What are the best ways that successful companies can reach a higher level of success? How do we continue our success, and should we focus on global expansion?
Founder, Swift Travel Deals
Your questions encompass three important elements. First, you can reach a higher level of success only if your additional business is as profitable as your current business. Do not dilute your management focus by pursuing lines of business where the marketplace does not reward you. Do not be afraid to expand your service offerings; but do not hesitate to quickly discontinue underperforming activities.
Second, look to expand what you are doing well — and profiting from — rather than taking on clients with very different purchasing criteria.
Finally, look to your client list. Who are your best clients? Where do they live, where do they go, why do they travel, and why do they use your service? Yes, you want to grow your business, but you must grow your business profitably.
As a travel agent, you are the classic service business — you do not own the hotels or airlines you book travel with — most clients use you for very solid reasons and you need to understand this before you map out your business expansion.
The 80/20 rule is a good place to start. Who are the clients that generate 80 percent of your sales revenue? Who are the clients that generate 80 percent of your total transactions? How profitable are these client groups to you?
You need to look at your book of business to identify the profile of the client who, if you could double the number of clients who looked like them, your profitability would triple. You want to add clients who value your service and are profitable to your service.
Now dig deeper. Follow up with former clients who used your services once or twice and are no longer using them. You were successful in attracting them, you made an initial sale, but something happened — either in the service delivery or travel experience — or there has been a significant change in their service demands. You need to know this to viably grow your business.
About the author
Jonathan Seltzer is a professor of marketing at the University of St. Thomas Opus College of Business.