In the development of our new revenue management tool, we have been talking a lot about the differences between yield management and discounting your properties. Which is more effective, and when is the best times to try something out of the ordinary? We came to the conclusion that adapting your prices for different periods of demand is very different to offering special discounts and that both can be used to get guests booking with your business. They compliment each other and should be used together.
Revenue management is a way to get the maximum price when demand changes. In periods of high demand, your property is worth more. We see revenue management as the science of offering the right price when the value of your property changes, not a discounted price. A Saturday night in mid-summer, three months in advance is a more valuable commodity than a lone Tuesday night next week. Your guests know this and they will already expect that this price is lower because the property is worth less to them at this time. It almost doesn’t seem like a discount in the traditional sense of the word for your guests.
You can see how Kigo revenue management sets the optimum prices for your properties based on demand here. We understand property managers adapt their price to changing demand, but how can you use special discounts to convert even more guests and also to increase loyalty? Today we’re going to talk about how you can use more personal and limited discounts to convert customers that are in two minds about booking and reward repeat bookers.
A discount should be an incentive to convert a booking. What successful discount campaigns do is offer something out of the ordinary, something special that is different to your regular pricing structure. Effective discounting is designed to convert customers that may be wavering in their decision or have not tried your company before.
Here is a great example of how you can use a discount to convert a customer that may be looking at multiple vacation rental companies:You send them the required booking information and offer a 5% discount if they confirm their booking that day or the following. Using a special coupon code means that you can send individual offers to new guests or have a widespread offer that you can advertise on social media or via an email campaign. Kigo websites come with the option to add these codes to any property and even the ability to offer a free night if a guest books a certain number with you.
This does a number of things
Firstly, it gives them all the information they need as well as an incentive to book. Secondly, it shows that you are serious, professional and can deal with enquiries quickly. When faced with the prospect of having to trawl and contact various other websites and companies, a small discount and efficient service can be enough to sway ‘maybe’ customers into booking right then and there.
It is a small gesture that will not have too much of an impact on your final revenue but will present your business in a positive light before your guests have even arrived. It marks your business out as one that is committed to providing more than the basic standard for their customers.
It is also limited by time, which makes your guests think that this offer is scarce and they should take advantage of it right away. The less time and fewer emails you have to send means that your expenditure per booking will reduce which will help to offset the discount to your initial price. If you were really concerned about your margins you could experiment with a higher initial price as this discount is designed to convert already interested prospects. They would not email you if the initial price wasn’t appealing enough, so taking 5 or even 10 percent off that could be the perfect impetus to book.
Having discounts such as this alongside the regular pricing you make to accommodate the changes in demand can keep your off-season booked and help to convert new customers to your business.