Our industry has become its own worst enemy. According to a survey by Pam Danziger in her book “Let Them Eat Cake”, she cites that the majority of consumers pay full price for luxury experiential goods – except travel. 64% of individuals surveyed said they got a discount or a deal.
It doesn’t matter if it’s a $299 Cancun package or a $100,000 World Cruise, over the years as an industry we have promised the customer, they always will get the lowest price available. Even if that happens after the sale has been completed. Here are the cold, hard facts of this promise / guarantee: The lower the price, the lower the commission. Because you have set the expectation, you have to watch every promo, every one week & flash sale to keep your promise. That’s a lot of work!
How much is your time worth? Let’s talk about this for a minute. There are as many opinions on the subject of fees as there are sale models. Most agents I have spoken with believe they are doing their customers a “dis-service” by charging fees for services for which they are already compensated by the vendor.
Like most of you, as an agent & owner- I also fell into this trap. The biggest reason – fear. I was afraid my customer would cancel and book with another agency, or worse – direct with the supplier. If the deposit is refundable, why should they stick with me? As I have learned over the years, this is unwarranted paranoia. Granted it does sometimes happen, but not nearly as often as you might think.
Think about this! You are actually selling the same booking twice (or more) for a lot less money than you initially earned. We made our own bed on this one when we made the “lowest price guarantee”. It didn’t take me long to figure out that my company was not Walmart & there is something inherently wrong with this thinking? Do you agree? Our job is to make a profit so we can stay in the business of serving our customers. Profit is not a dirty word. Repeat customers are very difficult to service if we are out of business- that’s the reality.
I am all about making a profit. There is a happy medium to this conundrum that is practiced by “Wealthy Travel Agents” and expected by the customer. We can thank the airlines for this nugget, they have become masters of the game.
We must charge CHANGE & CANCELLATION fees – period! If you are not doing so – start now! Remember, most of the work actually done on the booking is the service after the sale – hence our fear of the customer leaving us. However, if there is a change or cancellation, why should everyone else but you benefit? You should be compensated for your extra effort. Now, if you feel that this is simply part of the incredible service you provide, please stop whining about how you aren’t making money as travel agent. The customer doesn’t care -they assume you are making money. What they do care about is that you meet or exceed the service expectation you have set.
If you are upfront with your fee structure, you will get very little resistance if the need arises. If they ask you to waive the fee and some will, politely decline. This reinforces your professionalism & does not allow them to affect your profitability by taking advantage of your business policy. Don’t worry, it will not affect their decision to use you for future trips.
I know of a number of agencies who are only profitable because they charge fees. In many cases you can actually end up making MORE money than on the original commission and are still provide the customer with a lower price.
Let’s do the math. If a package is initially $3000 at 10% commission ($300) and the supplier lowers the rate to $2250, your commission drops to $225. You charge $250 change fee and earn a total of $475 and the customer pays net total $2500. Everyone Wins!
Now that I have you onboard, collecting fees is simple – just set up a PayPal account. Disclose on your fee page that cancel and change fees will appear as separate charges billed under your agency name.
Wealthy Travel Agents treat their business as a business. They know exactly how much they are worth, the value they bring to the table, and how to maximize the revenue from every transaction. The time is now!
Dan Chappelle is a professional business advisor, sales coach, author, and speaker. His training and consulting firm helps develop sales oriented business leaders, individual salespeople, and entrepreneurs, His best-selling book, Get Your S.H.I.P. Together: The Wealthy Travel Agent Guide to Sales, is available on Amazon.com.
For information on Dan’s Sales Acceleration programs, visit: www.DanChappelle.com
©2017 Dan Chappelle, CCI Inc.