Tweet

The Carnival Cruise Line Profit Machine

Guest post by: David Frey

Article Overview: The more products and services you can sell to your customer, the more valuable they become, and the more you can spend to acquire a customer. Read this article and find out how you can apply the marketing techniques used by Carnival.

The Carnival Cruise Line Profit Machine

As you're reading this newsletter, I'm sailing on a cruise ship in the Caribbean. It's my first cruise and it's been a fun and very interesting experience.

It's not really my first cruise. I used to be in the Navy and I "cruised" a LOT during the six years I was enlisted.

While we were working our behind off on the navy ship we would sometimes have these huge cruise ships pass us. You could hear loud music coming from the ship and see all the people in their hawaiin shirts and bathing suits.

Me and my shipmates were all envious. We would wave to the people on the big cruise line and they would wave back.

Now I'm one of the passengers on the cruise ship waving back to the sailors. It's a lot more fun!

My Shocking Discovery...

While talking to several of the passengers on the cruise I found out that I paid nearly TWICE as much as they did to go on this cruise. But that wasn't the most shocking discovery. You see, I thought I got a great deal on this cruise. But after talking to several other people I discovered that they paid almost next to nothing to be on this seven-day cruise.

Of course, I bought my cruise at the last moment and most of the people I talked to purchased their cruise well in advance, I was still surprised at how low a price they paid for the cruise.

I asked myself, "How could this cruise line (Carnival) afford to give someone a nice room and all their meals and drinks for free for seven days, and still make a profit?"

Here's the Secret Strategy Behind the Carnival Cruise Lines Profit Machine...

At first glance, it's hard to imagine how Carnival and other cruise lines can make a profit. You see, almost everything is free on the ship.

The food is free (and there's LOT'S of it).

The shows are free (and the shows are great!).

The gym facilities are free (I use them every day).

The activities are free (today I'm learning how to make animals out of bath towels...it's pretty cool).

And from what I understand, there's a 1-to-3 ratio of staff to visitor. That's a LOT of staff!

But it doesn't take long after spending a few days on the "Fun Ship" to realize how Carnival makes their money

There are a lot of services that are NOT free. Stuff like...

1. The onboard casino.

2. The Internet services (that I'm using right now).

3. The photographs (they have photographers everywhere standing ready to take your picture).

4. The massage, facials, and hair treatments.

5. The liquor.

6. The onboard shops and stores.

7. The off ship excursions (they are awesome).

And a host of other services. In essence, the entire ship is one big UP SELL.

Here's an insert that came in the daily newsletter. Notice the up sell ads...

Click here to see ads -> http://url123.com/a3gag

PROOF THAT I CAN BREATHE UNDERWATER

Here's a few photos of me on an off ship excursion doing an underwater helmet dive. I didn't even get my hair wet! :-)

Click here -> http://url123.com/azkbu

Click here -> http://url123.com/azw95

And Here's Another Shocking Secret...

How much do you think it costs Carnival to feed one person on a 7 day cruise? The answer shocked me.

I asked a "person in the know" on the ship this same question. Someone who is intimately involved in the food and beverage department.

I figured it cost Carnival around $60 - $70 to feed me for 7 days. I assumed it cost them around $3 a meal. So I multiplied $3 x 3 meals a day x 7 days and got $63.

He laughed and said, "It costs us around $10 to feed you for 7 days!"

Only $10! Nah...you're joking.

Nope. Not joking. $10.

Imagine how much food Carnival buys in a month and imagine the purchasing power they have.

Well, then - - even at $300 for a $7 day cruise they're still making money. That's amazing. But even if they were losing money to get me onboard their ship, it would still be a winning deal for Carnival.

I'll estimate that after this cruise is over I will have spent over $1,500 above and beyond my initial cruise fee. (And I'm not a drinker or gambler!)

So What's the "Marketing Moral of the Story?

The Marketing Moral of the Story is...

Once you have a "Captured Customer," up sell them like crazy with backend products and services.

Four great things happen when you have additional products and services with which to up sell your customers.

Great Thing # 1

You make a LOT more money.

Great Thing # 2

Your marketing costs go down.

Great Thing # 3

If you have to, you can spend more money to capture a customer (maybe even lose money on your initial transaction).

Great Thing # 4

The more your customer buys from you, the more loyal they become.

How This Concept is Changing My Business

As we speak, I'm making changes in my business, based on the very premise that makes Carnival Cruise Lines so profitable.

Change # 1 - I'm working to develop more products. More products increases the lifetime value of a customer (assuming that my customers buy more products from me).

Change # 2 - I will be buying more advertising to reach a wider audience, both offline and online. A higher lifetime value of a customer allows me to spend more to get a customer, thus I'll be able to afford doing extensive offline advertising.

These same principles work exactly the same in your business as well. The more products and services you can sell to your customer, the more valuable they become, and the more you can spend to acquire a customer.

It's simple.

Related Articles
  Cruising Trends for the Near-Term Future
  An Easy Home Based Business Opportunity Combines Travel with the Baby Boomer Generation
  Blogging Africa into the 21st Century
  Sao Paulo - The City Of Love Dance and Music
  “Sit Back and Watch Your Business Explode When You Tap Into The Most Powerful Marketing Tactic In The World-Don’t Be The Last To Use This One!”

Article Tags:



Related Forum Posts
profit line - I recommended Profit Line to one of my clients and they were not 100% satisfied with the service. Apparently one of the profit line people got a parking ticket while serving my client and then charged them for it. I haven't heard the other side of the story yet but the fact that I recommended them and it didn't work out makes me reluctant to recommend them again.
Re: Cash up front ... or Royalties? - [quote="TannyL":m0ab6gqi]The best deal will be get a one time payment PLUS royalties, this is how you do business.[/quote:m0ab6gqi] Well if you're in a position of power/high demand like an A-List actor (e.g. Will Smith or Tom Cruise), you can ask for cash up front and back end money from overall ticket sales. But if you're just a startup, it'll be a lot tougher to negotiate a better deal.
Re: Can Soemone Invent a Longer Day - Hi GT, I think time travel would be better. That way we could just go back a few days and do more work. We'd essentially be able to get more done, and in a sense would be making our days longer. However, do you think maybe that if we traveled to the past, then it would erase what we had previously done? Or, no matter what we do, the outcome remains the same, like in [i:1rij0ml4]The Time Machine[/i:1rij0ml4]?
Which kind of industries are you interested in? - Ecological or E-business or Investment or Finance or Management or Non-Profit or Retailer or others.
More Profit Women! - I really enjoyed the stories of Lisa Shepherd and Julie Mitchell - More Profit women CEOs would be great!


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Live To Work Or Work To Live?

The Golden Rule of Communications

Purchasing Real Estate using the SBA 504 Loan

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.