Several months ago, I wrote an article predicting a rapid and substantial increase in demand for travel services as the U.S. population became vaccinated, COVID-19 cases dropped to tolerable levels, and transportation services and destination venues began to reopen.
As a result, I also predicted that such a ramp-up in demand had the potential to dramatically outpace the industry’s ability to correspondingly increase service capacity, most specifically with respect to qualified personnel.
I anticipated that many Advisors and IC’s who experienced significant reductions in personal income because of being furloughed, having reduced levels of employment, or simply making less because all or part of their compensation was tied to received commissions, would be forced to seek other means of employment. As much as they have loved the travel industry, they had bills to pay and occasionally liked to eat.
While industry suppliers immediately started receiving some revenue because of deposits and some final payments, travel agencies would be faced with investing in increased labor costs to meet client service demands with the receipt of commissions often far in the future.
Fortunately, and unfortunately, I was right. Fortunately, because the demand for travel is back and robust. Unfortunately, because the challenges I predicted are happening right now. The challenge then, for travel agencies, as well as others in the travel industry distribution system, is how to best manage this Good/Bad rebound from the worst of COVID-19 in North America. For now, I will just address my suggestions for travel agencies.
Word of mouth works in both directions
In a meeting a few weeks ago I sat next to a travel agency owner who confided in me that he was worried that the level of their service quality was deteriorating because they simply did not have, nor could he afford, the number of qualified advisors to service the current demand. He was right to be worried. Over the years when I have asked agency owners, managers, and Advisors what their best source of new business was, the first response was always referrals. An oft-heard proverb is that if someone receives great service, they will tell someone else. If they receive bad service, they will tell 10 other people. Whether or not that is exactly true, I believe we all know that substandard service won’t be tolerated for long except for masochists, and they are generally a small market segment.
The bottom line is this, no matter how much you desire to make up for COVID-19 related losses by trying to service every opportunity that comes to you, THE WORST THING YOU CAN DO IN THE LONG RUN IS PROVIDE SUB-STANDARD SERVICE. I don’t normally like to shout but great reputations are very hard to earn, very easy to lose, and sometimes impossible to regain.
Let’s make this simple. I now employ you two days a week, but I need you five days a week. However, at this time I can only pay you at what normally be your full pay for two days a week. Does any version of this sound familiar? If you have part-time or furloughed employees that can afford to do the following, and if they are willing and trust you enough to agree, I have one suggestion for “creative compensation” that might be a possibility.
The employees work five days a week, you pay them now, what you can afford for the extra three days (minimum wage), and treat what you are not paying them as deferred compensation to be paid back. This is then treated as a liability to be paid back when the revenue from current sales starts to flow in. To treat this with the commitment it deserves you should enter into a formal agreement with respect to any deferred compensation and carry the deferred compensation as a liability on your balance sheet.
Will this work for everyone? No. But perhaps it will encourage you to think about creative ways to deal with compensation in an environment where today’s service requirements don’t match today’s revenues.
A burnt-out lightbulb doesn’t require an electrician
I have always thought that many agencies do not pay enough attention to the service efficiency and to the optimization of the most important service talents of their employees. While I digress, I was reminded of this issue by comments made to me in recent weeks by agency owners who complained about how much time their employees are spending on hold with suppliers when only a phone call will do. Unless you have available advisor capacity to sit on hold, hire someone at minimum wage or engage someone’s junior high school child to sit on the phone until the call is answered. It doesn’t take an electrician to change a light bulb and it doesn’t take an experienced adviser to sit on hold. Look around and ask yourself what other tasks are not the best use of your best talent that could be done by someone with fewer qualifications.
Another suggestion for increasing efficiency is to adopt a practice a few of my clients employ. When you get an inquiry ask the prospect to fill out an initial questionnaire outlining their current thoughts on the what, where when, and how of their potential travel plans. This approach is better received than might first believe and it has several advantages.
First, it lets you know right away without spending any time if it is an opportunity you want to turn away. Second, for those opportunities you wish to pursue, it helps you match the clients’ interests with the most appropriate advisor. Most appropriate means the best fit in terms of experience and expertise but also the level of experience and expertise required. In a service capacity challenged environment why would you have your most experienced advisor working on a relatively simple package trip when they are needed and capable to handle complex FITs?
Finally, advanced insight as to a particular request enables you to schedule your time and talent more efficiently. You have a client wanting to book a luxury safari in Kenya this Fall, and another interested in a River Cruise in two years. The River Cruise client can be set up with an appointment several weeks away while the safari needs someone’s attention now.
Speaking of efficiencies and appointments, one of my clients uses a program called Calendly an online calendar hub for scheduling appointments (there are others). You can show your time availability (you control) in different lengths of time (in your control) so that a client can pick a time that works for both of you. Think of the time savings in back-and-forth emails on this idea alone.
Triage, triage, triage…and triage
If you can’t service all the opportunities with the quality of service you expect of yourself the obvious solution is to pick and choose. Your existing “high value” clients come first, and they get the level of quality service you are known for and that they deserve. Only accept quality new clients and profitable business and again, only to the extent you can service this request appropriately. Turn down business from new clients that just aren’t worth your time. Turn down business from existing clients that have never been worth your time. Turn down good business that you are not good at and will require too much of a learning investment. I could go on, but you get the point.
If you can’t serve clients appropriately, or simply don’t want to, simply explain due to the current overwhelming demand you are not in the position to serve them in the manner they deserve. If you would like their business in the future, ask them for their contact information and ask them if it would be acceptable to contact them when you could give their travel plans the attention they deserve. You won’t always be successful, but you might be surprised how many will be impressed with your honesty and will want you even more.
Manage with fees
Anyone who has even the slightest awareness of me had to know this was coming since my pilgrimage on getting travel agencies to charge fees started in 1984, supported with a book on the subject, individual consulting, and too many workshops and webinars to count. At the outset of this article, I recognized the obvious problem of investing in service delivery now for commission income later. There has never been a better time to implement fees if you don’t already have them or increase the number and the size of your fees. The most important fee that you should absolutely have today is a front-end, non-refundable planning (booking management, concierge, etc.) fee. Such fees provide positive cash flow that softens the pain of waiting for commissions that are sometimes years down the line. They also help pay the bills and support enhanced compensation for employees and IC’s.
While fees are certainly about enhancing income and receiving revenue earlier than commissions, they are also about driving away business and clients you don’t want. If there is no interest in selling three-day Las Vegas packages simply put a high enough fee on them to drive that request away or be large enough to make it worth your time. In the case of prospects who refuse non-refundable up-front fees, and that will happen far less than you think, move on to a client that respects your time and talent and avoid those who are just brain pickers.
There are many profound definitions of management. My personal favorite is relatively simple.
“Do those things within your control to anticipate and adapt to those things which are not.”
A special thank you to Jennifer Campbell who graciously volunteers to edit my substandard spelling and grammar and never holds back to tell me when I am just blowing smoke. She is nothing short of a true friend.