The average customer retention rate within the Advantage Travel Partnership is 37%, delegates at Advantage’s annual conference were told last week.
Mark Rowe, the consortium’s head of marketing, said: “That means 63% of your customers never use you again. If you can get that retention rate up by just 5%, you’ll increase your profitability by 75%. There aren’t any members our there who keep 50% of their customers so we have really got to think differently about ourselves.”
Revealing the findings of a survey of 605 existing customers, coupled with four focus groups around the country with 15-20 people in each session, Rowe added: “42% of our customers are retired. 79% are from households with no children.
“We have got a lot of older customers. We over-perform on the Ds and Es, who are low income customers, we under-perform on the Cs, who are young professionals, and then we over-perform on the As and Bs.
“There are pockets of real wealth out there that we need to target properly as 80% of our profits come from 20% of our customers, so we need to get the right ones.”
Rowe said the research showed that customers saw agents as a way to take the risk out of the booking process, as somewhere to get a personal approach, somewhere to leverage a better deal and a place to get impartial advice.
However, they also believed agents to be more expensive, not that convenient, as having a more limited choice than that which is available online, and often felt they could do it themselves.
Rowe said: “So where else are our customers booking if they are not coming back to us? 16% are booking with our competitors, 23% are booking with multiples and 50% are booking online. And they are definitely leaving our shops and purchasing extras online, and short breaks etc. They are doing it online because we are not offering the full service the whole time.”
Rowe also revealed another worrying statistic. “While 83% of customers rated us as good or excellent, only 53% thought that they had received good value or saved money by booking with us.”
He stressed the importance of every member standing out, not just from the multiples, but from each other as well, adding that every one should have a USP and add genuine value to the holiday booking process.
Citing the phenomenal rise of the coffee shop as inspiration, Rowe added: “They have become somewhere that people feel really comfortable. They are somewhere between home and the office where you can do some work or just relax.
“They are a nice environment to be in. I’m not saying everyone should open a coffee shop in their store, although that might not be a bad idea, but you have to create a nice environment that people want to be in.”
And he said that of the 16,000 coffee shops in the UK currently, only 5,000 were from the three big brands so there was plenty of room for good independents.
“It’s about changing your shop from a place of transaction to recreation. You all need a very clear proposition, know your potential customers and offer something different,” he said.