Clients Ready for Service Fees, Are You?

The biggest misperception about service fees is that they chase customers away, asserted travel industry consultant and service fee guru Dr. Robert Joselyn, CTC, president and CEO of Joselyn, Tepper & Associates. "The resistance to implementing service fees comes from agents, managers and owners, not clients."
(An ASTA survey found that only half of leisure agencies charge service fees. See story below.)
"If service fees are presented correctly, the business lost doesn't compare to the amount generated," he said. "Most people who walk away because of a fee would have stiffed the agent or booked elsewhere anyway. The fees just run off the deadbeats."
Joselyn has provided educational sessions on successfully implementing service fees for many of the top agency consortia and franchise groups.
There's no secret, Joselyn said. "Know your value and articulate it."
In preparation for an onsite training he will be providing at a Virtuoso agency, Joselyn gave participants an advance assignment. "The assignment was to pick out a few cruises and tours and keep a lawyer-style log. Every time they did anything, they were to write how much time, what they did and the value to the client."
Most agents, when asked what value they provide, can't readily answer, he said.
"When an agent says they charge a booking management fee on a cruise, they need their elevator speech. Once the agent lays out all they do, the client says ‘fine.'
"Many agents say, ‘This may work in other places, but customers will just go on line to avoid the fee.' But the number one thing is not price, it's value, he notes. Agents have to know their value and educate their clients."
Joselyn provided some examples:
• A good agent always checks documents to make sure they are accurate. Let clients know that if a mistake was discovered on board, everyone would point fingers, but they might be stuck in the wrong cabin or the wrong dinner seating. A wrong name might lead to security hassles.
• The ship's excursions aren't for everyone. An agent might say: If you book with me, you don't have to get on and off a big bus and stop at two souvenir shops where the tour guides get a cut of the action. For a few dollars more, I can set up a custom tour for you.
• Cruise lines offer insurance, but agents often sell coverage through independent carriers that provide some extra benefits such as bankruptcy protection.
• Cruise lines are always changing prices and agents usually recheck the pricing. If the agent uncovers $500 in savings, they can let the client know that they've been watching the prices and tell them, "Gee, I have great news, I've saved you $400 after our rebooking fee."
Fee structures are still evolving, Joselyn reports. For cruises, the average fee generally ranges between $25 and $50 per booking. Some agencies charge hourly fees, structured as in a law firm, with different rates for different specialties.
"I've heard of rates up to $500 an hour," he said.