To Reduce Your Risks, Charge Fees

by Harvey Chipkin
To Reduce Your Risks, Charge Fees

If you’re not already charging clients a fee for your travel consulting services, the idea of introducing fees may feel risky. But not charging fees is even riskier for travel agents, says industry speaker and consultant Nolan Burris.

“I would never criticize an agent for being afraid to step into fees, because it’s risky territory. But it’s riskier to leave your financial future to the whims of a supplier board room,” Burris told Travel Market Report.

The issue of travel agents charging fees inspired Burris, a former travel agent, to start his business in 1999. He called it Future Proof Travel Solutions because he wanted to help agents stay secure in their careers no matter what suppliers did.

“I saw friends lose businesses overnight after the airlines stopped paying commissions. That shook me,” he said.

Travel Market Report talked to Burris about how agents should approach the subject of fees – and how they can make their businesses profitable by charging them.

How did the issue of travel agent fees inspire you to start Future Proof?
Burris: I thought something had to change. If agents didn’t reinvent themselves, they would not survive, because we didn’t know if this [commission cuts] would spread to cruises, tours and so forth.

What we know now is that it no longer makes financial sense to place your finances in somebody else’s hands. In fact, insuring your financial future is not just about fees, but about taking charge of your own financial reality in general.

Agents are earning much less per transaction than they did 10 years ago – although they are working just as hard, if not harder.

What’s the rationale for agents charging fees?
Burris: Agents have to realize that nobody needs a travel agent today, so they have to prove their value. First, ask yourself: Do I have something worth charging for?

If you have not yet created a service or experience that’s valuable, you are not ready to tell the client you are charging. You have to come up with a package that will make them say, ‘OMG that was amazing.’ You have to make them want you.

As an example, you can use your Facebook page to show people where you have been and what you know. Put up quotes from other clients, including about fees. Or put up other photos or posts that get the message across.

How can agents who have never charged fees start doing so?
Burris: I coached one agent who said fees would never work in his city. I told him to do an experiment. The next time he got a call from a low-risk potential client – somebody who was annoying or otherwise not a prime prospect – use a script I gave him.

It happened the next day and he got the client. He was flabbergasted.

The biggest obstacle to charging fees is not the client – it’s the travel professional. A lot of people have no clue how to begin. A lot of agents just don’t know how to sell themselves.

How should agents introduce fees to clients who never paid fees in the past?
Burris: This is the biggest fear among many agents. But in fact these will be the easiest clients to talk to. They already know you’re good. You only need fear talking to them if you haven’t done a good job for them.

It’s harder to talk to new clients because they don’t know how good you are.

So what do you say to these clients?
Burris: Tell them the truth, but the whole truth. Don’t just say your costs are higher. (For a detailed example, see sidebar.)

At what point do you bring up the fee?
Burris: The simple answer is before you do the work. Perhaps with a longtime client you might have flexibility, but there should be a commitment from the start. It may be a good idea to give them a little bit of a test drive. There’s a sample audio script on our website.

 How much should agents charge?
Burris: The agent should understand the cost per transaction – based on all their costs. A shoe store manager knows how much to charge and so should an agent.

The simplest formula is to take your total expenses and divide that by the number of transactions; that will be a rough start.

I have many tattoos, and when I got my first one I told the artist I wanted just a little one in a hidden place. He said, ‘Trust me – go bigger than you want.’ That was great advice.

When I talk to agents, they’re so timid. They think $50 is a lot. I tell them they have spent 20 years gaining expertise. It’s very important to start higher and then you won’t get caught up in cycles of increases.

What percentage of an agency’s revenue should fees comprise?
Burris: There are a lot of variables. If you do a lot of corporate, it’s probably close to 100%. The agencies I know that are profitable probably enjoy a range of 40% to 60% of revenue in the form of fees.

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