Leading performance indicators, the overlooked metric
How do you measure how well your business is doing? If you’re like most travel agents, it’s probably by how much money you bank each month. Monthly deposits going up — good. Monthly deposits going down — not so good.
There’s nothing wrong with keeping your eye on the bottom line, but the amount you take in each month is known to business pros as a lagging indicator.
What that means is that the amount you put in to your bank account each month tells you what happened in the past. But it tells you zero about what’s coming down the road.
This is true of any business, but it especially important for travel agents. Why?
Well, consider this. A shop owner makes a sale and she puts the money for that sale in her pocket immediately. A travel agent makes a sale (books a travel product) today but only gets to see the money later — perhaps months later, after the client has traveled.
That’s why savvy businesspeople pay attention to their leading indicators, the ones that tell them what the future holds in store.
So what are your leading indicators? Unfortunately, the answer is “It depends.”
It can differ from agent to agent, agency to agency. It depends on what you sell, how you sell it, and your personal strengths.
But basically the answer revolves around your “pipeline,” a concept with which you should be come familiar.
As I noted a bit earlier, travel agents earn their commission today (by making a booking) and get paid later (after the client has traveled. In the case of some products. like cruises, that could be many months later!
Hence the concept of the pipeline: what goes in one end today comes out the other at some future date.
Your leading performance indicators let you know how healthy your pipeline is and, ideally, should provide a fairly accurate measure of what you can expect to put in the bank next month, the month after, and for many months to come.
Determining your leading indicators involves some patient effort on your part and some conscientious record keeping, but thankfully it’s not rocket science.
Here are some things you might want to track:
• How many new prospect names do you add to your database each month?
• How many people do you add to your agency newsletter email list each month?
• How many sales presentations did you make this month?
• How many cold calls did you make this month to group travel decision makers?
None of these things may have an immediate payoff, but they will have results if you follow through.
The trick is discovering which of these metrics (and there are others that might work better for you) most closely correlates with dollars and cents results down the road. And like I said, it’s different strokes for different folks.
I know an agent who specializes in selling last-minute, discounted deals. For him it’s the number of people on his email list. The more he adds this month, the better he does five, six, seven months down the road.
Another agent might specialize in cruising for small groups of friends. For her the thing to track may be how many presentations she makes each month.
The important takeaway is that if you are following a lagging indicator like sales, when those numbers go south it can take you many months to recover.
Why? Because the seeds of this month’s income were sown many months ago.
For more ways savvy travel agents get an edge, CLICK HERE.