Turning new customers acquired through micro-tourism into repeat customers. LTV enhancement strategies applicable to other industries.

The tourism industry, severely impacted by the pandemic, is now promoting "micro-tourism" – short trips enjoyed locally – to attract residents from nearby areas as customers and encourage them to become repeat visitors. This represents an effort to deepen relationships with existing customers through micro-tourism and increase the "LTV (Life Time Value: Customer Lifetime Value)" – the total profit generated from a single customer over their lifetime.Could the retention strategies seen in micro-tourism be applied to other industries?

Therefore, this time we explore the theme: "Can retention strategies in micro-tourism provide hints for improving LTV in other industries?" Together with those aiming to turn existing customers into fans within their own businesses, we will consider marketing approaches to increase LTV.

What is "Micro-Tourism," Enjoying Travel Nearby?

Even if you hear "A quick weekend trip just 1.5 hours away!", you probably won't find it strange to travel such a short distance.

It has long been noted that domestic travel in Japan tends to be "cheap, close, and short" (low cost, nearby, and brief). This trend has accelerated since the pandemic. Extended restrictions and self-restraint likely made even short trips feel refreshing and more valuable. These nearby getaways are termed "micro-tourism," gaining significant attention during the pandemic.

Major travel companies define micro-tourism as "enjoying travel within a 1-2 hour radius from home." Leisure activities offering non-daily experiences, such as pottery workshops, shimenawa (sacred rope) making, and yoga at scenic spots, are gaining popularity.Furthermore, positive effects on local economies are anticipated, such as promoting locally sourced consumption, deepening understanding of regional festivals and traditional culture, and strengthening connections with local people.

Even without long-distance travel or overseas trips, "enriching journeys" can be found locally.

Why is micro-tourism gaining such significant attention in Japan right now? Let's examine the background.

In July 2020, the government launched the "Go To Travel" campaign. This initiative aimed to revive the tourism industry, severely impacted by the spread of COVID-19, by subsidizing consumers' domestic travel expenses. Other campaigns, such as the "Prefectural Resident Discount" and "Regional Block Discount," targeting travel within one's own prefecture or neighboring areas, were also introduced. This popularized a travel style centered on enjoying short trips using nearby lodging facilities.

It is thought that the concept of "micro-tourism" came back into public consciousness around this time.During the pandemic, not only were free overseas trips restricted, but people were also asked to refrain from traveling outside their prefecture within Japan. From an infection control perspective, long-distance travel became taboo, and many people even hesitated to visit their parents' homes. Amidst this, the idea emerged to balance infection control and travel by choosing destinations within one's own prefecture or other nearby areas requiring short travel distances.

Furthermore, the pandemic served as a reminder that "travel" itself can be an extraordinary experience. Consequently, the value of short trips—extensions of daily life—was rediscovered. This includes enjoying the simple act of riding a local train, relaxing at nearby hot springs, or staying at a suburban resort hotel to savor a meal.

The Key to Micro-Tourism Boosting LTV

As we've seen, the pandemic led to a rediscovery of the value in short trips. Moving forward, we'll delve deeper into micro-tourism from the perspective of "retention (maintaining existing customers)" and also explore hints for its application in other industries.

In recent years, advancements in transportation infrastructure have made long-distance travel more accessible, driving continuous expansion in the tourism industry. Inbound tourism, in particular, has seen remarkable market growth. In 2019, the number of foreign visitors to Japan reached a record high of 31.88 million. That same year, the number of Japanese travelers abroad also hit a record 20.08 million. Travel surrounding Japan was scaling up year by year just before the pandemic.

However, such large-scale travel requires significant time and expense, making it difficult to cultivate repeat customers. In marketing, there is the concept of "LTV (Life Time Value: Customer Lifetime Value)." This calculates how much profit a single customer generates for a specific company or brand over their lifetime. In other words, it emphasizes not just a one-time purchase of a product or service, but how to turn customers into repeat buyers and how to retain existing customers.Viewed through this lens, large-scale trips like overseas travel represent a model of "maximizing individual profits through significant investment," which presents challenges for improving LTV.

Micro-tourism, however, involves nearby travel by local residents. This makes it possible for them to visit multiple times a year. Even with a small local population, if tourists visit four times a year—once per season—revenue quadruples.

An American management consultant proposed the "1:5 rule," stating that "acquiring new customers costs five times more than retaining existing ones." From an LTV perspective, micro-tourism could thus be considered an ideal model for the tourism industry.

Successfully attracting repeat visitors through micro-tourism would bring significant benefits not only to lodging facilities and transportation industries but also to related businesses. To achieve this, it is essential to deepen fan engagement by offering diverse experiences that lead to rediscovering the region's charm, seasonal events and fresh activities that captivate visitors, and opportunities for genuine interaction with local people. Indeed, various initiatives aimed at enhancing regional value more than ever before are being implemented in micro-tourism destinations.Let's examine key points from concrete micro-tourism examples that elevate customer quality of life while also increasing the lifetime value (LTV) for related businesses.

Example 1: Providing Community-Rooted Experiences
Community-based NPOs and urban boutique hotels offer services that help rediscover local charm. These include delivering local gourmet meals to guest rooms, having locals guide visitors to traditional bathhouses and restaurants, and encouraging participation in traditional cultural experience programs. Travelers who participate rave, saying, "Not only can you enjoy delicious food, but you also get to experience what it feels like to be a resident." As more people become fans of the town, repeat visit rates can also be expected to rise.

Case 2: Offering Day-Use Plans
To attract day visitors, "non-staying hot spring inns" have emerged, offering day-use services where guests can enjoy meals in their rooms and open-air baths. While no overnight stay is involved, guests can relax and unwind in a luxurious, non-daily environment. This is a case where high-end inns, often seen as unattainable, have introduced relatively affordable day-use plans.

Case 3: Acquiring Repeat Customers via Apps
By downloading and registering with a smartphone app provided by the local government, users gain access to tourism information and earn points each time they use restaurants or lodging facilities. These points can be used for discounted shopping or various benefits. Even after their trip, users receive regular updates on seasonal information, encouraging them to return.

Retaining existing customers is a critical challenge for any industry, not just tourism, one that rivals the importance of acquiring new customers. Creating mechanisms that turn adversity into opportunity through collaboration between regions, businesses, and local governments. Developing services from the customer's perspective and enhancing the quality of the "experience." These examples offer insights for improving LTV that can be applied across industries.

We've examined micro-tourism—a trend amplified by the pandemic—in detail, covering its background, business advantages, and concrete examples.The tourism industry is boldly implementing strategies to deepen engagement with customers acquired through micro-tourism and encourage repeat visits. From this, we observed numerous unique approaches—though rooted in traditional methods—that effectively turn customers into loyal fans. Why not take inspiration from the ideas they've generated and aim to capture repeat customers and boost LTV within your own business?
 

To learn about trending topics like "Nighttime Economy Promotion," please also refer to this resource.