Insights on Travel from Costa Rica Expeditions’ Founder Michael Kaye and his Expert Friends.

Need More Advice on How to Get More Inquiries… And the bags of coffee go to… Tommy Galan & Max Waugh!!!!

Tommy suggested that we “give the Costa Rica Expedition guest an opportunity to make the recommendation in the moment, while still entranced by the magic of Costa Rica, and the quality of Costa Rica Expeditions.”  Great idea.  Since it will take a little time to implement, and I was going to Tortuguero anyway this weekend to get Video for a first anniversary update of the Words Adventure, I asked some of the guests at the lodge to allow us to record their impressions of the experience.  At some point we’ll be loading the videos on You Tube and asking for your comment

For now, please help me think through a question that Max posed.  “Would you go so far as to offer greater incentives to your past guests for referrals?” I’ve dealt with other tour operators that will offer ‘5% off your next tour for every successful referral…’ Given the sheer volume of referrals you’re already getting perhaps this is too drastic a step, but a more substantial incentive could prompt your customers to be more active in marketing on your behalf.”

That got me to thinking.  So now for those of you who have gotten this far…  Fair warning, I am going to immerse you in the mundane details of thinking through market initiative, and, if anyone is still reading at the end, ask for your input.

If a monetary incentive gets us bookings from past guests’ recommendations that we would not have otherwise gotten, there is no question we can afford to accept less profit.  Not only is the conversion rate considerably higher for referrals than with any other source of prospects, but also we have the strong impression that prospects from referrals take less labor and have higher levels of delight than prospects who come to us in other ways.

Obviously if we got the same number of bookings at a cost of 5% per booking than we would have gotten without incurring the cost, offering the 5% would make us less profitable.  On the other hand, we’ll never know if that would be the case unless we try it.

We have plenty of reliable historical information on what percentage of our inquiries come from referrals, so it seems to me that the more numerate of my colleagues would be able to devise a measurement system that would tell us whether or not the offer was profitable.

My most compelling concern about offering a 5% referral fee is the feeling that it may create the wrong motivation for our past guests. I’d feel much more comfortable with past guests recommending us because they think they are doing their friends a favor rather than for money, or even to do us a favor.
Another concern is that a 5% discount on future trips is not worth a great deal to you, if you are not planning to take another vacation with us.  I have feeling that the tour operators who successfully use this promotion, market many destinations, which makes it much more likely that for them to get repeat business than a one destination company like Costa Rica Expeditions.

There is of course a solution that addresses both concerns.  Make the discount available to your friends. And, if you want to return to Costa Rica with us you can befriend yourself.  How does that strike you?

Here’s another concern that is a little trickier.  Most of what we do involves complicated custom designed itineraries that do not have a retail price.  If I were on the buyer’s side of this fence, I would wonder whether we just marked trips up an additional 5% for those people who had the certificate.

To respond to that qualm, how about we advise people to get the price quote first and then charge the 5% discount?

I am thinking that the techies could come up with a certificate that it would be hard to duplicate.

So what are your thoughts?
Am I on the right track here?
Is 5% enough of an incentive?
Would more work better?

Or is the incentive really symbolic, like the bag of coffee that I am offering for the best responses to this post?

Given the tremendously well thought out comments that many of you send for a bag of coffee, I am sure that you are working well below your pay-grade.

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6 Comments and 6 Replies

  • At June 30, 2011
    2:57:42 pm
    Richard Nabholz said:

    the coffee is always welcome. The discount should not be necessary. Run your specials on occasion so we can try to fit to our schedules.
    do more of the short videos like the Tortuga, we send on to friends.

    • At June 30, 2011
      12:07:31 am
      Kathleen Rielly said:

      I had a marvelous experience with Costa Rica Expeditions and have recommended you to several people, which I might have felt disinclined to do had there been a financial incentive. I would be concerned that my friends may also have viewed the rec as suspect were there a discount offered.
      I often check reviews of prospective hotels and tours on sites such as Trip Advisor and one hotel I recently stayed at suggested I send a review to Trip Advisor. You might encourage guests to recommend your services on such sites, particularly if they express appreciation at the time of departure.

      • I love the idea of getting guests to act while still on their vacation high, and of taking a souvenir picture that they can get for free if they post it to FB or Twitter. You could also invite the camera-shy to tweet, Facebook, or blog about CRE and get a CRE hat, bag or commuter cup. If it’s possible to do it from the computer at the hotel before checkout, then it’s an immediate exchange, otherwise you could ask them to send links within a week. I think a gesture of appreciation is all that’s called for, and a branded one will further spread the word, perhaps as immediately as the guests’ trip home where they’re likely to encounter fellow travelers casting about for ideas for their next adventure.

        A more time consuming idea (but perhaps more intriguing), might be to run contests for best short vacation video, picture, short essay, and have the winners featured on VTIP or CRE’s FB page/You Tube channel. Winners are likely to broadcast the news on their social media outlets, you’d be spreading entertaining/touching/striking material that shows off what a CRE experience is like, and you could build an interesting gallery for future use. Max could curate, right Max?

        And, lord knows I could use the coffee, but I think you should send Max some Chicky cookies. We all know how much he likes those: http://upside-down-patty.blogspot.com/2010/11/help-i-need-somebody-to-help.html

        • At June 29, 2011
          3:56:05 pm
          Chase Buckner said:

          Let me first say that my personal opinion may not be too relevant to this issue as I am 28 with not much disposable income, so I’m probably not your target demographic. I am, however, in the marketing field and am currently facing this same problem.

          I agree with your initial reaction: “I’d feel much more comfortable with past guests recommending us because they think they are doing their friends a favor rather than for money, or even to do us a favor.”

          For me, a 5% discount on anything is not worth any effort I would have to put forward to obtain it, no matter the product. Anything over a 50% discount would get my attention but I’d still most likely pass out of a fear of “fine print.” There is so much “discount” crap thrown around the internet everyday, I’ve trained myself to just tune discounts out. This post is a good example of what I’m getting at. I could care less about the coffee (I don’t even drink coffee) but I’m interested in the topic, so I’m leaving a response. My response, I would assume, will be more insightful than that of someone just interested in winning free coffee.

          To me, it’s all about intrinsically motivating previous guests to share branded digital content with their social networks. The challenge then becomes coming up with ways to do that. I think something like an online album of professional photographs taken for the guests while on holiday (branded with the company logo of course) would work. Make the album/photos free for download but the only way to access the album is to “like” the company facebook page. Or maybe get really tech and set up a system where they get access to a photo for free and to get another photo, they need to share the first one by either posting it to FB or Tweeting it.

          • At June 30, 2011
            12:03:59 pm
            Michael Kaye replied
            to Chase Buckner:

            Chase, As my granddaughter would say this is awesome. Can I send you something? How about chocolate? I understand that the gift is more symbolic that anything else, but I don’t think there is anything wrong with a symbolic gesture if it is sincere.

            I am curious. If you are not in our demographic, how did you find out about this blog?

            Your point about discounts is really helpful. Soon as I read it I realized that I normally ignore discount offers either because they are too small to be worth it or there’s a catch. Now that you mentioned it, I see it as a challenge rather than a deal-breaker.

            As for the amount of the discount, our average booking is around $6,500. A 5% discount comes to $350. Worth it to me if I believed it was honest.
            I also like your idea about motivating guests to recommend us in social media.

            Think about the chocolate. Or would you prefer Costa Rican hot sauce.

            • At June 30, 2011
              2:13:47 pm
              Chase Buckner replied
              to Michael Kaye:

              Haha, Thanks Michael. I work for Zach and Rebecca at Journey Mexico and, as I mentioned, we are currently facing these same challenges.

              Costa Rican hot sauce sounds awesome, but mailing anything to Mexico is a bit of a crapshoot. Glad you found my comment interesting. Would love to chat more anytime.

            • At June 30, 2011
              5:37:27 pm
              Patty Chang Anker replied
              to Michael Kaye:

              HELLO, no one mentioned chocolate before. I would be happy to take Max’s chocolate.

            • At July 01, 2011
              9:17:48 am
              Michael Kaye replied
              to Michael Kaye:

              Chase, I should have remembered. I did not connect Zach telling mo about you with your name. I loved your you tube video on whether it’s safe to got to Mexico.

              If you work for Zach and Rebecca you don’t need disposable income to be in our “demographic.” All you need is disposable time. Come visit and collect your hot sauce.

        • At June 29, 2011
          3:34:54 pm
          Max said:

          To clarify, the example I gave was a cumulative 5% discount for _each_ referral. So someone could potentially work toward a 15-20% discount or greater off their next trip if they sent multiple clients your way. I don’t know if that changes your thinking at all, Michael. And you’re right, I think there are cynics who will expect you to simply adjust your prices to make up the difference, but hopefully most folks who loved their CRE experience won’t feel that way.

          By the way, I don’t drink coffee (some Seattleite, huh?), so I’ll happily donate my share to Patty. I think she needs it.

          Max

          • At June 29, 2011
            3:31:46 pm
            Shannon Borrego said:

            Michael, I think it is true that the reward would be symbolic to many of your past guests. Most people don’t choose CRE based on the price so a 5% savings might not be a huge motivator, especially if they don’t plan to return to Costa Rica any time soon. However, most of the people that travel with CRE do fall in love with the country. Traveling with CRE is all about appreciating the beauty and wonder of Costa Rica. What if you offered to donate a certain amount of money (perhaps 5% of the trip cost of the friends who were referred) to a charity which directly benefits some aspect of Costa Rica? You might offer a choice of charities or create one yourself. The person making the referral would feel good about themselves as a donor and Costa Rica would benefit from the donations.

            • At June 30, 2011
              9:45:25 am
              Michael Kaye replied
              to Shannon Borrego:

              Great idea, Shannon. But rather than obligate people to donate what if we gave them the choice of taking the discount or donating?

              • At June 30, 2011
                10:36:00 am
                Shannon Borrego replied
                to Michael Kaye:

                Even better!