Five important KPI’s for travel agents and what they help you measure.
Closing monitoring key financial key performance indicators KPI is a an important part of managing any business, but given the high number of variables in the travel industry, being able to quickly drill down into profit and loss drivers becomes critical to diagnosing problems and improving the business bottom line.
If a travel business isn’t hitting its profit targets we have to ask the right questions to understand why. Is it a price issue – are you discounting too much too often? Is the price holding up but volume has fallen? Is one destination or package type profitable but others are letting you down? How long does it take you to on-board new travel consultants and see them generate results? Do you have poor efficiency in key areas due to a lack of technology or skills gaps in your team?
The specific metrics needed are different for every business depending on the area of travel you specialise in, but here are some good places to start.
|Operating profit||Indicates the overall financial health and viability of your business|
|% increase in planned sales||% increase in the planned sales in the previous period shows the efficiency of travel consultants.|
|Actual sales step-up ratio||Shows the rate at which planned sales convert to actual sales. This enabling you to address weaknesses in the sales cycles and improve results|
|% increase in travel and entertainment||Indicates whether your cost of doing business is rising and highlights the rate of sales increase required to maintain operating profit.|
|Domestic to overseas booking ratio||Most travel agents need to keep the right balance of domestic and overseas sales to ride out currency fluctuations and better distribute and manage risk.|
We work alongside many clients to establish meaningful KPI’s to help them better manage their business for improved profitability. In most businesses, carefully measuring ‘activity’ metrics soon shows where there may a problem or an untapped opportunity. Activity based cost reports are very useful to clients because when a business owner truly understands all the costs of delivering product or services and how those costs differ across divisions or service types it becomes a powerful tool for managing and improving financial performance.
If this isn’t the way your company thinks about financial reports today it could well be worth making the change. Give our team a call to discuss how KPI’s and activity based reporting could help your business become more profitable.
Original Post: mitchellwilson