Facing Down Supplier-Direct Competition
by Robert W. Joselyn, CTCFollowing is the latest in a series of guest columns from the president and CEO of Travel Agency Management Solutions (TAMS).
Not long ago I heard from a third-generation travel agency owner in the Pacific Northwest who wanted guidance on a tough business reality that riles all travel agents – suppliers selling direct to past agency customers.
Here’s what he said:
“Hello Bob: Our agency’s biggest problem remains that our vendors compete directly against us. I sell a first-time cruiser on a Holland or Princess cruise, and the customer is contacted directly for [the rest of her] life.
“Can lessons be learned from other industries that use this same business model? If I can solve this one problem my business model will bloom.”
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Following is my (edited) reply.
It’s what suppliers do
Two years ago I surveyed 120 TAMS members about what they thought the industry would look like over the next five years. When it came to competition, suppliers were identified as No. 1.
As you suggest, this is not unique to the travel business. Virtually every seller of products and services collects customer contact, profile and preference data to use for direct marketing, among other things. Every time you fill out a warranty registration someone’s database is enriched.
Recently I wrote in Travel Market Report about travel agency revenue streams and fees, which are directly related to your question. One of my major points was that a travel agency sells other companies’ products and services, like any other retailer, then augments that sale with their own products and services.
To the extent that you only sell someone else’s products or services – and your own services are not providing compelling additional value – a satisfied customer is likely to develop a loyalty preference for that product and not for your services.
In those circumstances, the customer doesn’t really care where they buy the product the next time around. Instead, they will gravitate to what they perceive as the best deal.
It’s not just in travel.
Advantage: supplier
Perhaps a comparison to cameras will help. If I buy a Canon camera from Best Buy with the knowledge and advice of a salesperson, and I love the camera, I am more likely to buy a Canon again. If Canon reaches out to me with a special offer, I have no problem buying direct.
Sure the salesman was a great help, but now I know what I like, so I don’t really need his advice again.
This is the bottom line challenge for agents: What can you do that is unique to every sale that makes where the customer buys as compelling as what they buy?
Advantage: travel agent
In your example of Holland America, you could have:
• recommended and set up custom shore excursions;
• provided pre- and post-cruise destination advice (a restaurant in Vancouver’s Gastown neighborhood that should not be missed);
• made certain they understood the best insurance options;
• suggested what type of clothing to pack;
• provided or suggested pre-trip reading material to enrich their travel experience.
In other words, make sure that where your customers bought the product – i.e. you or your agency – is part of the value the customer receives.
And you don’t have to give away your knowledge or these extra services. They have greater value when you charge for them.
Follow up with customers
Another thing: Don’t let suppliers provide the only follow-up initiatives with customers.
Find out if the buyer loved Holland America enough that they would like to sail with them again. If that’s the case, you need to let them know about new ships, new itineraries and special offerings.
Don’t be a victim
I don’t mean to be harsh here, but if you don’t fight for the customer’s perception of the value you bring to the process, you are choosing to be a victim.
Dr. Robert W. Joselyn, CTC, (aka Dr. Bob) is president & CEO of Joselyn, Tepper & Associates Inc., a travel agency consulting firm, and of TAMS, LLC (Travel Agency Management Solutions).
