Acquiring a Client List? Here’s One Travel Advisor’s Tale

When Edgewood Travel acquired the client list of a small travel agency that closed up shop this winter, it was a first for longtime travel advisor Valerie Edgemon. While the acquisition promises to reap healthy returns for Edgewood Travel, the process of absorbing those accounts has involved quite a learning curve.

Edgemon is the owner and founder of Edgewood Travel, a 29-year-old agency in Savannah, GA, whose pre-pandemic sales were between $6 million and $7 million annually. In early February, Edgemon and the owners of a two-person home-based agency agreed that she would take over their client list.

The client list Edgewood Travel acquired is relatively small – about 100 accounts. But it represents a healthy book of business, consisting of longtime loyal travel agency customers, most of whom are seasoned twice-a-year travelers, as well as younger clients with good potential. Prior to Covid, they booked in excess of $1 million in travel annually.

Edgemon had been talking casually with the sellers since 2019 about purchasing their list when they retired. The pandemic speeded up the sellers’ retirement plans.

The pandemic also significantly eased acquisition terms for Edgewood Travel.

Instead of paying a substantial upfront purchase cost, the agency will pay the sellers a fee any time one of their former clients travels during the next three years. The fee slides downward over time. (For current bookings, the fee depends on how far along in the booking process the client was when Edgewood Travel took over the business.)

A good fit
One of the appeals of the acquisition for Edgemon is the many parallels between the two agencies. “Their book of business married pretty well with our kind of customer. They worked with customers who were long-time customers – so do we. They built relationships – so do we.”

Those parallels have eased the transition, and Edgemon urged other travel advisors who are thinking of acquiring a client list to “make sure you’re looking at people with similar cultures.”

There were other similarities too. Both agencies were on ClientBase, so Edgewood Travel was able to merge the seller’s ClientBase information with its own. They also belonged to the same consortium and in many cases had the same supplier representatives.

Equally important has been the relationship between seller and buyer. Edgemon said she knew the sellers to be “really good solid advisors,” had complete confidence in their integrity and a level of mutual trust that has made it easy to resolve issues as they arise.

Time-consuming process
Even with all those congruencies, absorbing the client list has been far more labor-intensive than Edgemon imagined, and this is one of her main cautionary notes for other agencies: “Expect there’ll be more work on the front than you anticipated.”

One task that has been especially laborious has been reviewing client files.

“They were super organized, and they gave detailed invoices to their customers. But in some cases, there are hundreds of emails to go through, versus we would have had a reservation card and everything would be attached to that reservation card. So that’s been a slower-moving process.”

That process has been slowed further by the pandemic.

‘Booked, rebooked and rebooked’
About a quarter of Edgewood Travel’s new clients had active bookings that were either on deposit or paid in full. In normal times, handling those midstream bookings would have been straightforward. But because of Covid, those clients “were booked and then rebooked and then rebooked and now rebooked, with the commensurate emails and the FCCs and Travel Guard vouchers,” Edgemon said.

“Having a very clear transmission of outstanding vouchers and insurance vouchers and future cruise credits and tour credits have been really important,” Edgemon said.

So too has been the ability to call on the sellers when Edgemon didn’t understand a cancellation thread or other details in a file. “We need to know what’s going on before we talk to the customers, so we look like we know what we’re doing.”

Some new customers put that to the test. “I had a lady call who had an American Airlines credit. I said, ‘Yes, we have that on file and whenever you want to travel on American just let us know,’ and she said, ‘I don’t have any dates.’ I think she just called to see if we would know what we’re talking about, and once she found out, she was like, ‘Okay, that’s cool.’”

For active bookings, Edgemon is reviewing each client individually with the sellers, so that Edgewood Travel advisors will benefit from the sellers’ informal client knowledge.

“This was not really about the booking; it was, ‘These people always book the lowest category of cabin,’ or, ‘They’re not foodies; as long as they can get a decent hamburger, they’ll be good.’ Or, ‘They rarely get insurance.’”

Educating new customers
One aspect of the two agencies’ business practices that did not fully align was their approach to charging fees. For instance, Edgewood Travel charges upfront consulting fees, including for cruise and tour bookings, while the sellers did not. “It’s a bit of a change in the paradigm,” Edgemon said.

Edgemon felt it was important in her welcome email to inform her new clients of Edgewood Travel’s consultation fees. She wanted right away “to set the tone that this may be different from what you’ve experienced in the past.”

She’s also addressing fees individually with clients. “It is a conversation that we’re having to have with every one of them.”

It’s just one more time-consuming task to factor in before deciding to acquire a client list.

Now, as travel heats up, it’s also important for agency owners to make sure they can handle the volume that a new book of business represents. “You don’t want to take it on and then realize that you don’t have the staffing to handle it,” Edgemon cautioned.