Tourism insights: Inclusive pricing
Customers don’t like surprises and telling them that they must pay extra for the consumption of additional services while your guest, is an unusual approach.
On a recent trip to Cape Town to spend a week exploring the Unexpected Cape Town, as a guest of Cape Town Tourism (CTT), Mary Tebje spent time with a number of suppliers, experiencing their products and services before delivering a presentation to CTT members on how value and exceptional service are key for business growth. Parts of this article were originally published on the Tourism Update website.
As European inbound markets struggle with recession and Euro zone debt crisis, the impact has been keenly felt, with a slowdown in holiday volume and value, and an evolving customer not recognisable from those travelling five years ago.
As there is little prospect of much, if any, growth in 2012, it is a natural reaction for suppliers to look around for new business from new markets. There have been many calls for the national and regional DMOs to invest in developing inbound markets such as Brazil, China and India. This is a high-cost approach and one best suited to the national DMO.
One thing to remember before you board your flight, is that often business growth comes from within existing markets and among existing customers, often at little or no capital cost. Adding value to your existing offer is a great opportunity, where the customer gains some additional advantage without having to pay for it - thus the benefit received far outweighs the outlay.
The UK and Germany produce the lion's share of visitor expenditure in South Africa and are unusual in that they have a high proportion of repeat visits and many are on their fifth or sixth visit to South Africa. They stay for an average of 13 nights compared to the African land arrivals, which is two nights. They are coming back for a number of reasons, chief among them to Visit Friends and Relatives (VFR), that great unsung market segment that can produce wonderful returns for smaller, off-the-beaten track suppliers offering exceptional service, added value and a great experience - theatres, local bars, restaurants, markets, retail, music venues and events and those businesses most likely to benefit.
It’s among these segments, (including the domestic markets), that it would be prudent to look again at services and pricing.
I was struck by the relatively few new products and services on the market and how the proposition seemed to be speaking to customers that no longer exist. The leisure consumer is looking now for authentic specialist experiences, a sense of place and even greater value. Value is not about discounting, nor is it about saying how "cheap" a service is; cheap means "cheap and nasty" and discounting smacks of desperation.
For example, if I am paying premium pricing for my hotel room, I do not expect to have to pay for the contents of the mini-bar, WiFi, airport and local transfers.
If I think I am paying over the odds for a walking or cycling tour of the destination, I don’t expect to have to pay for lunch, a donation to the local charity we are visiting, or my own refreshments and transfers. Consider packaging your service and, the more professional and attractive the packaging, the more the perceived value of the product will be. This is gold dust.
Customers will accept premium pricing, but only if the service and value is also a premium.
Mary Tebje is the UK Rep for Cape Town Tourism, is an ex-pat and has travelled to South Africa more times than she cares to mention. She has more than 20 years' experience working in customer service delivery for both visitor attractions and destinations. She tweets @SeeTheSights and can be contacted at firstname.lastname@example.org