Top Key Performance Indicators (KPIs) for Online Travel Agencies (OTAs)

Top-Key-Performance-Indicators-for-Online-Travel-Agencies

Across the world, people have begun flocking to tourist destinations in numbers that match pre covid levels. 

Given the rise of trends like remote work, travelers are also exploring offbeat places, meaning online travel agencies are experiencing a surge in demand. 

However, there is little room for optimism due to rising competition, operating costs, and travelers’ newfound appreciation for personalized trips. 

As pressure mounts on the margins of online travel agencies, it is vital to track and improve several key performance indicators (KPIs) that demonstrate the business’s health. 

What are Online Travel Agency KPIs for managers?

In online travel agencies, KPIs refer to several performance metrics that reveal how well the business is doing.

Typically, companies track customer lifetime value, conversion rate, average sale value, etc. Still, these metrics are often insufficient to get a holistic view of how efficiently your business is running and how customers perceive you. 

These metrics are crucial for your success as they not just get you new business but also help retain old customers. The latter benefit’s importance can’t be overstated because it costs five times more to acquire a new client than to retain one. 

Let’s look at the top KPIs that OTA managers need to track. 

Average sale value

How much money do customers spend on average with you per sale? This question is answered by measuring the Average sale value KPI. Getting the number is quite straightforward; divide total sales revenue by the total number of sales made in a given period. 

Return on advertising spend

The return you get on your advertising spend on each channel is the ratio of the total revenue and advertising spend on that digital marketing channel. The metric enlightens you on how much money you made for each advertising dollar you spent on a pay-per-click channel. A good benchmark for this KPI would be 4:1, meaning you make 4$ for every 1$ spent advertising on a channel, such as Google Ads. 

Cost per acquisition

An OTA’s cost per acquisition refers to the average amount of money spent advertising to get a sale. With this metric, you can clearly understand what types of customers are profitable, which advertising channels are lucrative, etc.

Cost of sales percent 

The cost of sales percent is also known as the expense ratio, and it is crucial to optimize your spending on ads. To determine the value, you need to figure out the cost of clicks on your ads per purchase and divide the value by the revenue from the purchase. 

Customer lifetime value

This metric may be one of the most useful of your KPIs.

Essentially, it reveals each customer’s entire net profit throughout your relationship. Identifying it with respect to every customer will show you whether the cost of acquiring them was worth it. 

To find a customer’s lifetime value, you must multiply the average customer retention time (years), the number of repeat sales, and the average order value ($). 

Conversion and Abandonment Rates

Conversion rates tell you how many site visitors purchased from you. You can also consider customers signing up for a call from you as a conversion. This number will give you a definitive answer if you wonder how effective your website, booking engine, or app is. 

Conversely, the abandonment rate is the measure of how many people came to your site, filled up the shopping cart with your travel services, and left the site before paying. From our experience, OTAs have an abandonment rate of around 94%, so you can benchmark your performance against that. 

Rate of customer referral

Getting referrals from customers who have had a great experience with you is the most cost-effective way to acquire customers. Referrals can be of many types; an influencer may have mentioned you, a friend or colleague may have passed on a good word, or someone who used your service may have left a positive review somewhere. You must ask incoming customers where they heard about you and try optimizing that referral source. 

Customer complaints

What your customers say about you can serve as a goldmine of insights to improve your line of products or services. Ensure that you closely track all the complaints that come in. 

Let the complaints be called in, emailed, sent via social media, or left on a review site. Consider it a priority to note down your customer pain points and the number of promoters, detractors, and neutral feedback you are getting.

Crucially, you also need to note down the time you take to resolve each complaint and ensure the time taken goes down over time. 

Mobile based bookings

To be competitive, travel agencies need to take a mobile-first approach. This transition will prove valuable, given that more and more customers research and make travel bookings online on their smartphones without any human interaction. 

It is worth mentioning that 72% of bookings done through mobile happen within 48 hours of last-minute Google searches involving the words ‘today’ or ‘tonight.’ As a result, you need to know how many people are booking via your mobile site/ app vs. the desktop site. You also need to closely monitor the conversion rates of all your booking channels to see if you are using them best.

Conclusion

Tracking these key performance indicators is mission-critical for every OTA manager. The need for constantly monitoring these online travel agency KPIs is only going to grow, given how competitive the space is getting. However, tracking the metrics isn’t enough; OTA managers must also keep improving the KPIs with a clear target. 

If you are successful at measuring how well your travel agency is performing and make constant changes to improve efficiency, customer satisfaction, and revenue, you’ll find your company thriving as record numbers of people are prioritizing traveling in the coming few years. 

If you are interested in optimizing these KPIs and providing your customers with a shopping experience, AgencyAuto will be perfect for you. The travel agency software streamlines your mid-office processes and lets you delight customers with personalized tours at a reasonable rate, beating out the competition for good. 

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