So it´s not really business as usual nowadays? You´ve got some cancellations? Media are flooding us with bad economy news at the moment. Even though not much has yet actually happened that affect peoples life in reality, there´s a sense of urgency in the air. Keep smilin´ and be pro-active! There´s a lot you can do to manage the situation.

Even in a recession, there are a number of options to maintain or even increase your market share. Take  a look at your marketing and check the balance between price and perceived quality. Of course, you can do nada. If your customers are loyal and you accept to loose some of the poorer ones, you´ll most probably survive to a smaller market share and lower profitability. Doing nothing but raising the price will maintain your level of profit but probably leave you with a reduced stock of customers. What to do?

Maybe you´re one of those many that, more or less by routine, are passing on unexpected price rises for fuel costs, airport taxes or whatever, to your customers just because it´s allowed in the small print ? No wonder they´re cancelling. Everybody´s on pins and needles and you raise the price…

It´s cheaper to maintain the price and raise the customers perceived value. Your suppliers will surely help if you just initiate the discussion. Local destination management companies has a range of possibilities to balance costs or raise the guests experiences by small means. Ask them. They can often negotiate better rates for lodging, change to cheaper hotels with a similar service level, add an experience or even change the route if communicated properly. In the best of worlds, this might even allow you to cut prices and get a better market share. Of course, it depends on what kind of tours you are operating and how these are described in your programme. Remember, your customers want to go on your tour. Your local DMC and their suppliers want them to come.

In a recession, I´d suggest that you exhaust your low-visibility price moves first: eliminate cash & group discounts. Curtail your low-margain services. Charge for valuable services that until now has been offered as free. Try to absorb one or two cancellations, it will benefit you in the long-term.

A successful price increase can certainly have a strong effect on profits. If your margain is 3% of sales, a minor 1% price increase will get you a 33% profit increase if sales volume is unaffected. So, if you choose to raise the price there must be a sense of fairness surrounding increase to avoid cancellations. Prepare people. Give time to adjust to the new circumstances. Explain in simple and understandable terms what actions you are taking to avoid further price increases, what options they have and why prices are going to change.

Communicating with customers means dialogue, a two-way street. Sending a newsletter is not. A bulletin at your website is even worse. You need interaction that engage people. Ask questions. Invite customers to an exciting and informational event. Inform about your preparations and actions.

How about your re-sellers? You have them for profit- & effectiveness. Likewise, they sell your stuff for the very same reasons. Dump distributors that don´t give high priority to your products. Activate, engage and evaluate the others. Visit them. Arrange a seminar. Initiate a sales contest. An award for “Top seller of the month”. Launch a sales campaign together.

Then of course there´s also an option to reduce the perceived quality. You cut marketing expenses to combat rising costs. Even here there´s a road to success. Next time I´ll let you in on one of the best marketing tools I´ve ever seen. Does it work? You bet.