Should you sacrifice profits to better serve customers?
Travel Great service is the key to acquiring and retaining customers. It can be the difference between you and your competitors. But what if the cost of providing that great service is eating away at your profits?
What is the customer expectation for business travel?
The minimum a customer expects is for the price they are quoted to be the price they pay. Going further, the customer might also expect some flexibility in how they pay that price – maybe a payment plan, or an invoice a month later.
As a travel business dealing in different currencies, meeting both of these expectations can leave you at the mercy of currency fluctuations. The impact on profit margins can be damaging if you do not apply a hedging strategy. But if you do hedge, it can be damaging operationally.
Are you paying to meet those expectations?
By the time your customer pays the agreed price – perhaps months later – currency fluctuations could result in profit margin erosion.
Some companies add two or three per cent to the price they charge the customer as a way of insurance. However, markets can drop more than this over a time window of 48 hours, let alone an entire month, which means that profit margins are eaten into.
Of course, we all know the volatility of the market can sometimes work in our favour. But why roll the dice with your company profits?
How hard are you working to keep up?
For many businesses, a huge amount of company time is spent calculating exposure across currencies and reconciling forward contracts.
The demands of inefficient payment set-up and back office processes can consume both resources and time, resulting in profits being eaten away through operational expenditure.
International tasks that used to be long processes, such as flight bookings or money remittance can now be done at the click of a button. If businesses are to offer this level of service, they had better ensure their back office operates at the same speed to protect profits.
Automation is the way forward
For businesses to move forward, automation is essential. Technology can be used to automatically lock in profits by pricing in a customer’s local currency; guaranteeing the rate received over the agreed payment period. Whether a customer pays in a month, or in three months, your original margin is safe.
Providing great customer experience shouldn’t be at the expense of your bottom line. Automating operational processes unlocks value to customers while also having a positive impact on profits.