.com have realised this and are taking full advantage of this new wave.

So what does this mean for the unique and independent tour provider? Two words, GET ONLINE!! There is a thirst for unique and different tours that are not found through traditional travel channels like travel agents. They shy away from large "corporate" sites and are scouring the new for new ideas.

Your site must have an informative and attractive layout in order to establish trust with the clients, and then it must also have booking capabilities. This will ensure the growth of your business.

We have started amazingtours.rezgo.com to showcase great and unique tours that we have found.

Lure, Sample, Buy: The New Destination Marketing Mix

Nova Scotia is leading the way in destination advertising. They recently released this article
that covers their new strategy to attract web friendly tourists. The three tenets that they use in their marketing efforts are lure, sample, buy.

They lure guests with traditional media like news paper, and TV spots. These ads direct them to the NovaScotia.com website. The website has Google Earth tags that relay information on some of the major destinations in the province. These tags coordinate with video vignettes on the web site. This allows potential tourists to get a taste of the culture before they arrive.

Guests of the site will then have the option to find flight information and start the process of buying their next vacation.

This process really reminds me of the Prosumer video that was hosted on the Travel and Marketing 2.0 blog. Travel is all about experience, and the more that consumers can taste the experience before they commit, the more likely they are to buy.