Joselyn: Supplier-Direct Competition Is ‘Rampant’
by Robert W. Joselyn, CTCThis is the latest in a series offering insights and advice based on financial benchmarking data and analysis from the travel agency members of TAMS.
I could not help but be a bit surprised by the uproar associated with Sandals’ new restrictions on its Soon Come Back program.
Oh yes, I fully understand travel agents’ disappointment and anger at earning a 10% commission, instead of 15%, on a returning customer that an agent cultivated and brought to Sandals in the first place. (Ethics aside, I see this as a short-term gain for Sandals at a long-term cost they may never fully appreciate.)
What surprises me is that so many agents were themselves surprised.
Competitive threats
Last year, I surveyed TAMS member agents to find out what they thought the travel industry environment would look like in 2017. The survey covered a number of topics, which I will share in future articles, but the one I want to address here is competition.
I asked TAMS members to rank what they viewed as their most serious competition in 2017.
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Their answer? Suppliers.
On a scale of 1 to 10, with 10 representing “extremely significant” competition and 1 representing “non-significant,” agents ranked suppliers about an 8 as a competitive force.
Suppliers were followed closely by mega online retailers, whom agents ranked second, at about a 7. Independent agents ranked third as competition (more about this in another article), big box discount stores (read: Costco) fourth, and other travel agencies dead last!
Poaching your clients?
That many travel industry suppliers aggressively collect personal preference and contact information from their customers to use in future direct marketing is no big surprise to those who answered this survey.
It doesn’t take much thought to understand why.
Direct marketing to a satisfied customer is without question less expensive. Direct marketing to a satisfied customer reduces the risk of the customer choosing another brand – or being advised to choose another brand – next time he or she travels.
Already rampant
I agree with the TAMS agency responses by the way. Supplier competition is a threat that isn’t waiting for 2017 – it is rampant today.
The new restrictions on Sandals’ Soon Come Back program should not have been a surprise. What might have been a surprise is that Sandals offered commission at all – as opposed to a direct solicitation and booking that bypassed the agency altogether.
‘Smiling Faces’
The entire supplier competition issue reminds me of the Temptations’ song “Smiling Faces.” Remember these lyrics?
Smiling faces sometimes pretend to be your friend . . .
Beware . . . Beware of that pat on the back
It just might hold you back . . .
Advice: Don’t get distracted
The potential advantage an agency has always had in the marketplace is its ability to develop close, personal and trusting relationships with the consumer.
Competition can distract you, or it can make you better.
It’s not that you shouldn’t be wary of supplier attempts to poach the clients you cultivated. You should be – just as you should have strategies and tactics to combat supplier competition. But you should never lose focus.
The choice is yours. If you choose to focus on what the competition does, you will be directing your energies in the wrong direction and will always be a step behind.
Reaping the rewards
Last year, more of my TAMS members reported record profits than in the previous 12 years – despite increasing direct competition from some misguided suppliers.
The choice was theirs. They chose to stay focused.
Robert W. Joselyn is president & CEO of Joselyn, Tepper & Associates and Travel Agency Management Solutions (TAMS). TAMS is a travel agency financial data benchmarking and best practice organization with 120 members in the US, Canada and the Dominican Republic. For information, contact rjoselyn@TAMS-Data.com.
