Imagine this.
You've just had the most pleasant guest at your hostel.
She stayed a few nights, has already referred all her friends, and has literally purchased all your other services (rented a towel, a lock for her luggage, washed and dried her clothes with you, and more).
After she left, she made you wish you had more services to provide.
And when you think back, you realize that she was the most pleasant and most profitable guest you've ever had.
So can you possibly ask for even more profits from future guests like her?
Definitely.
Let's think back for a moment.
How much did it cost for you to acquire this customer?
Now, what if we were able to lower this cost by 10%, 30%, 50%, or more?
It might not seem possible, but it is. And it can mean a lot to your hostel's profits and asset value in the future.
But the problem is that most hostels can't even tell you how much each customer costs to acquire. Even worse, they probably have no clue whether a certain medium is even working or not.
If they do, they can't tell you exactly how well each medium is doing.
Ignoring this type of data is like burning money!
So what exactly must you know?
Just two simple things.
The costs it takes to acquire each customer (for each medium) and how much profits that those customers deliver, on average, in return (for each medium).
Think about that for a second.
If you knew how much each customer was worth in profits to you, you would know exactly how much you'd be willing to spend in each medium for you to still remain profitable.
It truly is simple, but so many owners are bleeding money because they simply overlook this crucial information.
But knowing these two key numbers can help you focus on the most profitable areas for you to reinvest your money.
It truly is like finding hidden treasure.
And there's even better news.
Like I said before, most owners simply don't know how well a medium is working for them. For example, do you know your conversion rate for booking guests over the phone?
Probably not.
However, you should know this. You're paying for that phone line. And each time that phone doesn't get answered (or it gets answered ineffectively) you're paying for that in costs or a loss of a customer.
So what can you do?
You can develop a "winning" script that constantly converts customers over the phone reliably. Let' say it converts 6 out of 10 calls into guests.
Plus, once that script churns out predictable results each week, you can simply test a new word, sentence, or entire script to see if you can beat that conversion rate.
That wouldn't lower your costs per call. But it would significantly reduce your cost to acquire a new customer.
Think about it.
If you're now converting 8 out 10 people over the phone when you were previously only converting 4 out of 10 people... you're now earning more profits from the same amount of phone expenses.
It's not brain surgery, but thinking about lowering your costs to acquire a new customer for each medium and how to leverage more profits out if it can truly be a game changer!
And again, this can be applied to any advertising medium.
In fact, if you're using pay-per-click (PPC) advertising you'll clearly see how improving your click-through rates (CTR) on your ads will significantly reduce your cost-per-click (CPC).
So take a look at your advertising budget now.
Look for where you can lower costs.
Then take a look at what's working and how you can improve those conversion rates. And from there you'll suddenly find "hidden treasure" waiting to be dug up.
Start today and you'll soon discover there was much more treasure than you realized.
Want more profitable strategies?
At Hostel Hacks, Paolo provides more of his award-winning and unique marketing strategies to increase your profits in any economy.
Experience the results for yourself... before your competitors do.
Copyright 2013 Paolo Garcia
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