OUTSOURCING HOSPITALITY MARKETING & SALES, WHO BENEFITS?
Outsourcing hospitality marketing & sales is a well worn path and one which must be planned with the end in mind. At the outset it must be said that there is certainly a place for a collection of eco-tourism products syndicating costs through the appointment of a single representative, the benefits appear obvious. Their market reach becomes much greater than what could be achieved within the limitations of a small product’s meagre budget in isolation.
It is imperative that one enters this relationship with eyes wide open, and one must also recognise that you are entering a relationship with the other product owners represented by the same individual or company, but more about that a little later.
Let us set the backdrop to the process of marketing, sales, and in some cases these outsourced services extend to reservations.
What is marketing, sales and reservations in the context of the eco-tourism sector?
The assumption is that reservations is the result of marketing and sales, and that could be accurate. The line between marketing and sales however is not so easily defined. In fact, almost any sales related activity which does not result in a direct sale could be a marketing cost. So, even if no sale is achieved, we are still able to account for the cost somewhere in the non-descript budget line item called ‘marketing’. And no-one can reasonably challenge the value of this line item, since the ‘noise’ around the importance marketing is generally accepted.
In the case of Internal marketing and sales functions, one could attribute some value to the excess sales costs in the form of building the company brand, and at very least, adding a contact to our database.
In mainstream hospitality organisations, the job of the reservations manager extends beyond simply order taking, and it is often their responsibility to manage yield and occupancy levels. Lodges and the like generally receive reservation requests with the question of rate, inclusions and exclusions long before agreed upon. This was for good reason during a time when rates needed to be published in hard copy, and this may be changing in ever increasing world of dynamic rates.
And then we move on to a term frequently heard when it is necessary to assign a job of work which is not intended to deliver a measurable result.
The buzzword which dominated progressive thought flows in the past decade, raises more questions than answers. For example, at what cost was one to embark on this somewhat nebulous concept, and what were the indirect costs associated with this strategy. And once the costs have been incurred, who is left with anything of value?
The direct costs are always easier to budget for, and they include trade shows, presentations, entertainment, and all the ancillary expenses that tag along.
The question is; are these in fact not just sales costs, since the product owner is not investing in the building of his or her brand, but rather paying for the outsourced service provider to build and maintain their own market relationships and profile.
Let’s look at the indirect costs, which are far more ominous, associated with these relationships, the result of this interpersonal web that we create which binds us to our suppliers, often to the point where we no longer see the wood for the trees. The point at which we continue along this slippery slope of incurring yet further fees in the form of increased commission, brochure contributions, sales support, customer value adds, complimentary stays, and then override commission upon certain targets being reached. Or, as some would term it, business retention bonuses.
In short, we pay upfront for the business, and if and when it should materialize, we are required to pay again to retain the business. A subtle shift in what was intended to be a symbiotic relationship to one of predator – prey perhaps. A little melodramatic some would say, but difficult to argue against.
An analogy could be the relationship between patient, doctor, and medical aid, where neither the patient nor doctor are concerned with who is paying, provided they each get what they want.
The product owner is left picking up the tab, after the representative and suppliers have each siphoned off their cut in the form of fees and commission etc. It could be said that this is not marketing at all, not even vaguely so, but rather sales. And a simple sales vs cost of sales book entry.
The representative faces their own set of challenges and ask themselves; can we take on another product?
The point at which critical mass is exceeded?
For the most part, the representative is unlikely to take on products which compete directly with one another, for example the same price point in the same area. But when they do it is likely to be explained as the ‘benefits exceeded the risks’. This is not to say there are no risks, and representation fees are never dropped.
The trick here is to take on another product in such a way that you do so as quietly as possible, at least as far as their existing clients are concerned to avoid the obvious question; are you now not diluting the amount of time you can spend on my product? Occasionally this too can be answered satisfactorily by employing additional resources for the benefit of all.
Nevertheless, there may well come a time when the relationship between product and representative comes to an end.
How long does the relationship last?
Starry eyed product owners enter into representation contracts believing that occupancies will soar, and scant regard is given to the inevitable end date, assuming there is in fact an end date?
Parting ways at the request of the product owner can occur for a variety of reasons;
- The representative has exhausted their market reach.
- Fallout between one of the products and the market has tainted the rest of the portfolio.
- The product has reached the point at which it requires dedicated resources.
- Rate attrition through fees etc has eroded the achieved rate to an unsustainable level.
Although not so common, there are also occasions where the representative elects to terminate the relationship, and this too can be for a variety of reasons.
Parting ways can be a costly and damaging process. The product owner has funded the relationships that exist between the market and the representative, and they are indeed far closer to each other than the product is likely to be to its market. In fact, it is possible that the product owner has little idea what or where their market is.
Add to this that the representative is not likely to shoulder any blame for the departure of one of their products, instead the impression will be created that the decision was mutual at best, and at worst they may malign the product.
So, the question is when and how is it appropriate to outsource marketing and sales?
When and how is it appropriate to outsource marketing and sales.
The ‘when’ could be almost any time a product wishes to expand its support base. And that leaves two additional questions; deciding on the right fit for your product and finally and most importantly; defining the fees, measurables and term of the relationship.
The success of your relationship with your representative is based on successfully and completely addressing the basic requirements set out above.
One of the modules in our Eco-Tourism Management course is dedicated to the ‘how’ and it is during the course that we assist product owners and managers with setting up their framework within which to manage these relationships.
Another is social media marketing vs social media sales (Wilderness Explorer has the largest social media following of any eco-tourism product in South Africa).