My last column about rebating sparked some serious and heated responses.
The argument most often invoked is, “I don’t work for free”. Let me go on the record to say, no one should work for free!
Unfortunately, most consumers think you do. To be fair, they don’t understand how you get paid, nor do they realize that often the lowest price they have been quoted didn’t come from the supplier but involves a commission discount.
Our industry is its own worst enemy. It’s an up-hill battle.
First, a few large leisure travel agencies and OTAs proudly advertise to the consumer that their services are free. It’s a great hook, after all – people love free.
Second, while I am sure his intentions were good, a very high-profile industry association executive posted on his LinkedIn feed last year about the virtues of using a travel professional – because their services are FREE!
After all the years of effort we have put in to get consumers to accept fees of any kind, a simple post or tweet from an industry insider to the contrary can do irreparable damage.
As an industry, we have made our own bed. To many, rebating is an unethical and allegedly illegal practice. Sorry to say, its neither. It’s a choice.
The comparison is often made to professionals such as doctors and lawyers. They don’t discount their fees and as professional travel agents – we shouldn’t either. (Actually, many do – just ask for their “cash” price).
It is a noble stance; however, the operative word is FEES. Since most travel agents are paid primarily on commission, a more accurate comparison is to those who practice a similar business model, such as real estate or insurance sales.
Insurance is highly regulated (much more so than real estate) and rebates are illegal in most, if not all US states and Canada. You should also be aware it is typically illegal to discount or rebate commission from the sale of travel insurance. Real estate is a whole other story.
I spent some time in residential real estate when I lived in Texas. It is highly competitive, and rebating is rampant. Like travel agents, real estate agents don’t own the product, they work on commission, and get paid only if it sells.
And like travel sales, there are a number of accepted business models (their version of OTAs are Redfin and Zillow to name a few) as well as a large contingent of part timers and dabblers. Unfortunately, these tend to take away from those who practice the profession as a full-time career or business. Does this sound familiar?
Most professional real estate agents I know also fall into the silent majority of those who strategically rebate commission. While it’s not their standard practice, they are independent business people. Sometimes circumstances and competition dictate when they need to do so.
Back to travel professionals. A number of people commented about using value-add and gifts, versus discounts and rebates. Many also mentioned that no one can serve the client the way they do (debatable). But more often, it was because they felt they were “owed” the full commission. Next week I will discuss these three items in detail, but I want to leave you with a final thought.
A very loyal customer once told me, “Dan, I don’t mind you making money off me, but I don’t want you to get fat!” Those words have stuck with me for 25 years.
Dan Chappelle is a professional business advisor, sales consultant, author, and speaker. His personal development and consulting firm helps develop sales oriented business leaders 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
©2018 Dan Chappelle / CCI Inc.