A wake up call with a senior exec
As a whole, are travel agents complacent? Over the past few months, I have heard a lot of chatter about how it is a bad thing to be “average” and how you need to strive to be “better than that”. I fully agree, but as I look around, I sometimes wonder if that desire and passion is really there for the industry in general. Are we, as an industry of sales professionals, mediocre—at best? What do clients think? And, perhaps more importantly, what do the suppliers think?
My mother always told me it never hurts to ask, so I made a call to a senior executive with a major travel supplier to chat. I had nothing to lose. After an hour long phone call, I was shocked, surprised, and quite frankly, worried.
We covered a lot of ground; we talked about MLM and Card Mill agencies, the state of the industry, and how effective agents are in selling a particular supplier’s product. If you want to hear some brutal honesty, read on. Otherwise, click your “back” button on the browser.
Path of Least Resistance
Agents will usually take the path of least resistance. For some reason, they are afraid of sales. Perhaps it is the “order taker” mentality, a lack of sales training (versus travel training), or just a fear of sales. But it has been proven time and time again that the agents will operate using the path of least resistance. Sales is tough, and it is very easy to just sell what’s available or handy.
There has always been the question about where our loyalties lay—the people that pay us, or the client. The easy answer is the client—the path of least resistance. However, without the money from the supplier, we are out of business. Of course if the client is set on a particular product, you sell it. But you also need to remember, the client came to you because (for any number of reasons) he did not want to do it on his own—he is looking for help, advice and assistance. There is nothing wrong with identifying the needs of the client and if there is a better fit with a preferred supplier, to sell him on that product and sell it proudly. We discussed price watching. Whose problem is it? Should an agent actively use their time to look for lower prices to effectively reduce their own commission…on a product that the client has already rationalized and determined to be a fair price? If the client finds the lower price, great, make the adjustment and maybe even charge a small fee to do it. But why use your resources to lower your income. When was the last time that Best Buy or Radio Shack called you to let you know that computer you bought a month ago was $100 cheaper and they wanted to give you some money back?
It was mentioned that the industry, in general, lacks sophistication. It was not said in a disparaging way at all. And I tend to agree. Many of the agencies in existence today were sprung from a love of travel and not and MBA from Wharton. I might even go so far to say that most agencies, due to this lack of sophistication, are tossing away thousands upon thousands of dollars each year. I am quite confident I am guilty of it as well. As a whole, we are horrible at moving market share. Let’s take a look at a few examples. When commissions began to be cut, TWA was a hold out. They just “knew” that their “partners” would support their worldwide routings. Guess again. When up front commissions were finally eliminated, a struggling Frontier Airlines made a bold announcement to the industry—they were keeping commissions at 10% uncapped. Their president felt that by demonstrating their willingness to truly partner with agents, they could grab some market share from their top competitor—America West. To be honest, Frontier was a better product with a newer livery and friendlier employees. After 6 months, commissions were eliminated. Frontier did not see the market share increase they had expected. As a matter of fact, they lost market share! Thank you travel agents!
Our lack of influence is not relegated to the airlines. Back in November of 2007, Royal Caribbean International made a gutsy move and terminated contracts and refused to do business with card mill, multi level marketing companies such as YTB. This resulted in much praise from everyone in the travel industry (well, except for the ones that were terminated) because it was a solid message that they support legitimate travel professionals and not companies who operate on the fringe—ethically, morally, and legally. While I have not seen any solid numbers, anecdotally it appears that the market shift RCI might have expected, has not materialized.
As we were wrapping up, we discussed a study that Carnival Cruise Lines did a few years back at the behest of Bob Dickinson. They queried their second time cruisers who had booked with an agent. They asked them a simple question—“did you purchase this cruise from the same agent you purchased your first cruise?” Can you take a guess at the results? If you have not heard this statistic before, please sit down. 80% of the people that booked their second cruise with an agent did not book it with the agent or agency that sold them the first one! Now of course, there are some shoppers in there; but 80%? As a whole, travel agencies lost 80% of their business to another agency. What does that tell you?
I have maintained that at some point in the not so distant future, we will go to a net environment. Agencies will need to rethink and retool their business models just as they have countless times before. But this time, there will be no reliance on the suppliers for any money—it will all be on the agent or agency. Keeping that in mind, can you afford to have 80% of your cruisers buy their next cruise from someone else?
While I went into this conversation just looking to chat, I came out with a whole lot of perspective. I am pretty sure that the opinion of this industry executive is not unique. I think we have some work to do to prove our worth. I think the points raised, solidly make the argument to go to a net environment and cut out the middleman and let him fend for himself.
We need to think about the client of course, but we also need to consult and offer what is best for the client and your business. You can have a million happy clients and sleep well at night, but at the end of the day, unless they are making you money, you are going to bed hungry.
What do you think? Valid points? Or full of bunk? Please leave a comment!