For Agents, Supplier Quality Outweighs Commissions, Study Shows

No matter how much suppliers invest in marketing and no matter how great their agent incentives, it’s the supplier’s track record for quality and service that wields the most influence among travel agents.

That is the conclusion reached by Supplier-Travel Agent Marketing Report, a recent survey of ASTA member agency owners and managers about trends in supplier-agency relationships and booking preferences.

Among other key survey findings – GDS usage is dropping, and agents are increasingly likely to use the Internet for booking. Also, agency membership in consortia or franchise groups is on the decline.

Preferred supplier choice
Asked to choose the most important factors in selecting a preferred supplier for the agency, the highest number of  respondents (92%) cited “reputation/quality of product.”

By contrast, 73% of respondents listed commissions/overrides as an important factor, while 70% listed ease of booking. Just 52% of the agents said they were influenced by whether the supplier is part of their consortium’s preferred network.

Client satisfaction
“It shows that the experience the client is likely to get from the supplier is most important to agents,” said Melissa Teates, ASTA’s director of research. “Keeping the client satisfied is most important, as it should be.”

Supplier reputation has topped the list of considerations for the seven years that ASTA has conducted the survey, Teates said.

The survey did show a small decrease in the weight of supplier reputation. In 2007, 97% of respondents cited reputation/quality of product as the most important factor in their choice of supplier. That percentage dropped by five points in the intervening years.

“The fact that it’s down a little may reflect the current economic climate – agents may have to look at other factors,” she said. “However, there has been no increase in the percentage of agents choosing commissions or any other reason as important factors.”

Agent protection
Results of the ASTA survey came as no surprise to Jackie Friedman, president of Nexion, a host agency in Irving, Texas. Choosing preferred suppliers based on reputation and quality is important not only for client satisfaction, but for agent protection as well, she said.

“You have to look at stability and reputation above all else when it comes to preferred suppliers,” Friedman said. “We look at if they are financially stable, will they be around, will they pay on time – all of these things are clearly important. Agents have ended up getting burned.”

Implications for suppliers
Among lessons to be learned from the survey is that suppliers should emphasize quality and service in their marketing pitches, Teates said.

“Too often supplier marketing is about price,” she said. “I don’t see a lot of marketing that actually promotes to the agent the quality of the product. Despite this, agents are good at detecting quality. They talk to each other.”

With the advent of social media and review sites, which allow commentary about suppliers to spread like wildfire, Teates said that suppliers should be more mindful of reputation than ever. “If I were a supplier, I’d be really concerned about social media right now.”

According to the survey, agents strongly desire useful information from suppliers about their products that will help them determine their quality and how best to sell them to clients. “Suppliers that provide the needed information in the best formats have an advantage,” the ASTA report said.

Decline in consortia membership
The survey also noted a slow but steady drop-off in the number of ASTA member agencies belonging to a consortium or a franchise, decreasing from 85% in 2006 to 71% in 2011. The decline accelerated between 2010 and 2011, dropping seven percentage points.

 Financial constraints are the most likely reason, according to Teates.

“With money being tighter, fewer agencies are likely to be both a CLIA and a consortium member,” she said. ”If you are primarily a cruise agency, CLIA may be providing everything that you need.

“As the economy improves, some people may come back to consortia. But there are a lot of new groups out there that agents can join, so they have to make choices.”

Another reason for declining consortium membership could be the emergence of the luxury boutique agency model, she added.

“Some agencies that have a strong, very high-end clientele don’t feel they need a marketing group,” she said. “They’re good at developing this client base on their own.”

Survey methodology
ASTA collected survey data online in March of this year. Three hundred and sixty-six member agencies participated.

According to ASTA, the sampling is representative of member agency owners and managers and reflects key demographics, including sales volume, business mix and geographic location.