Risk Management: Distribution vs. Marketing Return on Investment

In order to increase your bookings for your tour and activity company, you have two options: improve your distribution network or create a stellar marketing plan. Either way, you should be able to get more bookings, but each option comes with its own set of risks and benefits. It’s important to understand the risk involved with each decision, so that you can make the right choice for your business. Ideally, you will want to select the option with minimal risk and maximum results, as this will help you grow your tour company to the next level.

Distribution: Indirect bookings

Risks: There is little risk associated with increasing your distribution network. You only pay a commission when an agent resells your product. This means that you only pay when you have a conversion, versus paying for something in hopes of earning a new customer. Not to mention, you can set up your Channel Manager once and then have constant access to a steady stream of agents who are looking to sell your tour products to customers across the globe.

Rewards: You can control your return on investment better when you improve your distribution network and allow agents to resell your products. You pay for what you get. In addition, you know the established commission rates so you can plan your investment more accurately. When you pay a commission, you have earned a new customer — you never have to worry that you are wasting money on a strategy that is ineffective. It’s so easy, anyone can increase their distribution network!

Marketing: Direct bookings

Risks: Marketing is a risky undertaking for a tour and activity provider, especially if you have no formal training or education in the field. Marketing, and particularly online marketing, is an ever-changing industry that requires a specialist to properly execute. A proper marketing campaign will be a significant investment for your business, and there’s not always a guarantee that it will bring in new business. In addition, once any marketing campaign is complete, you will have to start up a new one in order to keep customers rolling in. It’s an ongoing process that can be time-consuming, tedious and difficult for someone who is not experienced in marketing.

Rewards: If your marketing campaign is effective, then there’s a potentially high payout that you will enjoy. You will see a significant boost in business and your investment will be worthwhile. The right marketing campaign will draw in customers from different areas and demographics, and will ultimately increase your bookings.

When you implement an online booking system designed for tour and activity providers, you will be able to properly execute your marketing strategy as well as increase your distribution network. Rezdy is the online booking system that you need for your tour business. Not only will it help you automate the booking process, but it also gives you access to a Channel Manager that allows agents to easily resell your products.

To calculate your Return on investment for your distribution and marketing strategy, watch our recent webinar that explains the difference, and download our Excel Return on investment calculator.