CLV and the Tourism Industry

Many companies in the tourism industry use CLV to help them manage their profitability and target the right customers at the right times. As mentioned in previous posts, convention and visitor bureaus are a bit of a different animal. We don't make any transactions at all. Other than ordering a visitor guide or making a booking through a third-party system, we don't actually deliver the final service to a customer. We are simply the marketing arm of the local government. This means that we don't control any pricing, product or customer service aspects of spending a vacation in Colorado Springs. Instead our main function is to inspire people to travel here.

That being said, we do try to use some loose estimates provided by the state of Colorado to predict the average length of stay and average spend for different types of customers who visit us. These values combined with industry standard formulas, mostly provided by the national trade organization, help us to predict the value of different large groups or events that come into town and how much economic impact they have brought to our city over several years. Based on these numbers, we are able to strategically choose which large scale projects and events to pursue with our limited funds. Essentially we are very picky when deciding which customers to invest in. Some are definitely more valuable than others. One unique part of the meeting travel business is that most large meetings rotate from destination to destination from year to year. The national trade association provides a large database where most CVBs cooperate together and share economic impact information from past meetings and events that they have hosted. Information includes actual size of the group, where they stayed, length of stay and other pertinent information. It's almost like an industry wide CLV system. CVBs are very aware of what groups are more valuable than others. This information system is invaluable as our sales team decides which meetings to pursue. It is definitely true that sometimes "the juice is not worth the squeeze."

As far as leisure travel goes, we routinely cleanse our database of names and email addresses to cull out those list members who are no longer responding to our marketing efforts. While emails are relatively inexpensive at around 2 cents per email, when you have hundreds of thousands of email addresses the expense to mail to the entire list can be quite large. Our current database system allows me to track behaviors over time (number of visitor guide orders, bookings, interest based email opt-ins, etc) for each individual email address and is very helpful in targeting and focusing our marketing to reach the appropriate people at the right time. Or deciding to drop that contact from future communications all together.

While I don't use CLV as heavily as I would if I actually had a tangible product to deliver to a customer, we still find ways to utilize the technology to be more efficient with our marketing and advertising dollars.