Key to Growth is Client Relationships By Adrian Caruso GUEST COMMENT | TRAVEL WEEKLY 29 June 2007

Do you remember the good old days when airline commissions generated the bulk of your travel agency revenues? Well just take a look at the following numbers - and think again. The commissions that airlines paid agents in Australia increased every year until 2001, when they peaked according to BSP. Within the next five years, commission caps and cuts took their toll, and airline commissions for agents processed through BSP disappeared. In response, the agency community shifted gears and focused increasingly on complex, high-margin products such as cruises and vacation packages. This year, statistics show that travel agency commissions from cruise lines will probably exceed $1 billion.

What's the moral of the story? The complex leisure travel that agents now sell holds far more financial opportunity than air ever did back in the seemingly untroubled days of airline commissions and overrides. This is an arena in which agents have a big advantage over online mega-agencies. That advantage is the personal relationship agents have with their clients.   Agents know their clients. They see them at footy games and churches and in the local grocery store, and have relationships with them that many online players don’t have.

But the on-line agents do have one advantage over traditional travel agents: A single database that aggregates the purchasing and travel history of all of their clients. All their automation is in place. They automatically have every client's email address. They can easily go back and pull up travelers who have booked a trip, but who may not have purchased travel insurance or car hire or day tours. Now that’s what I call the ‘one database benefit’. Suppliers can look at that single database, see its purchasing power, segment that database to see what kind of products will appeal to the various types of customers in that database and design customized campaigns designed to appeal to those clients.

That's tougher to do with an individual agency's database; no matter how up-to-date and detailed it is, because suppliers have to do it with many agencies. But technology and business practices on the travel agent side have now developed to the point where agents can begin to enjoy the benefits of that kind of clout - without ever losing control of their own client database.

But why do so few agents still fail in marketing? The first reason is that agents simply don’t communicate with their past clients. Research released this week by benchmarking firm Resurg Group showed that one in five agents make no contact whatsoever with their clients during the year with a further 45 percent contact them only once over a 12 month period.   Your customer database is the most valuable asset an agency has for it has no stock.  Just a list of clients.  Even agents they do market, they don’t know enough about their customers to target a product that would appeal to them.  They just market anything to everyone on the database. Which bring me to the second reason why agents are failing in travel marketing.

And I feel it is at times the fault of the major GDS’s and the back and mid office systems they have been selling agents for years as a bolt on to their GDS. These systems simply do not do enough with the client data that is captured by the agent.  If they do, they have never ever shown an agent how to extract the information and what to do with it.  Nearly every agent in Australia and New Zealand we consult or coach says the same thing.  ‘We don’t know how to extract our client information from the system!’ With the exception of Client Base users – which I feel is the clear leader in our market for a mid-office program with a CRM program as a bolt on.

Recent developments overseas which we initiated with one agency consortium included synchronization of an agency group’s databases. In the same way many of you sync up your Palm Pilots and other PDAs with your computers, it's now possible for ‘separate but equal’ databases to sync up their databases from differing agents mid and back office systems into one central database.  And keep that central database up to date with daily syncing. It's automatic and takes no extra work on an agency's part. Many suppliers can now see the aggregate of that data - not customer names, of course, but the purchasing history and power, and the type of travel those clients take - and use it to create a variety of highly targeted marketing campaigns that individual agencies can use, if they so choose.

Agents still have total ownership and control of these databases for it’s your program and you choose the suppliers, you choose which clients get what, and you are in control. You are just outsourcing.  It is also very cost effective for both agent and the suppliers with many agencies pooling their numbers to reap the benefits of the clout derived from the combined purchasing power of their customers.

The attraction for suppliers is that they're trolling for business in one giant database instead of many smaller ones. Suppliers can measure their returns on these marketing initiatives to see how well they worked.

For example one trial campaign we did with this agency consortium took the databases of three of their agents and pooled these client databases together with their recent purchases history.  They had a total of 1,000 names but had email addresses for a little less than 700 of them. The participating agencies sent out emails customized with their agency information and a special travel insurance offer that generated 172 sales of travel insurance policies.

Suppliers want to work with agencies that have good data on their customers, because it helps target consumers with travel products that match their tastes and desires. That helps suppliers sell travel, helps agents sell travel, and means customers are taking vacations that make them happy. And that's good for everyone. 

This is the future of marketing in the travel industry – targeted and niche marketing based on a client’s interests and desires. But for this to happen the agent has to have a good hard look at their existing mid-office system and see if it is giving them the all the information they want about their customers including purchasing history, preferences and interests.  This usually involves having a CRM (Customer Relationship Management) program within their mid-office system or as a bolt on.  The agent then must learn how to use this valuable CRM program and decide to start more targeted marketing to their database of customers on a more frequent basis…..otherwise others will and they will profit….not you.

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