Lessons From The YuMi Alotau Accelerator
I’ve spent the past week in the port of Alotau in Papua New Guinea, working with ten tourism businesses.
Alotau is beautiful, and every few weeks the population swells with the arrival of 2,000 cruise passengers who are in town for the day.
Carnival Cruises is committed to growing Alotau’s economy, and want to help create/improve local tours that give customers a highlight of their trip.
That’s where we come in – our program YuMi Partners helps entrepreneurs design, test and build great experiences that will delight customers and create local jobs.
Here are some of the lessons we’ve had so far…
You want to really nail three elements: Product, Customer, Money
Every tour operator needs to be confident in their product, their customer and their financial position.
A flawed product will be a factory of headaches.
A misunderstood customer will be a factory of complaints.
A skewed financial model will send you broke.
For this reason, we all agree that we need more clarity over how these elements work today, and to think creatively on how we can improve them in the future
Know your three customers
Tourism businesses have three customers; the cruise passenger, the cruise operator, and the aggregator who does the bookings.
All three must be well known, and must constantly be left feeling delighted.
Upset passengers complain to the cruise operator, the cruise operator complains to the aggregator, and suddenly you’re not a featured/recommended activity.
Standards are high, fair and achievable
We read through the extensive terms and conditions with each entrepreneur, and it came as quite a shock.
Cruise operators demand a lot, which can feel overwhelming.
Upon a second or third reading, things start to feel better – whilst standards are high, they’re also based on common sense.
Precautions are in everyone’s interests.
A way of turning these requirements into action is to split the work into two lists:
1. Things that must be done upfront, like obtaining permits, buying first aid kits, replacing old equipment, etc.
2. Things that need to be on a checklist each day, like re-stocking first aid kits, conducting safety checks, etc.
Four principles of the design phase
We introduced four principles at the start of the program, which help establish the right attitude for designing new businesses.
1. Good ideas survive competition – we are not afraid to try new things or explore new concepts, because we know the best ones will win.
2. The magic words are “I don’t know but I’ll find out”. We are not embarrassed to admit what is unknown, instead we commit to learning more.
3. As Richard Feynman said “It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are; if it doesn’t agree with experiments, it’s wrong.” We don’t accept clever ideas until they are proven.
4. We say “Can If…” instead of “Can’t because…”. Our objections are framed as positive conditions, forcing our brains into glass-half-full thinking.
To understand an idea, draw it
Each group drew their tour, start to end.
What’s surprising is that a good tour sometimes takes a whole month start to end, even though the trip itself lasts six hours.
By including the time spent arranging staff, preparing the site, collecting income and paying your contractors, you can see all of the “invisible costs” that need to be taken into account.
This was a magic moment, where participants saw just how much work it took to run a single day.
To understand a customer’s experience, draw it
Each group then drew their customer journey.
We use the 5 E’s model; Entice, Enter, Engage, Exit, Extend.
For each of these five stages, we look at the customer’s feet (where they move), their camera (the magic moment) and their mood (how they feel).
This gives us a thorough understanding of today’s experience, and highlights opportunities to fix low points or boost the special moments.
Use these drawings to build your financials
The product map highlights the costs, while the customer journey gives us an indication about how much customers typically spend.
This helps us create accurate forecasts about the future, as well as spotting ways of increasing revenues.
There are three main types of cost: upfront costs (buying a boat), fixed costs (leasing an office) and variable costs (bottles of beer given to customers).
There are three main sources of revenue: ticket sales, add-on experiences and souvenirs.
As long as each group has thought about each idea, I’m happy.
The happiness equation
Tim Urban identified the formula for happiness:
Happiness = Reality – Expectations
You might have seen this for yourself; an Oscar winning movie that you rate a 7/10 is a disappointment, whereas a 7/10 romantic comedy you watched on a plane is a nice surprise.
Good tour operators are obsessed with the customer’s experience, as this fuels their marketing and reputation.
More specifically, they focus on matching their promises with what they deliver.
A good day that doesn’t live up to promises will be remembered poorly.
You need a good tour description
I’m happy to admit my own ignorance, so I’m honest enough to say that I don’t “get” a lot of tours at first.
That’s because I find that I need to ask “So What?” in my head twice;
“We run a drum oven tour”
“You can learn about traditional drum oven cooking”
“You can bake your own bread alongside the local mamas”
Ah right, that sounds fantastic!
“We run a traditional fishing workshop”
“You can learn about traditional fishing techniques”
“You get to make your own fishing equipment”
Ah right, that sounds fantastic!
Here’s a formula for a tour description:
Short, clear headline
Compelling strapline that explains the benefits
Describe 3-4 of the magic moments over the day
My suggestion? Read 50 tour descriptions and pick your favourite three, then use those as a template for your own idea.
Tourists get nervous about money
While our entrepreneurs are experts on running tours, I am an expert on being an awkward tourist.
We get funny about money, for a few reasons.
One purchase is often easier to swallow than many little add-ons.
A $200 ticket feels cheaper than paying $99 + $20 + $25 + $30 + $10.
It might be more money, but it’s a single decision and then we can put our wallet (and analytical brain) away.
We want to know what is expected of us; if there are obligatory fees, put them in the ticket price – we don’t like a demand framed as a choice.
If we’re expected to tip, if there’s a gift shop or a chance to buy lunch, tell us ahead of time.
We want to bring enough money to give us lots of options, but not so much that we’re unsafe.
It’s also a good idea to get us to pre-pay either ahead of time or at the start of the day, rather than have us carrying lots of cash for a group of 4-6 people.
Finally, we get nervous about souvenirs in remote places, we’d be upset to have our gifts confiscated by customs.
Placing posters from Australian Customs at the markets is genius, it gives us permission to buy nice things.
Clever extras are a goldmine
There are lots of opportunities to sell additional items to happy customers.
For example, at a recent trip to the museum, we spoke with the artists who created the main exhibits.
In conversation, my colleague Shannon commissioned some custom artwork – this clever artist turned a cheap admission fee into a much larger purchase.
Everyone wins, all it took was a conversation.
If you’re an adventure tour, what about selling GoPro rentals and SD cards?
Customers can use the cameras, then keep their SD card while you make a neat profit.
Or what about offering to post souvenirs home for us?
Could you sell customers a DHL courier service, so that their new purchases don’t have to fit into their suitcases?
External contractors are a huge risk
There are so many moving pieces in a tour in the Pacific.
Different islands, different land owners, lots of contractors, limited buses.
Each tour operator needs to ask themselves: What’s the smallest issue that has a disproportionately large impact on our business?
Whilst a lot of these can’t be prevented, they can be planned for.
This might involve exclusive contracts or employment, rather than being at the mercy of independent vendors.
By creating alternatives in case of transport issues or contractor unavailability, the tour can progress instead of issuing refunds to disappointed customers.
We’re all on the same team
These ten businesses are not competitors, they’re all on one team: Team Alotau.
This team is fighting for Alotau’s reputation – the better their brand, the more customers they’ll see.
That means either more sales, higher prices, or both.
Alotau is competing against other countries and other ports, and it’s in everyone’s interest that Alotau as a community does well.
The rising tide truly does lift all boats.