Investing in a direct booking website with proven conversion is the fastest way to make your short-term rental (STR) business more resilient and less dependent on the policies and whims of Online Travel Agencies (OTA’s) like Airbnb, VRBO, and Booking.com. However, to ensure its success, you need to know and track a key metric: conversion rate.
It’s a simple idea - at what rate do your website sessions become direct bookings? Are enough of your website visitors turning into paying customers? If not, you might think the answer is to buy more traffic to your website. However, this approach can lead to skyrocketing customer acquisition costs and an unsustainable marketing program.
Instead, you should focus on converting more of the traffic you already have.
Improving Conversion Lowers Customer Acquisition Costs
I recently had a chance to learn from some of the most sophisticated, large-scale short-term rental managers in North America at the Beyond Customer Advisory Board meeting. My major takeaway: the best property managers knew their conversion rate and, subsequently, how to invest in marketing strategically.
If you have a direct booking website, understanding the user’s journey and conversion experience is essential. Too little traffic? You may want to consider investing in SEO or ads. However, if your website is converting less than 0.5% percent of its traffic, you need to start by optimizing your website.
For example, let’s say your website gets 5,000 visitors a month, but you only get 10 direct website bookings per month. Your conversion rate is only 0.2% percent when you should expect it to be closer to 1%.
Now let’s say you spend $2,000 per month marketing your direct booking website, including ads and services. Your conversion rate has a downstream impact on your overall customer acquisition costs.
Customer Acquisition Cost (CAC) = Marketing Cost / # Customers Acquired
$2,000 / 10 = $200
Calculating CAC for your direct booking channel tells us that you are spending $200 to acquire one customer, which is not sustainable. Increasing the marketing spend, would only add more water to a leaky bucket.
If we were to increase conversion on your direct booking website to 1%, you customer acquisition would improve:
5,000 visitors x 1% = 50 bookings
$2,000 / 50 = $40
Without increasing spend and instead focusing on improving the website experience, we are able to dramatically lower customer acquisition costs and create a much more sustainable business.
What Measurement Tools Should You Use?
There’s a big gap between our industry’s haves and have-nots in being able to measure conversion. OTAs and Beyond’s Customer Advisory Board clients have access to analytics tools like Google Analytics (GA) letting them monitor website metrics like sessions, time on page, and bounce rate. This is one of the keys to their success.
From what we see, too many STR managers don’t have any analytics access at all. It’s important to have analytics, like GA, set up on your existing website, so that when you make changes you look at both historical and current performance to monitor effectiveness.
However, for top STR managers, Google Analytics by itself isn’t enough because website stats don’t give conversion without a lot of extra work (i.e. digging booking source data out of your PMS). Instead, these STR managers could get their conversion rate in less than a minute using Google eCommerce. In our experience onboarding new clients, even among those who had Google Analytics before they launched with Signal, almost none had Google Ecommerce or another conversion tracking tool set up.
If it’s worth your time to have your own booking website, it’s worth knowing how well it converts, which is why we include not only Google Analytics but also Google Ecommerce with every Signal booking website.
What Can You Do?
Measure your conversion rate - The most important thing is to ensure that you are tracking your conversion rate by adding analytics to your website and booking engine. Start by measuring your historical conversion rate, tracking it year-over-year and month-over-month. You should also establish your benchmark rate, and set goals. Usually, setting up this tracking is very straightforward for a website developer, so if you’re getting charged by the hour the cost should be reasonable.
Optimize your website for conversion - After tracking your conversion rate, you should have a sense of what needs improvement. Direct booking websites should be designed so potential guests have all the information they need to decide. They should be encouraged to make a booking with strong “calls to action” and a frictionless user experience that inspires trust and security to hand over their payment information.
Partner with the right tech provider - make sure your technology partners are incentivized to care about your success. If you pay them by the hour, they probably focus more on selling you more hours than driving results for your business.
At Beyond, we’re motivated to provide your business with the fastest website and the best booking engine launch to ensure you keep getting and growing direct bookings. The Beyond team takes care of the details—designing brand style updates, migrating your existing content, personalized SEO setup, and even PMS transition support.
To learn more about Signal, reach out for a free website consultation.