The Middle East’s tourism industry needs to prioritise service recovery if it is to secure repeat business, decrease customer maintenance costs and reduce exposure to price competition, according to one of the region’s leading performance experts.
Karen Storey, Managing Partner of Dubai-headquartered X-Logic, says the very nature of the travel and tourism sector and its high degree of human interaction makes it vulnerable to mistakes.
“That’s precisely why service recovery has to be prioritised in any sales and marketing plan, it’s critical,” says Storey, who is a member of the Chartered Institute of Marketing and a fellow member of the Chartered Institute of Personnel Management.
“As the Middle East’s tourism industry continues to boom, so does the competition and their ever increasing value proposition to customers – but how many of them are actually delivering? Unless companies are relentless about right, first-time service delivery, mistakes can, and do, happen.”
Storey, who is to address a seminar devoted to service delivery at Arabian Travel Market – the region’s premier travel and tourism exhibition being held in Dubai, United Arab Emirates next May, says though recent evidence suggests there is no replacement for ‘right, first-time’ service delivery in travel and tourism, service recovery does impact the bottom line and long-term customer perceptions.
“Considering how much it costs to lose a customer, few companies take service recovery seriously,” said Storey. “In many tourism-based industries, one lost customer costs the company at least US $2,400. A loyal guest at one of the region’s resorts may visit an average of four times after the initial stay and spends roughly US $1,000 per visit. The contribution margin in most cases could be as much as 60 percent. So, when a customer does not return, the company loses 60 percent of US $4,000 – it also has to replace that customer through expensive marketing.”
And Storey warns that though a good recovery service costs time and money, it is highly competitive against the costs incurred by badly performed service.
“No business can afford, or wants, to lose customers, if only because it costs much more to replace a customer than it does to retain one – we have all heard the ‘five times more’ marketing calculation story. By putting service recovery high on the strategic agenda, companies can shift the costs from constantly courting new customers to cutting customer defection. A company’s effort to ensure that its customers are satisfied over the long term is rewarded by an increase in profit through repeat business, referral sales, decreased customer maintenance costs, and reduced exposure to price competition.”
At her Arabian Travel Market seminar, Storey intends to present case studies on how some of the world’s best companies approach service recovery and to spell out how it can help protect client relationships and revenue.
Arabian Travel Market 2007 will be held at the Dubai World Trade Centre, United Arab Emirates from May 1-4 next year. Its free-to-attend seminar programme is set for another round of expansion following this year’s high delegate turnout.
“The seminar programme is part of our strategy of ensuring the show is more than a trade exhibition and an educational forum in which we partner the industry in taking forward key issues impacting this rapidly evolving sector,” said Chris Chackal, Group Exhibition Director, Overseas Events, Reed Travel Exhibitions (RTE), which organises Arabian Travel Market.
“This year’s seminar programme was exceptionally well received with some sessions having standing room only. We are now exploring the effectiveness of upgrading and expanding the programme to ensure we tackle topics which have global and regional relevance. This will be part of a number of new initiatives now being investigated which could assist in taking the show forward to another level and, that result from feedback from our valued exhibitors.”
