by Doug Kennedy
May 28, 2013
A frequently discussed topic
at industry conferences these days is call conversion ratios.
With the increased emphasis on reservations
sales development, companies are recognizing the importance of turning
“inquiry-only” calls into bookings. One
of the most important indicators of success in this area is the call
conversion
ratio, which refers to the total number of reservations inquiries
received as
compared with the number of reservations booked.
Conversion Ratio = Number Of
Reservations Booked¸ Total
Reservations Calls Received
“What Is A Good Call Conversion
Ratio?”
In keeping with philosophies
and approaches of the quality enhancemen initiatives which most
companies have
undertaken in some form in recent years, on the surface it would seem
to be a
good idea to benchmark your call conversion ratio against the
competition. So the next logical question is “What is the
average call conversion ratio?”
Certainly, it is entirely
possible to determine a mean, or average, call conversion ratio for
like-companies serving a similar market segment. It would be a
simple mathematical
formula. Just survey competitive
companies, add-up all reported conversion ratios, and divide by the
number of
participating organizations. However,
for reasons explored here, benchmarking against this number may be of
little or
no value in evaluating your company’s call conversion ratio.
Limitations in Benchmarking Your
Call Conversion Ratio
Your Customer Base
Impacts Conversion Ratios
Your reservations agents’
success at capturing calls is affected by your customer
base. Here are some examples:
- Percentage Of
First-Time Callers. Larger advertising
budgets tend to generate more first-time callers who may have less
commitment
to booking. While the end result of well-placed advertisements is
undoubtedly
more overall bookings, a necessary by-product is an increase in callers
who do
not fit the profile of your targeted customer base. So companies
with larger advertising budgets
will tend to have lower conversion ratios overall.
- Percentage Of
Repeat Business. The repeat customer,
who utilizes the same property on a regular basis, is less likely to
shop the
competition and is more committed to booking on the initial inquiry
call. So those companies that have a loyal customer
base, and who as a consequence are likely to do less advertising, will
tend to
have higher conversion ratios overall.
- Business Versus
Leisure Market. Leisure guests, who are
spending their own money, and who tend to expect more from their travel
experiences, are likely to call more companies prior to booking than
their
corporate counterparts. Business
travelers may have more of a commitment to staying at a particular
property.
Perhaps their company has a special negotiated rate. Or maybe
they are attending a meeting or
conference which is being held on-site.
Therefore, companies serving the leisure and meetings market tend to
have lower conversion ratios than those serving the corporate market.
Systems For Measuring
Conversion Ratios Can
Bias Results
While most reservations call
centers use automated systems for measuring call conversions, the
majority of
reservations offices are restricted to using manual systems due to
limitations
in technology. Regardless of how you are
measuring conversions, it is important to understand that there are a
number of
built-in bias’ that significantly “skew” the results.
- Manual
Systems. Manual systems have one
advantage; they allow for conversion ratios to be calculated according
to the
number of “qualified” calls, as opposed to “total calls
received.” “Unqualified” calls, such as those for dates
that are sold-out, or calls to service an existing reservation, can be
essentially thrown-out. Conversion ratios
measured manually will therefore tend to track higher. However, a
disadvantage with manual systems
is that tracking errors can impact results.
- Automated
Systems. Nearly all call centers, and a
small but increasing number of hotels, can use technology to measure
conversion
ratios. An ACD (Automatic Call
Distribution) system, or any of the long distance based call tracking
systems,
will indicate the total number calls received.
The reservations system will track the number of reservations
confirmed,
allowing calculation of conversion. While automated systems eliminate
human
errors in tracking, they too generate biased data. For example,
companies receiving a
significant number of single calls that generate multiple bookings will
experience higher conversions than those that rarely receive multiple
bookings
from one call. Also, automated systems
do not allow for a differentiation between qualified and unqualified
calls. Finally, in periods of peak demand, when a
significant number of dates are sold-out or not available due to
minimum stay
restrictions, conversion ratios will appear to decrease as calls
continue to
flow in but the agents have no inventory to sell. This is
especially significant in recent
years as the lodging industry reports record levels of occupancy and
employs
sophisticated revenue management systems that restrict availability.
How To Measure
Conversion Ratios And
Benchmark Progress
Even though results are
inevitability biased, it is still critical that call conversion ratios
are
measured. As the now-famous Hawthorne Studies showed many years ago,
productivity improves when people know productivity is being
measured. Here are some considerations.
- Benchmark Against
Your Own Results. The best method for
benchmarking your call conversion ratios is to compare results with
your own
internally collected data. After
creating a system, and using it consistently over a period of time,
your hotel
or company will begin to establish a baseline and will be able to
determine how
your current production levels compare with “benchmarks.”
- Use Automated
Systems If Possible. Because automated
systems eliminate human tracking errors and extra paperwork, they
represent the
best means of measuring call conversions.
If you are using automated systems, find a way to differentiate
reservations that originate from sources other than incoming
calls. (Examples include group rooming lists,
contract rooms, and wholesale bookings.)
Depending on your level of automation, one option might be to utilize
the “source code” feature of your reservations system.
Another option might be to have reservations
sales agents use a separate log-in code when entering reservations that
result
from sources other than incoming calls.
When analyzing data collected via automated systems it is also
important
to take into account factors that bias results as explored here.
- Use Manual
Systems If Necessary. If a manual system
is the only option, it still critical that call conversions are
measured. To help ensure accuracy in data collection,
it is essential to provide a simplified form that will be easy for
transient
sales associates to complete. It is also important to explain why
conversions
are being measured, so sales associates do not feel threatened and
commit to capturing
the data as accurately as possible.
- Post the
results. Regardless of whether manual or
automated systems are being utilized to measure call conversion ratios,
it is
important to post the results in the reservations sales office.
This will provide recognition for superstar
performances, help identify those who need additional coaching and
counseling,
and challenge the competitive spirit of everyone.
In summary, the reservations
office or call center is not a laboratory; it is difficult to measure
call
conversion ratios in absolute terms. It
is important to keep in mind that the primary mission of the
reservations
office is to sell rooms, not to record marketing data. Measuring
call conversion ratios is just one
tool, albeit an important one, for benchmarking the progress of your
reservations sales training and development efforts.
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Doug
Kennedy is
President of the Kennedy Training Network, Inc. a leading
provider of customized training programs and telephone mystery shopping
services for the lodging and hospitality industry. Doug continues
to be a fixture on the
industry’s conference circuit for hotel companies, brands and
associations, as
he been for over two decades. Since
1996, Doug’s monthly hotel industry training articles have been
published
worldwide, making him one of the most widely read hotel industry
training
authors in the world. He is the author
of Still
On The Road to Sales and Guest Service Excellence. Visit KTN
at: www.kennedytrainingnetwork.com
or email him directly: [email protected] |
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