How effective is your marketing?

reprinted (in part) with permission from COMMUNIQUE - Canada's Tourism Monthly, Jan/Feb 2000, Vol. 4 Issue 1 co-authored by Bonnie Baird, research manager, Tourism Saskatchewan and Donna Hawes, owner, Three Lakes Camp, Jan Lake, Saskatchewan

Fewer than 10 percent of tourism businesses actively track the effectiveness of their marketing expenditures and activities. Even large hotels often don't know which specific ads or promotions brought in their customers. As a result, decisions are made on gut instinct, or operator's personal preferences. While these methods for making marketing decisions may provide some overall feeling for what is working, they do not help an operator to choose between specific ads or marketplaces.

It is also important to note that just because an operator likes a magazine or radio station, his or her customers may not. And cheapest is not always the best bargain. So how can a tourism operator go about determining which ads and marketplaces are working?

Set up a simple chart to begin tracking paying customers and inquiries - put it on paper or computer and keep it beside your phone and cash register.

Step 1:

Code all advertising, marketplace coupons and brochures with a unique number or letter. For example, your newspaper ad could be 20NP, your direct mail to previous customers 20DM and your radio ad 20RA.

Step 2:

Ensure that you and all your staff who work the phones, front desk, e-mail or cash register get into the habit of ALWAYS asking "How did you get our number/hear about us?" If the customer answers "I saw an ad," ask "Where did you see the ad?" or ask for the code number or letter in the ad. If you have a web site ask for this information on an e-mail reply form or during the process of replying to e-mails. Be sure to keep codes for "been here before" and "friends/relative told me about you."

Step 3:

Enter name, address, phone number and e-mail address for each caller/booking.

Step 4:

Look at the results on a regular basis. Add up the inquiries and sales for each marketing activity. Look at which ones are generating results, by province, state or city.

Next, calculate the cost for reaching your potential customers and the return-on-investment from sales for each activity.


Calculating cost per inquiry/booking (CPI) and return on investment (ROI).

CPI is as simple as dividing the total cost and the ad or marketplace by the number of inquiries or bookings you made. Costs for marketplaces should include show registration, travel and accommodation and brochures. For example, if the total cost for the show was $1500 and you received 15 solid inquiries and three bookings, the cost per inquiry is $1500/15=$100 per inquiry; and the cost per booking is $1500/3=$500 per booking. You can then compare these costs to other marketing activities to determine your best buys.

ROI is calculated by dividing the actual dollars that marketing-related customers spend at your business by the total cost of marketing. Using the above example, if each of those three bookings spend $250 per night and two parties stayed four nights and one party stayed three, then:

ROI = ($250 x 4) + ($250 x 4) + (($250 x 3)/$1500)
= $1000 + $1000 + ($750/$1500)
=$1.83 for every $1 you spent on the marketplace.

Remember that these calculations are for the year you undertook the marketing activity. You should carry your tracking over into the following year to capture a more complete picture of return on your marketing.

Worth the Effort?

This seems like a lot of work. Is it worth it? The owner/operators of Three Lakes Camp, a fishing/resort operation in Saskatchewan, think so. Following is a brief overview of why and how they track - and their 1998 results can be found right.

"We bought Three Lakes Camp on Jan Lake, Sask. five years ago," said Donna Hawes. "We took over an existing clientele and were able to keep many of them, but wanted to add to this client base. We turned to Tourism Saskatchewan for advice in marketing."

"I have included here a summary spreadsheet for the year 1998 showing the marketing initiative, bookings generated, total cost of the initiative, bookings generated, total cost of the initiative and the total income generated by that initiative. Some of the income actually was earned in 1999, as the clients could not book in 1998."

"The data can be used to compare results for many years. It has enabled us to spend our advertising money more wisely and helped define our target market." 

Editor's Note: The marketing data which was originally printed with this article can be viewed here.

This article was taken from pages 16 & 17 of NOTO's "The Outfitter" publication, March/April 2000 Issue


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