Determining an industry average for conversion rates for online reservations for tour operators seems like lesson in Calculus. The wide variations in activities and the extreme differences in operational logistics from one operator to another make it tough to set an industry "standard"online reservation conversion number. Aside from website architecture, SEO rankings, content and design.... We have found that operational logistics and price are 2 key factors to consider as you set and evaluate conversion goals for your online reservations.
Operational logistics
Below is a series of questions to help determine if your activities and tours are high or low on the operational logistic scale:
- Does your tour/activity require staffing at a ratio of less than 10:1? (IE: 10 guests require 1 staff/guide)
- Does your tour/activity require specialized equipment for each participant? (IE: size, type, special training)
- Does you tour/activity require coordination w/ a 3rd party to determine availability? (IE: private access, transportation, lodging)
- Does your tour/activity require prior experience or training?
- Do you have more than 10 different tours/activities to choose from?
- Does your tour/activity require special travel arrangements?
- Does your tour/activity involve weather considerations that impact safety on a very (daily) regular basis?
If you answered Yes to more than one of these questions, then you are likely HIGH on the operational logistic scale. IMPORTANT: Because you are high on the logistics scale does NOT mean that you can't convert online reservations. Being high on the logistic scale simply infers that you probably won't convert at the same rate as an operator who answered NO to the ALL of the above questions.
Tour operators that are LOW on the operational logistic scale need to consider and analyze conversion rates very seriously. If your activities are easy to participate in, require NO experience, are not limited by volume, weather, or equipment your rate of conversion directly impacts revenue. Anything that directly impacts revenue is a key performance indicator(KPI) (check out a previous post regarding KPI's) and needs your attention.
Price
We have found that price does play a roll in conversions. However, not nearly as much as the specificity of the activity. Routinely reservations for thousands of dollars are converted online. However, in general there is a 1:1 correlation between average cost per transaction and the number of online reservations.
Does this mean you should immediately lower your prices? NO!
Generally, providers who operate at a higher price point, typically manage a lower volume of total participants and reservations. While you may convert at a "lower" rate, the reservations that you DO convert are at a higher margin and value. It is this relationship that needs to be researched. When the value of each reservation is high, any online conversion can result in an increase in total revenue.
The takeaway when considering price...
Review your overall reservation process. Make sure that it is clear, simple and informed. When you have the opportunity to streamline the online procedure take it. Price matters, but confidence, clarity and process ultimately are what seal the deal.
So what is a good conversion rate?
We see conversion rates from 20%- 0% and everything in between. The number of online reservations via the Flybook have been increasing at triple digit+ %'s for the last several years. Here are a couple of great articles to help you determine your online conversion goals:
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