This is the fifth in the series called, “Let’s Take A Look at Tukaluk”. This series of articles will apply the concepts of the Intentional Marketing System outlined in the book recently published by Joanne O'Connell and myself. 

Links to the articles in this series are listed at the end of this article. 

This article will look at the absolute maximum revenues that the Tukaluk Campground & Cabins can generate. Then we will look at a variety of reasons why the campground has difficulty reaching the maximum. Based on these conditions, we will calculate the realistic maximum revenues. Next, we will look at the real problem and determine a few strategies for remedying the situation. 

Note: For this article, we are just looking at revenues. We will not look at the cost of goods sold or operational expenses. 

Offerings and Pricing

According to the website, we can learn the following:

• Cabin 1 is $125 per night (2-night minimum)

• Cabin 2 is $140 per night (2-night minimum)

• Cabin 3 is mentioned but not available yet

• There is no cleaning fee per visit for the cabins

• There are 35 full-service campsites for $40 per night

• Tenting is $25 per night for 2 people and a vehicle (ignored for this article)

• Firewood is $10 a bundle

• A bag of ice is $4

• There are some services for non-campers (we can ignore these)

Absolute Maximum Revenue

To start with let’s assume that the cabins and the campsites are booked 100% for 365 days in a year. The absolute maximum revenues for a year (365 nights) would be:

• Cabin 1: $125/night = $45,625

• Cabin 2: $140/night = $51,100

• 35 Campsites: $40/night = $511,000

• Firewood (37 spots) = $135,050

• Bag of Ice (37 spots) = $54,020

• Absolute Maximum Revenue = $796,795

Chipping Away at Revenues

$796,795 is a nice amount of revenue for a small business. However, watch how quickly the absolute maximum gets chipped away to be a realistic maximum revenue of about one-third.

Campsites

The campground is in the middle of BC nestled in the woods with the mountains nearby. Beautiful, but as you can imagine, it gets cold in the winter. Most people don’t camp in the Spring, Fall and Winter, even in RVs. David Cooper estimates that during the year people come to the campground for about 4 months (120 days). July and August are strong months. People camp in May, June, September and October but these months are slower. 

As a result, the realistic maximum revenue from campsites is about $168,000 (35 sites * $40/site/night * 120 nights).

Realistic maximum revenues are down to about $453,795.

Cabins

David says that people love the cabins, which is why he is building a third one. It is almost done and should be available sometime this summer. It is, however, difficult for many people to take time off during the week, so reaching 100% capacity is tough. Let’s assume 50% capacity. This means that instead of $96,725 we are now down to a realistic maximum amount of revenues to be about $48,363.

Realistic maximum revenues are down to about $221,473.

Firewood

The province of BC has historically implemented various bans on campfires. However, over the past 10 years or so the length of these bans has increased. For the last 5 years or so, there has been an almost complete ban on campfires in BC (David Cooper). As a result, there is no revenue from firewood sales. 

Realistic maximum revenues are down to about $217,823.

Bags of Ice

There is some good news, however, small. As you can guess, because of the hotter temperatures, ice is in high demand. But selling ice depends on the number of people staying in the cabins and at the campground.

Campsites are now 120 * 35 = 4200 possible nights.

Cabins (2) are now = 365 possible nights.

Instead of generating an absolute maximum revenue of $54,020, revenue generated by sales of ice is now $18,260. Most likely this number is too high because people buy less ice in the colder off-season months.

Now the realistic maximum revenues are down to about $234,623.

Realistic Maximum Revenue

We started with an absolute maximum revenue of $796,795. This is the maximum amount of revenue that Tukaluk could generate under “perfect” conditions. After looking at various limitations and ways where revenue can not be generated, we determined that the realistic maximum for revenue is $234,623. This is a drop of 70% - mostly uncontrollable. 

Although we have calculated a maximum for revenue that is realistic, our job is not done. This is because, at the current time, revenues are not at this level. 

The Problem

In this situation, the occupancy rate for the campground is about 30% at the best of times. This means that even on the weekends, there are campers in only 10 sites instead of the total 35 sites.

Most problems in business that are controllable have two characteristics:

1. The issue is eating away at profits. Revenues are too low or expenses are too high.

2. However, it must be possible for the company to fix the problem. In other words, the problem cannot be an uncontrollable factor. Ultimately, the company can control the situation and fix the problem. 

The problem for Tukaluk Campground & Cabins meets both criteria:

1. The low occupancy rate creates a situation where revenues are lower than the realistic maximum, and

2. The problem is controllable and fixable

Possible Solutions

It is hard to influence the daily temperatures in the Arrow Lake Valley. Although, as humans, we might be able to do that on a global scale but that’s another story. So there isn’t much we can do about changing the seasons and reducing fire bans. However, there are significant things that can be done to increase revenues. 

In our book, Joanne and I identify three key components that marketers can directly influence to improve the effectiveness of marketing. These include:

1. Change the product (what we are selling)

2. Change the market (who is buying)

3. Change marketing (the messaging and the channels)

Strategy Options

We can use these three key components as an outline to help us focus resources on fixing the problem.

1. Change the Product

The are already plans in place to add another cabin. This will help to increase revenues. An investment is required to build the cabin and it will take a about year of revenues to break even. After that, the operational costs are variable and can be easily covered by the revenue generated.

However, based on the current product mix, this isn’t the real problem. The real problem is that there are not enough campers staying in the campground.

More campsites could be added but, again, this doesn’t solve the problem. There is already excess capacity. The campground provides campsites that are full service so there isn’t much that can be done to improve the services to each campsite. 

Competition isn’t an issue because there isn’t a camping site within 120 km that provides full service to each site. 

Selling more firewood and more bags of ice isn’t going to help either. Similarly, doing things like setting up a store and adding more products isn’t going the solve the problem. 

2. Change the Market

People staying in the campground love it. Here is an example of the type of feedback from customers:

We stayed here for two nights last week and it was such a fantastic

campground! Angella, the manager, is doing a lot of work around

the place with the cabins and infrastructure! The washrooms are

absolutely the best I have ever seen at an RV campground - bonus

the incredible showers are free! Lovely shaded sites backing 

onto the ravine and creek. Such a great alternative to the provincial

parks (and I would hands-down stay here over the electric sites in

the provincial park parking lot!) Good location for exploring the West

Kootenays and doing local hikes!

In a nutshell, the people who love the campground and keep coming back, like these characteristics:

• The manager, Angella

• The washrooms (clean and free)

• The shade from the trees

• The creek nearby

• And the location, including access to activities such as hiking, boating, fishing, etc.

3. Change Marketing

Multiple things can be done to increase the occupancy rate. Here is a list of a few examples:

a) Increase Reviews

Currently, Tukaluk has the following number of reviews:

• Facebook: 16 (86%)

• Google Business: 70 (4.5 stars)

• TripAdvisor: 1 (5 stars)

• RV Live Campgrounds: 2 (9.3 out of 10)

• Airbnb - Cabin 1: 46 (4.8 stars)

• Airbnb - Cabin 2: 14 (5 stars)

• And other sites

Getting reviews is inexpensive and effective. Just do it!

b) Increase Incentives for Repeat Customers

Maybe this is being done but it isn’t obvious on the website. A program could be promoted to offer a free night after 13 nights. The purpose would be to encourage people to stay longer. Instead of staying 10 nights, they end up staying 13 and get the next night for free.

c) Increase Incentives for Referrals

Similarly, a program could be set up to encourage customers to recommend the campground to their friends and relatives. Specific details would need to be developed. One option would be to offer a group of 3 campsites an extra campsite for free. 

d) Change the Messaging to Reflect a New Position in the Market

Right now the position in the marketplace is “campground with full-service campsites”. This message focuses on the features of the product. Rarely a sellable message. Focusing on benefits like “relaxing” and “good views” isn’t much better. 

Instead, the messaging should be about how unique the location is. Examples are: 

• Cozy cabins, endless adventures

• Reconnect with nature

• Escape the daily grind

• Full-service serenity

• Pet-friendly paradise

• Year-round wilderness experience

• Permanent relaxation zone

• Scenic campsites, endless possibilities

• More trees than worries

• Your home in the wild

• Adventure is just a campsite away

• Unplug, unwind, and Tuk- in

• Explore more, stress less

• Full-service camping, unforgettable experiences

e) Improve the Creative 

The images on Instagram are okay but not great. Images and videos related to the messaging are critical. Good use of humour is always great.

f) Generate More Awareness

There are lots of ways to generate more awareness. Options include:

• Search Engine Optimization (SEO)

• Search text ads 

• Display ads

• Banner ads

• Newsletters

• Signage

• Billboards

• Print including newspapers and magazines

• Media like TV and radio

• Social media organic posts

• Social media advertising

• Etc.

All of these are viable options. The trick is to figure out which option is going to get the biggest bang for the buck - at this time. 

David tried Google Ads last year. These generated plenty of visitors to the website but he wasn’t sure how many people became customers because of the ads.

Most traditional media is expensive and oriented to a mass audience.

There have been attempts at a newsletter but this has been sporadic.

Social media might be an option worth putting in some effort. There is a cost to developing organic posts but posting on Facebook and Instagram is free. The reach for social media posts can be quite wide. Boosting a post which increases the reach is cheap. The campground has pages on Facebook and Instagram but postings are infrequent and mostly related to the features of the campground. 

Summary

For Tukaluk's current predicament, diving into social media marketing might be just the 'camp-aign' they need. But David, before we pitch tents in the digital wilderness, what's your phone number? My dog thought your business card was a 's'more' and devoured it!

(I had a little help from Perplexity.ai to write this paragraph.)

List of Articles in this Series

In our first article, Step 1: Asking Important Questions, we laid the groundwork for understanding key questions before starting this project. This article followed our previous series, "10 Things I Learned from Joanne," which began with Each Level of the Model Must be Measurable.

In the second article, Step 2: Design the Model, we took a look (pun intended) at designing the customer acquisition model. This step is critical for defining the levels of the model and the marketing channels. The financial aspects of the model are implied, but not listed explicitly. We will get to this later. 

In the third article, Step 3: Collect the Measures - Visits, we looked at how to find and collect the measures to add to the model.

In the fourth article, Step 4: Calculate the Metrics, we looked at the task of using 2 measures to calculate a ratio. In general terms, as defined in our book, all calculations using measures are called metrics.