Revenue Management Series Part 4: Pricing & Promotions

"The single most important decision in evaluating a business is pricing power.” — Warren Buffett, Berkshire Hathaway

As tours and attractions take their ticket sales online, an entirely new world of business opens to them.

This is the world of eCommerce, and we believe the organizational skills required to run a strong eCommerce operation will be a key competitive advantage for the tours and attractions of the future.

That being said, the principles of pricing and promotions are not very different whether selling online or on-site; whether selling tickets, retail, or food and beverage.

By now, you are aware that RocketRez is flexible enough to allow you to allocate certain inventory to different sales channels, or to draw all your ticket and retail sales from a single source of shared inventory.

This works for all product types and all sales channels - tickets, retail, food & beverage products; online, in-person, over the phone, at a kiosk and OTA channels.

This allows our customers to create unique offers. Creative bundling across product lines, or volume incentives, can be tested, improved, scaled, or cancelled with fast feedback on what is working and what is not.

Opportunities open up when you can sell tickets together in the same cart with gift shop items, food and beverage pre-orders, and add-ons like parking and premium experiences.

Any individual pricing or promotion tactic maps back to the overarching goal of increasing revenue - using one or both of the following simple strategies:

• Increase Average Order Value
• Increase Order Volume

Tours and attractions are highly seasonal, and demand sways drastically based on factors like the weather, location, tourist trends and other recreational activities operating nearby.

Pricing and promotions are tools that you can fully control to help smooth your revenue and unload inventory, no matter what scenario your macro environment is providing.

Let’s examine some of the best strategies at your disposal to increase revenue by selling products online.

Increase Average Order Value

The following tactics are for use when the offer is premium, demand is high, or you are stocked with highly sought-after inventory. The goal is to make more money per customer.

Cross-Selling, Bundles, Packages and Retail Add-Ons

This is where you can get creative. Your customer is buying a ticket – plus what?

In an eCommerce environment, a smooth checkout process can automatically suggest additional items to create a bundle.

You can incentivize the cross-selling item with a discount, but often the convenience of purchasing these items together – like your event ticket and parking – is enough to secure a sale.

Look for natural complementary items to the core experience to maximize conversions.

Common Bundles:

• Retail and gift shop items
• Parking
• Clothing/Memorabilia
• Insurance

Upselling and Options

What is your version of a “Super-Sized” offer?

Once again, you have an opportunity to offer a more luxurious or efficient product after the initial buying decision has been made, directly in your checkout.

Make sure that the upsell or option you suggest is a reasonable increase, and not a big jump in price from the initial choice - or you’ll experience low conversion rates, turn off potential customers, and possibly even lose the original sale.

Common Upsells/Options:

• Seat location upgrades
• Private/VIP Experience
• Personal Instructor Provided
• Guided Tour

BOGOs and Quantity Breaks

Most people are familiar with a “Buy One, Get One Free” offer from retail stores or restaurants. Extrapolate the same method to your operation.

Some attractions, like zoos, aquariums or water parks lend themselves very naturally to a season pass or membership for families.

Parents are always looking for ways to entertain their kids with fun and inexpensive activities – with extra points for being educational or getting them off the computer and out into the world!

Make your attraction a great investment for their family entertainment budget, and you’ll be rewarded with pre-paid revenue for experiences held in the future.

Common Quantity Breaks:

• Family Pack
• Multi-visit tickets
• Bulk discounting

Group Bookings

Booking private events is a powerful driver of revenue in the tour and attractions space. The same characteristics that make your venue a great place to visit can often make it a perfect backdrop to host a group party, meeting or educational tour.

Common Group Bookings:

• Weddings
• Anniversaries
• Corporate Events
• Birthday Parties
• School Field Trips

Incentives

The allure of a free item, that is complementary to their original purchase, is often enough to tip people over the edge into a purchase decision.

Often, this doesn’t need to be a high-value item for customers to react favourably. Simply look for an offer that makes their life easier.

Common Incentives:

• Free Shipping
• Free Parking
• Complimentary Gift Shop Items

Increase Order Volume

The following tactics are for use when the offer is premium, demand is high, or you are stocked with highly sought-after inventory. The goal is to make more money per customer.

Discount

The simplest way to increase order volume is to offer a discount. Discounts are often centred around a theme to build customer excitement.

Look for an upcoming holiday, or a chance to unload inventory that’s near expiry, as a chance to get in front of customers to offer a fun discount.

Common Discounts:

• Dollar discounts
• Flash Sales
• Percentage vs. Dollar Amount Sales
• Seasonal Sales

Promo codes

Borrowing from the top retailers and food delivery apps, offering a promo code through your customer newsletter, social media or even a QR code on-site is an engaging way to reward customers that are paying attention to your communication channels.

Urgency

One motivating factor that turns a shopper into a customer is the element of scarcity. People love the feeling of attaining one of the last remaining spots, items or reservations that was sought after by many people.

Tours and attractions can display the number of tickets left on any given day, as a motivator for customers to purchase immediately.

Store Credit

Finally, a great way to drive additional traffic to your core offer is to give customers store credit. Commonly we will see this applied to the gift shop, but it is an incentive across several different scenarios.

Store credit works in the case of cancellations, cart abandonment, loyalty and rewards. Rather than offering a basic refund, you can drive people to your attraction and capture their revenue.

Finding the appropriate mix of pricing and promotional offers that work for your business takes creativity, experimentation, and constant refinement. At any given time, you must assess what you are trying to achieve as a business and the context you are operating in.

Ask yourself:

• ‍Are we a discount brand or a premium brand? Your most loyal customers have come to expect a certain order size. Deviating too far from your overall brand strategy can lead to either devaluing your experience or sticker shock.
• ‍What are your current demand levels? This industry is highly cyclical, and pricing and promotions must operate well within the greater context of demand to have any chance of success.
• ‍Finally, what are your current inventory levels? Excellent inventory management has a compounding effect on the profitability of a business and should be closely monitored to reduce waste and avoid leaving money on the table for scarce goods.

Use these widely used tactics as a starting point on your journey to find the optimal mix for your business.