Many businesses in the travel industry have had a tough time in 2020 and 2021. These 10 examples of KPIs for Travel Agency Managers will help you as an industry leader manage your business. With the massive decline in long distance travel, tracking performance is essential. While local and domestic tourism has recovered well in some areas, even better than before, the travel industry remains a precarious business. Talking to our clients in the industry, it’s clear that during these uncertain times, monitoring key numbers is vital. Here’s how they told us they do this.
Examples of KPIs for Travel Agency Managers
It requires a balanced approach to measure performance and respond to any trend lines without panic. We have collated 10 key performance indicators used by our customers in the travel industry. They are made up of financial and non-financial KPIs as well as the most commonly used management KPIs.
1. Total Transaction Value (TTV)
TTV or Total Transaction Value is the term commonly used in the travel industry to mean the gross value of all sales relating to travel services or travel-related arrangements. You may be calling this Total Income. Before you start, you may need to separate income from other services.
Under ATAS (Australian Travel Accreditation Scheme), travel agents are grouped into different categories depending on their TTV so it’s important that you monitor it and be able to report on it quickly.
In Calxa, you could create a new KPI Account Group for TTV Income and then the KPI formula would simply pick up that value.
2. Cost of Services Sold/Gross Profit Margin
In your industry, there are not usually goods sold but services. As a travel agency manager you might typically track the cost of any 3rd party services attributable to your TTV. This is likely to include transport, accommodation and other services.
Just like in other industries, there are some agents who prefer to use Cost of Services as a percentage of TTV, others who deduct the Cost of Services from the TTV and calculate the Gross Profit Margin.
3. Customer Acquisition Costs
This KPI is derived from the total marketing costs of the entity and is usually compared to either the TTV or Gross Profit. Assuming you had created a KPI Account Group for Total Marketing Costs, comparing to Total Transaction Value would give a formula like:
[Total Marketing Costs]/[Total Transaction Value]
4. ATAS Cost of Compliance vs TTV
In Australia, just like in many other countries, there are strict regulations governing the travel industry. ATAS, the AFTA Travel Accreditation Scheme, sets standards for the industry. While these are important to protect consumers, they do involve compliance costs for agents. You may want to measure those compliance costs and compare them to either Total Transaction Value, or Gross Profit. This is an important benchmark in the industry.
Create a KPI Account Group to identify the compliance costs and then the formula would be:
[ATAS Cost of Compliance]/[Total Transaction Value]
5. Initial Contact and Response
We have just covered some financial KPIs. However, non-financial metrics are important to drill into company specific indicators. These next four non-financial KPIs form part of the examples of KPIs for Travel Agency Managers.
The purpose of recording the Initial Contact and Response is to track the number of days it takes to provide a customer with a quote. As a travel agency manager, you are likely to have a system that provides this information. Then it’s simply a matter of transferring the monthly average to a Metric in Calxa. Finally, use a KPI to include in your monthly management reports.
6. Customer Retention Period
Ask yourself how long this customer has been using the agency? Some agencies measure this in months, others in years. The important thing is for you to keep track of it and improve on it. As with most other businesses, travel agents find it easier to work with existing customers than to constantly source new ones. Increasing the customer retention period is a key measure of customer satisfaction.
7. Customer Referral Rate
Many agencies in the travel industry rely on referrals from existing customers to get new customers. When your customers refer you to others, it’s always a good sign that you are doing something right. Monitoring your referral rate over time will help you keep on track and alert you to any changes. If you share your travel industry KPIs with your colleagues in other agencies, you’ll be able to benchmark your performance against theirs.
8. Customer Complaints
There are a number of metrics commonly used around customer complaints. The first and simplest for you to track is the number of complaints. Count them and monitor if they are increasing or decreasing.
Then there are the metrics around how you respond to those complaints. You can count the initial response time. Alternatively, you may choose to monitor the resolution time. The important point, as with all KPIs, is to choose one that makes sense to your business and track it consistently over time. They will all give you an indication of how well you are managing your customers and their issues.
9. Revenue per Employee
This is always a good measure of productivity and an indicator of when it’s time to add to your team. Use a Metric to record your head count each month and then create a simple formula such as:
[Total Transaction Value]/[Team Count]
If you prefer to monitor Gross Profit per Employee, the principle is the same. Pick the one that means most to you and monitor it over time.
10. Online Sales to Website Visitors
If you attract customers through your website, it’s important to measure its effectiveness. How many visitors do you get each month and how many of those buy? Having these numbers and you can then track them over time and focus your team on improving them. It will help you make decisions around:
- How do you get more visitors?
- And then how do you convert them to customers?
One of the attractions of online marketing is that it is generally easy to measure results and see what’s working and what isn’t. To get started, track online sales as a Metric each month, as well as your website visitors. Then your formula would be:
[Online Sales]/[Website Visitors]
Creating these Examples of KPIs for Travel Agency Managers
These are 10 KPIs for the travel industry that our customers tell us they are using. Pick the ones that are meaningful to your agency and supplement them with some general KPIs from our Financial KPIs for Business Guide. Use this document to guide you to re-creating these examples of KPIs for travel agency managers. If you are not a Calxa user, simply sign up for a free trial and connect to your accounts.