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Stop Looking For The Commission!

It’s a common sight: message board posts from agents asking for a referral to a company that provides a service their clients need, plus the tagline, “that pays commission.”

If one were to examine carefully the history of the travel industry in America, the commission-based model didn’t exist eighty years ago.  Sellers of travel were paid fees by the customer for making the arrangements.  Eventually, suppliers started offering a commission on the sale to travel agents as an incentive to sell their products.  Fees paid by the client fell by the wayside, and travel agents became agents of the supplier more than a consultant for the client.

The last few years have seen a small resurgence in fees of all types, with two dominant ones: the retainer fee, and the plan-to-go fee.  The main difference between the two is quite simple; a retainer is retained by the agency regardless if travel is booked or not, and the plan-to-go fee is applied to the final payment made to a supplier, and retained by the agency if the client decides not to book.  These fees are paid by the client in exchange for the services of the travel seller.  On the flip side, commissions still reign as the de facto payment structure in exchange for selling a supplier’s product.  In effect, we get paid twice – once from the client and once from the supplier.

In this Internet age it is important that we carefully consider what the client wants, counsel them in their options, and then secure their preferences.  The majority of the time, when a client says “Bahamas” we can think of two or three suppliers off the top of our heads that will service the client well and provide access to the right properties for that client.  But, moments occur when the client wants something we don’t normally handle.  Event tickets, perhaps, or a rather unique lodging experience.  Whatever it is, a “traditional” supplier that pays commission can’t provide it, and the only way to get it would be to go to the source directly, pass the costs on to the client, and make no money on the sale.

But, that really isn’t true – there IS money made on the sale, from the retainer or plan-to-go fee!  With this payment in your bank account, it becomes a matter of finding what the client wants, regardless if the supplier of the product pays a commission or not.  Two summers ago I had a client who took his family on a road trip along Route 66, the Mother Road.  His itinerary included a hotel that offered no commissionable rates and theme park tickets to Six Flags Magic Mountain in California, at the end of the trip, which were obviously not commissionable.  However, I secured the hotel and theme park tickets for the client, assured that my time and work had been compensated in the retainer he had paid me in advance.

These days there are many methods for capturing a retainer or plan-to-go fee so it’s much easier to participate in that model should you choose to do so.  The biggest benefit to having such a model? Getting the client what they want, regardless if a commission is paid or not.

I welcome your comments – please, let me know your thoughts below.  Let’s continue the conversation!

[For those who are interested in more information on fees and how to implement them, I highly recommend Nolan Burris’ program, “Fees For The Fearful”, currently available through The Travel Institute.  Members can receive a discounted price.]

 

Steve Cousino, ACC, CTA, LS is a six-year industry veteran and owner of Exclusive Events At Sea (http://www.exclusiveeventsatsea.com) and Journeys By Steve (http://www.journeysbysteve.com), based in Springfield, MO.  In addition to producing special events on board cruise ships, he specializes in vacations to the British Isles.  He can be reached at steve@journeysbysteve.com.

  7 thoughts on “Stop Looking For The Commission!

  1. Ann says:

    I think agents these days have to realize that they are working for the customer. What the customer wants may not be commissionable, and if you try to shoehorn them into something that doesn’t fit what they want, they will be unhappy. This is where you don’t apologize for being in business and charge what is necessary.

    A client that is unhappy won’t return to you. Is that worth it? A client that doesn’t want to pay fees. Is that worth it? 2 sides of the same coin, ultimately…

  2. I second the recommendation of listening to Nolan’s “Fees for All” for “Fees for the Fearful.” He makes a valid point – you are NOT double dipping when paid by the client AND the supplier. The supplier is paying you to service the booking on their behalf, they don’t give a rip if you provide extras to the client. The client is paying you for your advice, your knowledge, your expertise, and your ability to find them the right fit for them regardless of which supplier that is.

  3. Andy Bailey says:

    We went to a Retainer Model about 10-years ago. The amount is quite high, $2,500, but our clients pay it every year without questions.

    On the other hand. We do not recommend a desitnation, hotel, spa, cruiseline, airline, etc unless we are receiving a commission. If you do not hold the supplier accountable for your commission, the supplier will not respect you which will reflect on what type of service your client will receive from the supplier. Always collect your commission. As for a Retainer: your time and knowledge is valuable, charge accordingly. Ask for a Retainer, you will be surprised how many you will get!

  4. Dave Rosenthal says:

    I third the opinion and now charge a fee that remains in my pocket! Also had the honor of meeting Nolan and hearing his “Fee” presentation…great stuff

  5. Susan A says:

    I am fairly new to the industry. I have heard about agents charging service fees. I have a few questions: 1) Are fees collected first prior to any quotes given? 2) What payment method is used by most agents to receive fees? 3) How many quotes are given before additional fees are imposed?

    Thanks for any comments.

  6. Angie Wylie says:

    I agree with offering the best service to your clients whether or not the vendor pays commission or not. Providing great service assures your clients will return. However, I also believe in being compensated for the time it takes to research and put that special package together. I generally ask for my service fee up front (via check) before I give a quote, with the understanding if they book with me it will be applied to their booking. By doing this, you get compensated for your time if they don’t book. It also helps to weed out “shoppers”.

  7. Thanks to all who commented! To answer Susan A’s questions:

    1 – If you watch Nolan Burris’ “Fees for the Fearful” he indicates that you should charge your fee BEFORE doing any work, but AFTER you have proven your worth to the client.

    2 – A variety of payment systems are used: checks and invoicing via PayPal two common solutions I hear. Personally, I use a secure form on my website to accept the retainer and charge it via my credit card processor.

    3 – This is a subjective question, as in it’s different for every agent and agency, so there isn’t any way I can really answer it. But, you may try asking on the TRO Community to find out what others do, and it may help you decide on your own policy.

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