In the Trenches: Analyzing Our Revenue Sources
A couple of weeks ago, I wrote about how 2014 would be the year for Cranky Concierge to grow revenue without increasing costs. If that was an easy task, I’d be sitting on a beach right now. Instead, I’ve been busy digging into our business data to come up with a plan.
I could default to the most basic of strategies: Increase our fees a bit to bring in more money. Huzzah! But that approach could alienate enough clients to produce a net negative, and, besides, there’s a better option.
When I look at our sales over the past year, I see that our revenue primarily came from four places: general travel, small-business travel, award/mileage redemption, and commissions. That last one was actually our biggest money-maker, which may not seem intuitive. However, when we book pretty much any hotel stay, car rental, cruise, tour, or whatnot, we get paid a commission. Airlines also sometimes pay us commission, primarily on premium tickets. So commissions seem like a good place to seek growth opportunities.
Of course, we won’t ever steer clients toward an option simply because it pays us a commission. If we have anything other than our clients’ best interest in mind, we could sink our business. But the sales that produce the highest commissions for us often come with premium service and special amenities for our customers. For that reason, what’s in our clients’ best interest is often in ours as well (although, to reiterate, clients always come first).
With commission money already coming in, I should look for ways to improve the amount we can generate. For example, sometimes we can make higher commissions on sales just by booking a service through a different channel. Third parties that work with travel agents often provide higher commissions than direct booking. (If that sounds odd, it is, but that’s the way the system works.) I can do more research to make sure we’re booking in a way that pays us the most, because that has no impact on our clients.
But the lowest-hanging fruit is that, other than airlines, travel companies can be pretty slow to cough up commission. So I’ve begun to scrutinize our list of unpaid commissions — money we’ve already earned but have yet to receive. My effort has already begun to deliver results! Once I get a handle on commissions, I can seek growth opportunities in our other revenue streams.