If you’re in the hospitality industry and have an independent hotel or b&b then this proven business game plan that is guaranteed to enable you to sell more beds at higher prices all the while making a bigger impact on your clients.
1. Start With a Value Mindset
Commoditisation is enemy #1 for any business. That’s when your clients and prospects view you no different from your competitors. This is important because it affects the prices you can charge and the profit margins you earn. A healthy profit margin is crucial because it is the rocket fuel that lets you invest in your hotel growth and take home higher earnings. You earn more while doing less.
A fundamental principal in this model is that you must be able to charge a higher price than your competitors. You must be able to charge what you’re worth. In order to charge what you’re worth, you MUST have the right mindset. If you do not truly understand the value of your services and understand the return on Investment your clients gain from the services you offer, it becomes almost impossible to make price increases.
This dives deep into psychology. If you don’t believe little old me and my business can ever demand a higher price then competing on value will be a non-starter and will not have any impact on the profitability of your business. In fact, all the elements below, like creating a market dominating position and unique selling proposition, your marketing messages, your sales process and so on all go into demanding a higher price. They all depend on one underlying thing; having a value mindset.
Here’s the thing. Your prospect buy on value, they don’t buy on price. They’ll be willing to pay twice the price if you offer them four time the value! The only reason why they default to price is because you give them nothing different from your competitors to choose from.
So what allows some businesses to charge more? Because the value their clients see, both actual and perceived is far more than the price charged. They see a real return, a real benefit in paying for the products or service. A the owner of an independent hospitality business you have to give yourself permission to think outrageously high of your services and ability to give value to your guests. And you need to know what your clients perceive this value. You also need to consistently deliver that value.
Without the right mindset , you won’t get out of the starting blocks in transforming your hospitality business into one that makes more and earns higher profits for you.
Ask your self these questions
- Are you thinking too little about the value of your products and services?
- Do you know what your clients truly value?
- Are you living a self imposed limitation holding back your ability to create value and share in the value created for your clients?
2. Create a Market Dominating Position that adds massive value to your clients
The lack of differentiation, as perceived and valued by your buyer is a fundamental shortcoming in the majority of SME’s and this prevents you from growing profitably. The key to separating yourself from your competition is simple. You need a unique and compelling set of reasons why people should choose you over anyone else. This is called a unique selling proposition (USP). Your USP is how your prospects sift you from everyone else that offers your type of products and services.
You must be unique and stand out. But being unique is not enough. must add tremendous value to your prospects. You need to have a USP that targets your ideal customer’s “hot buttons”. Hot buttons represent their problems, frustrations, fears, concerns, that they experience that drives them to look for a solution. Hot buttons trigger your prospects emotions and drives them to seek a solution. People buy based on emotion and justify the buy with logic. Providing awesome solutions to these emotion driven hot buttons will establish your relevance and position your business to help these clients and create healthy revenue streams for your business.
A great USP is unique, very specific and focused on the benefits your clients obtain. Your guests are always on the lookout for what’s in it for them. Your USP tells them that. Creating a powerful, distinctive and specific USP for your business is the first and most vital step. Then you need to innovate in your business to be able to over-deliver on your promise to the market. Do you see how this could work for you?
3. Revise Your Business Model
Many hospitality businesses have a business model that is not conducive to profitable growth. The benchmark you should use as an indicator is the net profit the business generates before the owners or partners salary. Your responsibility is to continually grow and increase those profits. This is discussed later in point 9. As the old adage goes, it’s not about the turnover, it’s about the left-over. The left-over or profit is what sustains your growth.
Your hospitality business must be designed to continuously increase your left-over. You need a better model for the modern era; one that focuses on giving guests the results they truly value, having the right workflow and processes to deliver that value efficiently, with the right people in the right seats doing things right. To do so, you need to revise how you’ve organised your hotel, how you measure success and which people you have in which seats. Key to this is infusing a high-performance mindset into your daily workings.
Profitable hotels know exactly how what their capacity utilisation is and how healthy their margins are. With the wrong business model and performance measures it doesn’t matter how hard you work. You will never be able to scale your business and achieve any significant profitable growth. When your business is based on a system that incentivises the wrong profiteering practices and is not focused on creating the value your clients want, scaling and growing profitably is always going to be a challenge.
Ask yourself these questions:
- How wide are your margins?
- Are your work practices and performance measure driving the right results?
4. Get your head around your pricing and get a fair profit for the value you’re creating
One of the biggest problems I see over and over again is that hospitality businesses struggle with the price they charge and don’t get the rates they deserve. It’s because they cling to the myth that clients buy based on price. In fact, that’s completely wrong! Clients buy based on the actual and perceived value they’re getting. When you look exactly the same as your competitors, you give your prospects no other option than to default on price. That’s because your clients don’t perceive any fundamental difference in value and so they settle for the lower price because they want the best deal. This conditions you, the seller to be price sensitive. The result is you are reluctant to price higher in fear of losing the business.
And you’re likely to discount more when it looks like you’re losing the business. This practice is catastrophic for your margins and profitability. You end up earning meagre margins for all the work that you are doing. This chokes your cash flow and places pressure on you to sell more and do more to keep your head above water. So the vicious cycle continues.
The very first step to solve this is to link price to the value you create and not with time worked nor based on a cost plus pricing model. As soon as you can demonstrate the value your clients get and show them the positive return they’re getting, you can raise your prices. Do this right and they’ll happily pay the higher price. The big idea is to price your market, not the work.
Understanding deeply what the client values is the secret to obtaining higher prices. This turns the traditional pricing approach on it’s head. The traditional way starts with the work to be done and how much it costs, then it is priced and offered to the client.
When you compete on value, the process starts with the client and what they truly value, the price is based on the perceived value created, and finally the cost of delivering is factored in to the equation. With value pricing, your business focus is on how to innovate to create more value which enables you to offer your clients more value. As a result, you command higher prices than with the traditional approach.
Once you’ve figured out how to demonstrate the value your clients are getting, you can approach them with confidence without under-valuing yourself or your services. And when clients see the value you offer they’ll happily pay what you’re asking for. This is not just an alternative rates arrangement, it is fundamentally different mindset and methodology to pricing and competing in the hospitality market.
Value based pricing must become a core competency in your business if you want to sell more beds, sell them faster and with higher prices.
Ask yourself these questions:
- Are you currently pricing on what others are charging or a cost plus basis?
- Do you know how to demonstrate value to your clients?
- Are you getting your fair share of the value created for your clients or are you leaving massive amounts of profit on the table?
5. Create Compelling Offers
Most hotel owners don’t distinguish between their product/service and their offer. They are not the same thing. Most business owners believe that they have a good product/service so the sales will naturally follow. Nothing could be further from the truth. You must turn your product/service into an irresistible offer if you want to close more sales. There are two types of offers which have a dramatic impact on your marketing results.
The first is the Incentive Offer (such as “get a night free” or “get this 20% off deal”). It targets that 1% to 3% of your target audience who are ready to buy right now. They’ve done their research and have made the decision to buy. They’re now looking for the best deal… whom to buy from.
The second is the Informational Offer (such as a desirable, free destination guide, holiday checklist, restaurant guide etc.) It builds trust, establishes you as an expert, builds relationships, and appeals to the 97% of future buyers who are not ready to book right now. They’re still thinking about whether to book and are in research mode. They’re looking for more information to help them make the right buying decision. BUT here’s the thing, your information offer will also attract those who are ready to buy now!
End at the end of your information offer, you make your prospects an incentive offer that will appeal to the “now” buyers. The problem you have is that all your competitors are going hard at winning the “ready to book” 3%. If you split that 3% between you and your competitors, you are never going to make enough money. That’s why you want to target the 97% who are tomorrow’s guests.
By attracting future guests, educating and nurturing them and making them great incentive offers you expand your potential market and fill your pipeline with prospects. By the time they are ready to buy, the majority don’t need to do any further research as your business has become the logical choice for them.
Offering appealing information in exchange for their contact details is the KEY to getting an immediate and direct response from prospects. With the first contact established, your job is now to nurture your prospects with high value content and to stay top-of mind.
Compelling offers have the ability to produce immediate and lucrative results for your service-based business. The type of compelling offer you use depends upon your specific type of business and your ability to laser-target your ideal prospects. What kind of offers do you currently make to your prospects? How do you think the majority of your prospects would rate your compelling offers?
6. Don’t sell, solve problems
Many business owners have a strong aversion to selling. Butterflies in the stomach, the chest tightening anxiety. It feels like you’re having to convince someone to book something they don’t really want. Your guest senses it too and dislikes it just as much. The result is a low prospect sales conversion ratio. The key to selling successfully in today’s age is to recognise that your prospects are searching for solutions to the problems and challenges they’re facing in their lives and in their businesses.
When you approach people from the perspective of trying to help them realise their holiday dreams, they’ll be grateful for the help and you’ll attract thankful guests to you like a magnet. That means making it all about them and what they want and not about you and your products and services.
If you show up and talk about how wonderful your products and services are, you will repel them. If you show up and talk about their problems, challenges and aspirations and how you can help them achieve that with your products, services and expertise, you’re in the money. And you’ll feel much better too.
Unfortunately, too many business owners still use outdated sales approaches and then wonder why they don’t sell.
Ask yourself these questions:
- Are you using and outdated selling approach that makes you and your clients uncomfortable or have you switched to a more modern problem solving approach?
7. Fill Your Sales Pipeline with an automated marketing processes
One of the biggest challenges SME’s have is the lack of a consistent pipeline of warm, qualified leads. And when you do make sales, your business gets so tied up with delivering to your new clients, you completely neglect marketing and lead generation for a while until you need more business. This leads to a classic boom-and-bust cycle. The answer here is to automate your marketing and sales as far as possible while delivering great value to your prospects.
What I’m going to share with you now will have a major impact on your income and profits, as well as the ultimate success of your business. You don’t want to be chasing after clients, this can be tiring and an undignified way of sourcing clients for a business that aims to be the expert, go-to business.
There are multiple ways of building marketing and sales funnels that will attract your ideal client and deliver them as appointments in your calendar… all on autopilot. I’m going to share two very effective funnels for an expert based business.
Solution # 1: An appointment funnel with landing pages
Here’s how it works: When your prospects click on a link in response to a compelling information offer, perhaps in an email or from an online advertisement or social media post, the prospect is directed to an online page known as a landing page. This page features the information offer that was advertised, and ONLY on that information offer. Its objective is to encourage the prospect to take some actions that eventually leads to an appointment, such as downloading a guide or checklist, or watching an informative video. They are able to access the information in exchange for their contact details – a low risk action most are willing to take. Once they have watched the video or downloaded the information offer, they are taken to the next landing page where you make them an offer to book a call with you. If they take you up on your offer, the call will be scheduled automatically in your diary. Whether they take up the offer or not for a call with you, they receive a series of emails with high-value content, all specifically designed to educate them further on how to solve the problem they have. This educational sequence conveys your authority and sets you up as an expert in your field by demonstrating your knowledge and competence. We also make them further incentive offers that encourages them to take the next step in your sales process that eventually leads to an appointment with you. A well-designed landing page with an irresistible information offer practically forces your prospects to take action and will provide you with a consistent flow of leads coming into your business, turning into appointments.
Solution #2: The webinar funnel
Webinars and workshops are very powerful ways to engage with your audience, build your authority to be seen as a trusted expert and convey your message on how you can help solve their problem in ways other mediums can’t. Here’s how it works: You invite your prospects to attend a value-adding webinar. It must have an irresistible title and compelling, high value content to attract your prospects. At the end of the webinar, you make them an offer. This could be for a call with you, an assessment or other valuable offer. They get onto a call with you where you qualify them and offer them the solution they want. With just one hour per month, using the same webinar content each month presented to a different audience, you can land new clients for a small investment in your time. Webinars are a low-cost, simple but very powerful way to acquire new client flows in an increasingly digitally orientated economy. Once you have your webinar well under the belt, you record an evergreen/on-demand recorded webinar and provide your prospects access 24/7/365. Webinars are great, but evergreen webinars are even better because they are on-demand and work for you even when you’re home asleep in your bed!
8. Turn on the traffic
Our purpose here is to get prospects to put up their hand and say they’re interested and directing them to your landing page or elsewhere, where they can access your high-value information offer. You want your lead generation system to work like a tap that only needs to be opened to get the flow going, and when you want less sales you simply turn the tap off.
Before you even think of selecting a media channel to use, like Facebook, LinkedIn or the local newspaper, you must craft your marketing messages and Ads in a way that attracts the attention of your target audience. This is critical. If you are unable to attract their attention (in a sea of competing messages), it doesn’t matter which media channel you use, your response will be poor.
The Marketing Conversion Equation is a powerful persuasive messaging formula. It’s made up of a 4 step sequence of Interrupt, Engage, Educate and Offer.
The Interrupt refers to an attention-grabbing headline – EVERY ad and website MUST have one. It MUST be problem-based and focused on a major hot button for the prospects you’re targeting.
The Engage is a sub-headline that promises a solution to the problem referenced in the headline. Note that it only PROMISES a solution… it does not GIVE the solution.
The Educate it provides the solution and backs it up with evidence and proof. Think of Educate as an attorney standing in front of a jury.
And finally, the Offer prospects you target. This must be compelling and provide VALUE to your prospective guest. BUT THIS IS IMPORTANT A compelling offer is NOT! your phone number. Your offer must provide your prospects with value.
Example, How about you prospects are offered a free downloadable guide called “Everything you need to know about holidays in the Drakensberg Mountains” Wouldn’t you be enticed to download that in exchange for your name and email address?
The above example is formatted using the Conversion Equation
The Interrupt: Most tourists miss the best attractions in the Drakensberg Mountains. This highlights the problem to catch the attention of the target audience who has that problem.
The Engage: This is a problem I want to Help Fix. This promises them a solution without saying what it is
The Educate: I will show you how to get the best experience from you holiday. This is a very short educational piece because of the limitations in size of the Ad. There core of the educate piece will be in the information offer.
The offer: Read my guide: “Everything you need to know about holidays in the Drakensberg Mountains” “Yes, Give me my free expert guide!”
Can you see how this copy differs from the traditional approach of placing the company name and listing all the products and services on the Ad. It’s absolutely critical that you know and understand how to use this Conversion Equation.
With the power of this amazing approach, you’ll see a dramatic increase in the number of leads you begin to generate, the number of clients you begin to attract, and the amount of money you see accumulating on your bottom line.
Creating your marketing message is a strategic activity. Your message is what attracts the attention of your ideal clients. Which media channel you place your message on is a secondary, tactical decision. This could be Google, Facebook, Instagram, Linkedin, a magazine or newspaper, radio, or some other media channel.
The key is to place your compelling messages and irresistible offers wherever your ideal clients are found and let the message do the hard work. There are many different strategies to fill your pipeline. Here are a few
- Place a link to your highvalue : information offer everywhere you can; below your email signature, on your facebook, Instagram or LinkedIn page/profile, on the back of your business card, on your pricing quotes, etc. 19 20
- If you have an email database, run an email campaign offering the free information offer as a gift.
- Establish relationships with referral partners and provide them with the link where they can direct any interested prospects to.
- Networking: Take your business card with the URL of your high-value information offer landing page on the back of your card. While networking, talk about other people’s problems (not your products and services) and provide your card to interested prospects, directing them to your landing page.
- Paid social media marketing – create a post about the problem you solve and ask if anyone would like a free copy of your new information offer. Direct Message it to those who respond.
- Direct outreach. Message your prospects on LinkedIn saying you have created a new free gift and asking whether they would like a free copy.
- Schedule a weekly Facebook live. Each week, cover a single aspect of the content of your information offer. At the end of the live session, ask if anyone would like more strategies and offer them a free copy of the information offer. Direct them to the landing page.
Ask yourself these questions:
- Are your marketing messages working for you? Or are you throwing money down the drain?
- Are you placing your messages on the right channels?
- How many lead generation strategies do you have that are working for you?
9. Work the 80/20 Rule to Compound Your Growth
Building a profitable hospitality business means that you are able to earn higher margins and generate more profit than your peers of equal size and business maturity. This doesn’t just happen by chance. You need a designed system that almost guarantees you can’t go wrong.
That’s where the 80/20 Rule comes in. The 80/20 rule is one of the most important concepts you will ever come across in growing a profitable hotel – the concept of compounding growth. For business owners, it means 20% of what you do every day is generating 80% of your total annual income. In other words, you’re only doing a few things daily that makes you most of your money.
I can tell you specifically what makes up that 20%, and that’s all you really need to focus on. There are 5 areas that make up that 20%:
- More leads
- Higher conversions
- More transactions,
- Higher pricing
- Higher profits (gross profit margin less fixed costs/overheads).
These 5 areas are so critical because each compounds on the others. If you embrace the power of compounding in your business, it can change everything in your business… in a positive way, fast. Apply the strategies and see your bottom line compound within a year.
So take the time and effort to learn how to work this system and you will reap the benefits too. Your stress levels and bottom line will thank you too!
10. Invest in personal growth and mentoring
Going it alone is a poor recipe for success. Support is the key to success. Here’s what you need to know about your personal development. Your level of success seldom exceeds your level of personal development. In order to grow your business by another 40%, you need to grow as a business owner by 60% so you can sustain your growth. Mentoring, coaching and ongoing realtime development is the most effective way to achieve that success.
Three key questions you need to ask yourself:
- Are you truly committed to personal growth and the growth of your company?
- Are you open to new learning and taking on board new ways of do things?
- Are you willing to commit the time and effort to get results?