We all know that virtually every supplier has a direct to consumer revenue stream; and some suppliers focus on that more intently than others. While Royal Caribbean claims that the percentage of direct to consumer bookings are in the “teens” while NCL claims they accept nearly 25% of their bookings direct and are unapologetic about it.
To a degree, I understand. I have said for years that agents can do (and should do) a much better job representing the suppliers. Part of our collective problem is that most agents do not have preferred suppliers. Sure, your host or consortia or franchise might have a laundry list, but agencies need to look at their business and select the suppliers most aligned with it and support them. This is not an old argument. I will paraphrase a fact mentioned by Vicki Freed while she was at Carnival—80% of second time cruisers did not book their cruise with the same agent. When faces with this terrifying statistic, is it any wonder that the suppliers are looking to a direct channel?
But the other argument has been made that agents are the cheapest sales force going. For the cruise line, we are not a burden. No salary. No insurance. No overhead. No training. No hassles. Just a flat 10-20% commission depending on your sales. Seems like a no brainer doesn’t it? Imagine my surprise when I saw the following advertisement for a cruise specialist with NCL.
OPEN HOUSE TUESDAY JUNE 28, 2011
12:00 PM – 2:00 PM
*BUSINESS SUIT REQUIRED*
1600 Sawgrass Corporate Parkway
Sunrise, FL 33323
PERSONAL CRUISE CONSULTANT
Norwegian Cruise Line would like to offer you an opportunity to join our company.
You have a chance to be a part of one of the fastest growing cruise lines in the travel industry today. We are seeking a highly motivated and experienced Personal Cruise Consultant to join our Professional Sales Team in the West Sunrise area. You will be responsible for selling NCL cruise products directly to the customer, building rapport, continuing relationships, and recommending products and services to build a solid book of business and drive direct sales.
• Strong verbal communication skills to include professional telephone etiquette
• Ability to develop and maintain professional relations with a diverse customer base
• Ability to quickly learn and maintain current knowledge of NCL products and services
• Ability to work well and maintain a professional composure while under stress and pressure
• Possess a strong drive and high energy to reach specified sales goals
NCL offers a competitive salary, comprehensive benefits package including medical / dental / vision / life insurance, 401(K) plans, tuition reimbursement, and cruise privileges.
•Paid training for the position begins July 25th, 2011.
- Location: Sunrise, FL
- Compensation: Compensation: $50,000 – $65,000 per year!! Top producers make $80,000 or more!!!
Wow, $50,000 to $65,000 a year to start with significant performance bonuses and benefits! Can this really be less expensive than a well trained agent? To be honest, agents that earn this type of salary and benefits are few and far between. And on the surface, it seems like those salary levels are unsustainable. But they are not.
Remember, that $500 (give or take) that would have been paid to an agent in commission is now going to subsidize that NCL Cruise Specialist’s very generous salary and benefit package. Assume that the agent closes one sail a day—that is 260 cruises not sold by an agency. At $500 commission, you can see that this makes financial sense to the supplier. To break even, they only need to sell one cruise every 3.65 days. If the specialist is a good closer and can close 2 per day that saves NCL $260,000—now deduct the “$80,000 or more!!!” and you can really see the forest through the trees. The math is frightening.
So what is an agent to do? It is an old mantra that has been around for years—preferred suppliers! Take an honest look at your business and get rid of the business that is not profitable and make a conscious decision to work with the suppliers that want to work with you and reward you appropriately. If enough of us assume this position, you will see that the percentage of direct sales will decline proportionately to the increase in agency sales. If we do our job, everyone is happy. If we don’t—someone has to figure a way to sell the berth!