Focusing on Cruise Sales: Should You Get On Board?

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In the wake of airline commission cuts, does charting a new course with heavy emphasis on cruise vacations offer your agency a viable opportunity to significantly increase profit? Cruise Lines International Association and many retailers think so.

It seems that everywhere we turn these days, someone is telling us to bound up the gangway and concentrate our efforts on cruise sales. Many factors indicate this can be good advice.

For most vacationers, a cruise is an enjoyable experience and, when clients are matched with the cruise product best suited to their needs and preferences, customer satisfaction is high.

Because cruises are relatively high-ticket products, the commission yield can be considerably more than that from airline tickets and some other travel products.

Besides, cruising is very visible these days. Cruise lines aggressively market to consumers, ships pop up as venues for movies (including "Titanic," of course) and many advertisements for other, nontravel-related products seem to have a cruise theme.

A relatively small percentage of the total U.S. population has ever taken a cruise, so, CLIA asserts, there should be a vast, untapped market.

The cruise industry is rushing to increase inventory by putting attractive new ships into the market, and it is offering a wide variety of intriguing itineraries.

Finally, cruise lines are working to provide onboard features, programs and amenities that ensure there is a cruise experience that will please almost any vacationer.

So, are cruises the wave of the future for your agency? It may be wise to test the water -- with a few questions, below -- before plunging headlong off the pier.

Retailers of all stripes increasingly are focusing on cruises and aggressively promoting themselves as cruise experts. Many others are well established as cruise specialists, both locally and nationally. Similarly, many of them also have Web sites and other electronic means of communication. That same Internet technology will allow cruise lines to compete directly with retailers for the attention and the dollars of potential cruise passengers.

If you're thinking of shifting your focus to cruises, you will want to explore several issues in order to determine your agency's potential for replacing lost airline commissions with profit from cruises. Therefore, ask yourself these questions:

  • If many current clients have never cruised, would they be intrigued by the idea? These are loyal clients who trust your judgment and advice. If they decide to take a cruise and enjoy it, they will buy other cruises and they will tell their friends, who also may buy cruises from you.
  • Looking beyond your own clients, in your market, could you sell enough cruises at prices and commission levels that would produce an acceptable return on your investment in training and promotional activities?
  • Are there forces at work in your marketplace that will either assist or challenge you if you try to create incremental demand for cruises and for your agency's services?
  • Take a close look at the demographics of your market. What is the population breakdown in terms of age groups, income levels, household size and composition, religious and ethnic groups, etc.?
  • Are there segments, such as families, retired individuals, well-compensated middle managers and executives, etc., who might offer better potential than others? Are there enough people in those segments to offer you the prospect of substantial cruise sales?
  • What about the psychographics in your market? By that we mean, what values, attitudes and beliefs are commonly held?
  • How do your target consumers spend their leisure time? What causes do they support and to what organizations do they belong? How might their lifestyles be defined in terms of stresses and the use of time, the value placed on material possessions and focus on the needs of adults and/or children? How is status defined and what role does it play?
  • If you understand the demographics and psychographics in your market, you can determine if you should focus on cruises. If the answer is yes, these factors also will help you choose your target audience, determine what products are most likely to sell and construct a realistic, cost-effective marketing plan.

    You need some understanding of what your prospects are likely to seek in a vacation experience, the probable length of the vacations that they will take and what might motivate their vacation purchase decisions. For example, if your research indicates they may prefer three- and four-day vacations over longer vacations, you will obviously have to sell more short cruises to reach the profit level that seven-day cruises would produce. Clearly, customers who can and will buy deluxe cruises will be more lucrative for the agency than those who are extremely price conscious.

    We return here to a constant refrain: Does what you know about these issues suggest you can sell cruises at a reasonable profit?

    In another batch of questions, let's consider the competition:

  • How do your target consumers spend their disposable dollars? What other types of businesses are in direct competition with you for those dollars? Certainly, car dealerships, jewelry stores, clothing stores, restaurants and furniture stores are competing with you for discretionary purchases.
  • What might your agency have to do to convince consumers to buy a cruise rather than a car or a new sofa?
  • Are other agencies in your area competing on the basis of price or superior knowledge or outstanding service or something else? If price marketing and rebating seem to be rampant, factor the cost of being price competitive into the potential for true profit.
  • If you are just beginning to focus on cruises, can you compete on the basis of price with more established agencies that might be receiving higher commissions from which they can rebate? Keep in mind that recently several major cruise lines announced they will move to tiered commission structures, with overrides above 10% based on higher productivity.
  • If repeat cruisers in your area are focused on getting the best discount, an alternative for you is focusing on the large part of the population that has not cruised, but what would be the incremental promotional costs of taking the cruise vacation message to first-timers? Selling them cruises will be more difficult than working with repeaters because they must be convinced of the benefits of a cruise vacation.
  • If the competition promotes its superior knowledge and expertise, how will your agency get up to speed? This could be daunting, and how and where to gain this knowledge becomes an important issue.
  • A focus on cruise vacations can be very lucrative if you approach it intelligently, but a simple "me too" approach to marketing cruises in a crowded marketplace will probably not produce a satisfactory result. If you do your homework you have an excellent opportunity for success. This means:

  • Take the time to truly understand your market.
  • Carefully target the candidates who offer the best prospects for cruise sales and profits.
  • Seek niches where customer needs are not already being well addressed or that offer opportunities to create significant incremental demand for cruises and its own services.
  • Studiously evaluate cruise products and promote only those most likely to please the target audience.
  • Educate your staff to be conversant with those products.
  • Create a marketing plan, one that allows you to produce a profit on every transaction.
  • Constantly monitor consumer trends and cruise industry developments and then adjust your marketing plan accordingly.
  • Dale Eyerly Colson is president of Travelstar Inc., in Westport, Conn., a full-service agency that has specialized in cruise vacations since 1970. She has prepared and presented cruise-related educational programs for ASTA, ARTA, Nacoa and other educational forums for the trade.

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