Travel agency owners and managers must know their “Repeat Business Rate” or face shortfalls in revenue and profitability, according to Lee Rosen, CTC, president of TRAMS.
Mr Rosen said that research and analysis by TRAMS sees an average Repeat Business Rate (RBR) of close to 32%, which he describes as a dangerously low percentage – leaving nearly 70% of the agency’s clients vulnerable to competitors.
“Frankly, this leaves a lot of room for improvement,” said Mr Rosen. He said the repeat business rate was the percent of clients that booked a trip last year compared to those who will book this year.
In an interview with Travel Trade, Mr Rosen said that poor service or price are not the reasons clients don’t return to an agency. “There are exceptions, but test after test has shown that client levels of satisfaction with services are very high,” he said. “Nor is price is as significant a factor as many assume. Agents are generally price competitive.”
The real problem is marketing: too many agents fail to put in place marketing and technology tools that drive clients back to the agency, Mr Rosen said.
“If the real issue isn’t price or service then managers have to ask what causes such a low industry average – especially one basic to agencies’ success,” he said. He added:
“The fact is too many agents are passive – waiting for the clients to come back to them rather than having a proactive strategy that encourages and drives clients back. The trick is to give the clients a reason to come back – to provide travel options and opportunities that encourage and motivate them.”
Report by David Wilkening
