Whether your business is a brand-new tourist attraction being created from the ground-up or a mature tour or activity that has been around for years, if you want to thrive in the digital age, you need to know how to create a distribution strategy. Just what is a distribution strategy, why do you need one, and how do you create one? Let’s break it down.
Distribution and The Grocery Store Product Analogy
It’s easier to explain a tours, attractions, and activities distribution strategy in terms of a product analogy. Imagine that you manufacture an amazing product, and at first you sell it at a stand in front of your house. Even if you could manufacture an endless supply of this product, only so many people are going to see and buy it at this stand on your little street. You know that if you get your amazing product onto the shelves of your local grocery store, though, it will sell like hotcakes. But again, at only one store, you will only sell a limited quantity. Your challenge lies in not just getting your product into that first grocery store but into many more grocery stores after that. Only when you achieve a scale of distribution, will your business really take off and will many more consumers be able to find and buy your product. In your tourism world, that product is your attraction or activity, you’re the supplier, and the grocery stores are your distributors.
Now think of a product that’s so ubiquitous that you not only see it on the shelves of nearly every grocery store but also on the shelves of every convenience store and Wal-Mart, too. That product didn’t get into all those stores by accident – the manufacturer had a distribution strategy to get them there and to manage all of these distributors thereafter.
What is “Distribution” in the Tours, Attractions and Activities Sector?
For activities and attractions, any third party that can help sell more tickets and bookings for you is a distributor: ticket wholesalers and brokers, aggregators, resellers, traditional and online travel agents and websites, tour operators, multi-pass creators, affiliate partners, travel and other member clubs, and any other similar entity. “Distributor” is the industry description, but you may call your distributors “channels,” “resellers,” “partners,” or even “clients.” Because you’re in the business of tourism, your distributors may be global instead of local, but like in the grocery store analogy, each of your distributors has its own region, its own customer base, its own brand, and along with that you’ll wan to consider other factors when developing your distribution strategy.
8 Factors to Consider When Defining a Distribution Strategy
The overarching goal of a distribution strategy is to sell more stuff – in your case, tickets and bookings – but when developing your own distribution strategy, you need to get more specific than that. You need to start with your goal. Your primary goal will dictate how you look for, select, and work with your distributors.
- Brand-new attractions and activities: If you’re a brand-new entity, you have zero customers, zero brand-name recognition, zero traveler reviews, so likely your primary objective is to create as much awareness and potential audience reach as possible. To do this, you may be willing to create special promotional offers and discounts for customers and incentives for your distributors and to work with as many distributors and pay for as much marketing as possible – so your marketing budget may be a limiting factor, but the kind of additional marketing a distributor can help you with may also be a criteria in choosing and staying with that distributor.
- Maximizing profits: If you have an established attraction, you may be instead focused on maximizing the profit of each ticket you sell, including reducing the back-end costs of ticket tracking and reconciliation. This objective allows you to dial-back your marketing, but you’ll also want to be more selective with the distributors you work with or re-negotiate the terms by which they sell your ticket, and you’ll need to ensure you have a technology solution that reduces that back-end labor.
- Expanding into new markets: Your primary goal may be to break into a new overseas market or a type of customer segment from which you currently do not attract many tourists. This will also determine where you look for distributors and how to qualify them by the audience they can bring you.
- Refining your customer segment: After you’ve been in business a while and know the criteria of your ideal customer and where they come from, you can also narrow down your distributor pool. For instance, if you have an activity or tour that’s only narrated in English, your primary audience will be English-speaking customers so that means you don’t need to cultivate distributors who focus on non-English language markets.
- Introducing complex products: If you have begun to introduce new, more complex products or variations on your existing product – like timed tickets, VIP tickets, or bundled packages – these products require certain technical capabilities on the part of your distributors in order to properly sell them.
- Minimizing fraud: Any business that sells ticketed entry runs the risk of collecting fraudulent tickets. Fraud may not be the fault of your distributor partner, but some may be better than others at helping you curb and mitigate it, particularly if they have the means to sell your ticket paperlessly.
- Going paperless: It may not be completely possible – yet – to sell 100% paperless tickets, but you can strive for this “digital-first” goal. Paperless, electronic tickets like those delivered through mobile and wearable devices have become more of the norm as consumers get used to mobile airline boarding passes, digital hotel keys, RFID cards, and wristbands. For these forms of tickets to work for both the consumer and your business, multiple technology systems have to talk to one another, seamlessly and instantaneously. This “talking to” happens through Internet connectivity, and this connectivity needs to include your distributors.
- Retaining ultimate control over your business data: Our industry is starting to see acquisitions and consolidations that should give you pause. If the same company that you use for ticketing and sales also owns a distribution platform, what kind of access and insights to your complete data are you giving them…and are you OK with that unfettered access? Do you want any single company to know all of your inventory and all of your pricing at any given moment? Perhaps your strategy focuses on protecting your digital assets.
Over time – and possibly even with the changing seasons – your primary goal may change, and with it, your distribution strategy and what you require of your distributors will change. Your distribution strategy should never be one of “set-it-and-forget-it.” You should always be having conversations with your distributors – doing so lets them know you think of them as partners and not just as a portal. It also keeps you top-of-mind to them and you can push them to suggest ways to help you sell more tickets. After all, when your attraction sells more tickets through your distributors, they’re also making more money, a win-win.
21st Century Distribution Strategy
Many of the primary goals described above are either driven by or require some aspect of technology and Internet connectivity. Consumers research and book activities online all the time and more and more through their mobile devices, but you also want to have the means to sell and reconcile your tickets digitally. How can you get there?
1. – To move towards a 21st Century distribution strategy, beyond defining your primary goal, you need to ask yourself some other important questions: Are you reaching your revenue goals, or do you frequently have unsold tickets/seats/inventory? Are you still dealing with paper vouchers? Are you reaching as many distributor partners as you can and how digitally-capable are they? How are you managing all of your distributor partner relationships? How digitally-capable is your ticketing/reservation system? What do you need to do/get as a complementary solution if these platforms are not fully-connected – do you have a Plan B? If API connectivity is not available for all parties, how are you solving the pain points, what consequences does this have for your business, and does it impact the customer journey?
You need to be honest with yourself because these technology solutions now directly drive your revenues. Do a cost-benefit analysis: The manual processing of paper vouchers is something with a high cost (labor) but provides your business ultimately with low value. If you put the people processing paper vouchers to work managing distributor relations and constantly re-evaluating/revising your distribution strategy, that’s a much higher value of their time and for your business. Without the right technology solutions in place, you may also be restricting the number of resellers you’re even working with because you can’t scale. By finding a means to expand through more ideal technology solutions, you can directly drive incremental revenue.
2. – Your reservation system — the system that handles booking, ticketing, payment processing, and sales reconciliation – is only one piece of the puzzle. That system must be able to talk to your distributors’ systems. The way by which these systems connect and talk is called an “application programming interface” or API. Not all ticketing systems have API connectivity built-in and those that do have just a finite amount of API connectivity, mainly because APIs change constantly (and that requires a lot of upkeep and maintenance). In order to work with an unrestricted field of distributors, you need to understand who your ticketing system has API connectivity to, and how they manage that. To help you evaluate them, ask them questions like,
- Can you provide me a list of who you have API connectivity with?
- What’s on your in-the-works list and in what time will you plan on completing your API connectivity with those on the list?
- How do you help us bridge the gap in API connectivity in the interim?
- What’s your core business – ticketing or distributor channel management or API maintenance? (The answer can’t be “all of the above”)
- Who’s on the list of your existing distribution partners? Who’s not on the list and why?
3. – You should ask your current distributor partners what reservation systems they have API connectivity with and how that’s working (or not) and what’s limiting suppliers like you from selling more. Ask them what their digital and traditional marketing strategies are and how they’re specifically going to help you get more bookings. You should also pretend to be a customer on the distributor’s platform so you can see what the user experience is like – does that distributor make it super-easy to find and book an activity through their platform, because if not, that’s what your possible customer is going to face, too. You want your customer to have a great booking experience.
Mitigating the Gaps
Right now, there’s no single solution that can do everything at scale: you can’t sell all your tickets by yourself; your reservation/ticketing system can’t work with all of the distributors electronically, and not all ticketing systems offer paperless solutions; nor can all of the distributors connect to you electronically (and you certainly don’t want them managing your distribution strategy). If you want or need that Plan B to fill any of these gaps preventing you from incremental revenue gains, you want it to be one that has no bias, that’s not benefiting from specific ticketing systems or distributors, and that can provide you the 21st Century solution of maximum API connectivity. That agnostic player is Redeam. We’re a complementary technology solution that helps you bridge the gap where your existing ticketing system falls short and enables you to seamlessly do more business through more distributor partners who you control and manage in one centralized place.
If you’re looking to take your tours, activities or attractions distribution strategy into the 21st Century but are experiencing any of the gaps or challenges presented here, let’s talk today.
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I would like to thank a few special people for their excellent contributions to this article: Anna Domingo, VP Sales and Marketing, Hudson Yards Experiences; Haley Ward, Director of Sales, Hudson Yards Experiences; and Dan Rogoski, President, The Ride.
Redeam is a five-time award-winning Boulder, CO-based global technology company that dramatically improves tours and activities businesses by enabling a better digital customer experience, eliminating operational headaches and helping clients grow both revenue and number of sales channels through advanced features like channel and yield management. By utilizing Redeam’s technology, clients can easily process a scannable mobile ticket and eliminate the costly, antiquated, all-too-common practice of manually accepting, sorting and counting paper tickets—a practice that leads to lost revenue due to fraud, long lines, and bad online reviews. For its innovative solutions, Redeam has won such awards as the 2017 Phocuswright Award for Travel Innovation and 2018 Future Travel Experience Startup Competition Winner. The company works with hundreds of resellers and serves thousands of suppliers globally, including one of the world’s largest attraction theme parks, major event venues and boat tours, some of the world’s most-visited museums, and attractions like CitySightseeing/Gray Line New York, Ripley’s Believe It or Not, National Geographic Encounter: Ocean Odyssey, and the Intrepid Sea, Air & Space Museum.
Melanie Ryan Meador is CEO and President of Redeam. She is a travel industry veteran having spent 20 + years in hospitality and online travel prior to joining Redeam in June 2018.