Efficiency is what distinguishes a great individual travel professional from a growing, profitable travel business. A business that is an asset with a tangible and growing value. An asset that you own!
Time is moving faster than ever, and I’ve dedicated many recent messages to the ideas of creating simplicity in your business, the power of selecting a winning niche, and the benefits of using Agent Profiler (and our writing workshops to learn our system for making it perform) to attract more clients interested in your specialty. All of these are grounded in the idea that time is money and creating efficiency in your business is what truly paves the way to long-term profitability and growth.
Don’t misunderstand. You need to attract new prospective clients, convert prospects into paying clients, provide expertise, and above all, deliver a great client experience, but you need to do all of these things efficiently. Efficiency is what distinguishes a great individual travel professional from a growing, profitable travel business. A business that is an asset with a tangible and growing value. An asset that you own!
Improving your efficiency simply means that you can generate the same outcome (profit + happy clients) with a smaller investment of time (more happiness + less stress).
Creating and refining your Business Systems helps you improve your agency’s efficiency, but how do you know how efficient your business is? How do you measure efficiency and know if your business is moving in the right direction? How do you know how high you can scale your volume with your current Business Systems?
Quick Review: Your Business Systems include:
- Knowledge System: How you build and maintain your product and destination expertise
- Operations System: How you execute your travel advisement services (the nuts and bolts!)
- Marketing System: How you attract prospective clients
- Sales System: How you convert prospects into paying clients
- Service System: How you delight your clients and generate referrals
There is one simple metric that can tell you just how efficient your travel business is. Even better, once you identify all of the activities that go into this metric, you’re armed with the knowledge to improve it over time.
CTA: The #1 Metric In Travel: How to Measure the Efficiency of Your Travel Agency
The Number One Metric in Travel
There are several key measures that you can use to monitor the health of your travel business, but the number one metric in travel is Sales Hours per Transaction. Let’s explore what that metric is measuring, why it’s so important, and how you improve it over time.
What Sales Hours per Transaction measures
Your time is divided into two major buckets:
- Sales Activities: Client qualification and consultation, Product/destination research, Proposal creation, Selling, Booking, Supplier transaction communications (emails, phone calls, hold time), and Client communications (pre-sale and post-sale)
- Business Activities: Business administration time, Marketing activities (content creation, social activity, campaign creation, and management), and Educational activities (courses, conferences, events)
Sales Hours per Transaction aims to measure how efficient your Sales Activities are.
Calculating Sales Hours per Transaction is fairly easy. For any given period of time (a week or a month, for example), simply add up all of the time your business spends on Sales Activities and divide it by the number of transactions you complete during that same period of time.
Note: You can choose to include Business activities, but that is a separate measure: Average Total Hours per Transaction (valuable to know, but not the #1 metric).
Example: During the month of July, Sally spent 120 hours on Sales Activities and closed 20 transactions.
Sales Hours per Transaction = 120 hours ÷ 20 transactions = 6 hours per transaction
Why are your Sales Hours per Transaction so important?
Your travel business is only limited by one resource: time. You can make, save, or borrow more money. You can gain more expertise. You cannot make more time, so you need to be as efficient with the time you have as possible. If you have employees, this same law of nature applies to them too.
Your Business Activities are individual investments of time that (ideally) pay back in multiples. For example, you spend 1 hour creating a bio article on your Agent Profile. This investment of time will provide an ongoing payback each time it is discovered by a prospect and with each lead that is generated as a result.
Your Sales Activities on the other hand are single investments of time. Each hour you invest in a particular transaction is not applied to other transactions (yes, there are referrals and repeat clients, but you’ll have to invest time for each of those transactions too). However, and here’s the key point, if you can make your processes (your Business Systems) more efficient, the time savings are multiplied across ALL of your transactions. And measuring, monitoring, and improving your Sales Hours per Transaction is the one thing that can help you drive the most efficiency to your business the fastest.
How to improve your Sales Hours per Transaction over time
To improve your efficiency, you want to look for ways to get the same outcome from a smaller investment of your time. When you look at your Sales Activities, you can begin to look for ways to reduce the amount of time you spend without upsetting the outcome (profit + happy clients). Even better, as you begin to think like this you can identify improvements that will not only increase your efficiency but will also improve your outcomes to produce MORE profit and HAPPIER clients.
You do this by creating and refining your Business Systems.
Let’s look at one of the first Sales Activities: Client qualification.
Start by evaluating how you approach client qualifications. Do you have a standard approach? What part of the process is taking the most time? Can you reduce it even by a few minutes? Can you also think of one way to deliver a better outcome (more profit or happier clients)?
As you run through the different Sales Activities and measure where you are spending time you will very clearly see that certain activities cost you the bulk of your time. For many travel agencies, the product/destination research and proposal generation activities are some of the highest costs (take the most time). What if your agency becomes more specialized? Can you begin to increase your efficiency and produce better outcomes with a smaller time investment? Can repetition with familiar products and destinations increase your expertise and allow you to create dynamic, personalized proposals that cater to that niche? Will clients be more likely to buy a trip from you that is packaged in a personalized proposal with rich detail that makes them think you did this just for them? I think you know the answer.
Specialization is not the only way to improve efficiency though. Defining simple, repeatable processes will also help you improve your efficiency. Start simple, find one area that takes up a lot of your time and see if you can think of a way to simplify it and save 5 minutes. I bet you can. Once you create the habit of looking at things through the lens of how much time it costs you, and how to then reduce this cost, you will unlock one of the great superpowers for any successful business owner.
What then can you do with this saved time? You can invest it. You can invest it in your Business Activities to attract more clients, you can invest your additional capacity to work with more clients and drive more profit, or you can even (dare I say) take a break!
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