The Challenge: How to Fill a Cruise Ship
A number of years ago, we took a terrific Norwegian Cruise Lines tour of the Baltic—St. Petersburg, Tallinn, Stockholm, Oslo, Helsinki and Copenhagen. The company kept us on its roster of customers. We became “Latitudes Insider” members.
On her office computer a couple of years later, my wife Peggy received a last-minute “Latitudes” offer from Norwegian Cruise Lines at a time when we seriously needed a break. Clicking on the offer, she discovered not only a 7-day Bahamas cruise, but also an upgrade to a suite for very little additional money—tiny bedroom with separate sitting room and balcony. She booked it. If one of us wanted to read while the other slept late or napped, the layout was perfect. What’s more, Norwegian Cruise Lines treats its suite buyers to extra services: exclusive access to private dining areas, concierge service, mini-bar, etc. We returned to New York from the Caribbean thoroughly refreshed.
Over the years, we have booked Club ABC Tours, a company that can buy all-inclusive upmarket travel at very good prices and pass the savings on to its customers.
On April 12, I found identical offers four hours apart from both of these companies—a one-day sale for myriad cruises on Norwegian Epic.
Of course, I opened them.
The ABC offer was off the wall—gibberish.
I noodled around the Norwegian Cruise Line offer and felt the offers were so-so.
“The right offer should be so attractive,” said the great Claude Hopkins, “that only a lunatic would say no.”
I abandoned the hunt.
The Massive Challenge of Cruise Ship Marketing
Cruise ships are huge and costly. According to my arithmetic, the average Norwegian Cruise ship has a capacity of 2,394 passengers and an operating cost of $3.4 million a week.
The operating cost of Norwegian’s entire fleet of 11 ships—with a total capacity of 26,334 passengers—is an estimated $37.5 million a week.
That’s a lot of orders just to break even.
Let’s Dispose of Club ABC Quickly.
I clicked on the ABC offer and the landing page was exactly the same as the HTML email—a photo of Norwegian Epic and the promise, “Get $100 to spend on board plus reduced deposit.”
I clicked all over this landing page looking for a hyperlink for details of this cruise and nothing connected. The only other place to click was on the following line:
Club ABC Tours – Your travel club with outstanding vacation values since 1966
Call: 1 888 TOURS ABC (868-7722) Visit: www.clubabc.com
I clicked on the link and got the Club ABC Tours home page.
I was offered the Galapagos, Best of Russia, Budapest & Prague, Egypt, Thailand and China. The Norwegian Epic deal was nowhere to be found.
Club ABC either engaged in old-fashioned bait-‘n’-switch, or the people responsible for the offer screwed up and wasted my time.
Quite simply, when you send an email offer, always have a dedicated landing page FOR THAT SPECIFIC OFFER. If prospects land on a general home page and are forced to rummage around for the offer they just read, they will be gone in a wink.
Norwegian Cruise Line
Nothing is more perishable than an empty cabin when a cruise ship sets sail—an average lost revenue per-passenger of $1,530. And it was clear Norwegian Epic was far from sold out. Here were many accommodations of all shapes and sizes available for a number of cruises in Europe and the Caribbean. Hence the splashy 1-day sale.
The Norwegian folks gave me various places to click, and all of them got me immediately into destinations, dates and onboard accommodations.
The blizzard of choices was more than I could deal with—and 100 bucks off our onboard expenses was no big deal—roughly a 7 percent discount. So I zapped it.
A Better Offer: $250 Onboard Credit
On April 21—nine days later—Norwegian Cruise Line upped the ante. Instead of $100 in onboard credit, the company offered me $250 in onboard credit. The destination choices: Caribbean, Holy Land, Panama Canal, Pacific Coastal, Eastern Mediterranean and a Transatlantic crossing.
Click on any of those six destinations, and you are linked to the same general landing page, which was all about the Latitudes Membership program.
I’m a very impatient guy with a poor attention span. When I click on a picture of the library at Ephesus and the caption “Eastern Mediterranean,” I want cruises to Greece and Turkey—not a pitch for a program that I am already a member of. The Web people created a disconnect. Again, I zapped it.
Online marketers, always remember: You are a mouse click away from oblivion.
An Even Better Offer: $300 Onboard Credit
The following day, I received a third offer—“Last Minute Cruise Deals from New Orleans” with up to $300 in onboard credit (if I used my American Express Card). That got my attention.
Then I thought ... $100 off on April 12; $250 off on April 21; $300 off on April 22. Jeez, if I play the waiting game, will Norwegian up the stakes to $500 off?
This is the same marketing territory as magazine and newsletter renewals. The cruise departure date is the equivalent of the day a subscription is up—but with a difference. When the ship sails, it’s all over, good-bye. All unsold cabins represent dead loss.
The Art and Science of Pricing
In the world of magazines, newspapers and newsletters, when the subscription is up, the circulation folks usually keep sending issues for a while—known as grace copies. These gratis issues contribute to the circulation rate base—the number of subscribers guaranteed to advertisers—and thus still contribute to overall revenue. All the while, the subscriber is hounded with renewal efforts.
How many renewal efforts are sent? Quite simply, you keep sending them until either the customer tells you to stop or breakeven is passed and they cease to be profitable.
I spent years as a freelancer writing (among other things) magazine renewal series. The mantra from my mentor and client, consultant Paul Goldberg, was that effort No. 1 should be the very best offer, and it should be proclaimed as such—with fanfare.
The reason: If the subscriber ignores the first effort and a better offer comes along later, it’s an excuse to wait and see if the offers keep getting better and better. In the world of magazine renewals, a certain number of savvy subscribers compare renewal offers and hang onto the best offer in the series. (After all, they are still receiving grace copies, even though the subscription is up). When the magazine ceases to arrive, they pull out the best offer and renew. Or they go online and see if they get an even better offer.
“The consumer isn’t a moron,” wrote the late David Ogilvy. “She is your wife.” And given this lousy economy, consumers are being very choosy.
Cruise Line Efforts Are Different
In the case of a cruise line, the offers can get better and better as the sailing date draws closer. With a slew of empty cabins, it makes sense to offer progressively more attractive deals, even to the point of breakeven or small loss on the ticket, because per-passenger expenditures onboard average an additional 33 percent of the ticket cost.
If reservations are off budget, the marketing people can list cruises at cut-rate prices with the remainder cruise websites. In the mediaplayer at upper right are three cruises at distress prices listed on April 25 with departure dates of April 30 and May 1. The cost: as little as $50 per person a night—a huge saving under the average $165 a night.
Is this a good deal for the passenger? If a couple likes cruising and can leave at a moment’s (or a week’s) notice, it’s terrific. Where they sleep may be a hole-in-the-wall inside cabin, but they can roam a glorious cruise ship, gorge on good food and live like millionaires for 50 bucks a day.
Is this a good deal for the cruise company? Absolutely. It’s receiving revenue—ticket price plus onboard spending—that would be dead loss if the cabin remained unsold on the sailing date. And the cruise company has increased its customer base for possible later sales.
However, last-last minute cruise offers are best grabbed near home. On April 25, I found a nifty Royal Caribbean 7-day cruise to the Holy Land departing April 29 at a splendid price. However, airfare to the departure city (Rome) at that late date was $1,678—blowing any savings sky high.
In the words of my first employer, Franklin Watts, “Sell what you got.”
And don’t let up for a minute.