In the Trenches: Looking Beyond the Customer for Revenue

BrettSnyder by Brett Snyder on December 8, 2010
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In every business, there’s always pressure to increase revenues. Looking at our business, I realized we were in a tough spot in that regard. If we decided to raise rates, we would probably kill demand, but we did need to increase the amount of money that was coming in the door. So we started looking beyond the customer for revenue, and so far, it’s working well in more ways than one.

Up until last week, our service business was bringing in revenue solely from customer-paid fees. After trying a few different price points in the market, we settled on the ones we have today. It seemed to be the right price for customers, but we weren’t able to make enough money to really scale it and be successful on a broader level. Realizing that we wouldn’t be able to raise rates without killing demand, we had to get more creative.

We started looking to our suppliers for revenues, and it’s worked. Instead of solely getting paid by our customers, we’re now getting paid commissions from the other side of the coin. We’re now a travel agency, in effect. The combination of revenues from multiple sources makes the business far more viable. It also allows us to provide better service by being able to book travel directly instead of just directing people to other places to book.

The result is not only better service for our existing customers; it’s also opening up the business to new customers. Small businesses that travel have now started coming to us about handling their travel needs, something that wasn’t really attractive to them before when we couldn’t do the booking ourselves.

So now, we’ve increased our revenue per customer, improved the quality of the product we can offer, and expanded our potential market. None of this would have happened if we hadn’t decided to look beyond the customer for alternate revenue sources.

BrettSnyder

Brett Snyder is President and Chief Airline Dork of Cranky Concierge air travel assistance. Snyder previously worked for several airlines, including America West and United, before leaving to create a travel search site for PriceGrabber.com. Snyder did his undergrad at George Washington and earned his MBA from Stanford.

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