Agencies Can Thrive With Bypass By Vendor Approach
<B> Agencies Can Thrive With Bypass By Vendor Approach</B>
By Ivan Michael Schaeffer
<i>Ivan Michael Schaeffer is president and CEO of Woodside Travel Trust, Bethesda, Md.</i>
When major breakthroughs in information technology are announced in the travel trades, the response is predictable. Inevitably, a host of travel management
company leaders will grumble about their eroding share of the travel market. The experts will wonder aloud if the travel agency as we know it today can survive well into the next century.
Today's travel managers need not be reminded that agency bypass is no longer a theoretical possibility, but an imposing reality. The Internet and other nontraditional distribution methods have emerged as likely formidable competitors for travel management companies.
But precisely what are we spending so much time and effort worrying about? Perhaps we are frightened that our customers will realize that they have a real choice--they no longer need us to act as simple transaction brokers, issuing tickets and making hotel reservations. The time has come to face these fears and move past them. These new competitors, known as "disintermediators," have never looked back. Neither should we.
Fear is an understandable reaction to the threat we perceive to be facing our businesses. But fear generally breeds caution, and a cautious approach to business won't drive sales. In fact, it may not even cover an agency's daily operating expenses. There is another approach.
As the 131 partner agencies of Woodside Travel Trust demonstrate every day, travel management companies can thrive in the age of bypass and disintermediation. We can succeed by doing exactly what we've always done best--providing the highest quality of service to customers at the lowest possible price, while adding unique value-added services to every transaction. Customers always recognize excellence, and our agencies--as well as many others--are poised to provide the personalized service that our clients have always associated with top notch service.
One way we can demonstrate our commitment to excellence while combating the effects of disintermediation is by forming new relationships with our suppliers. Many of us take our suppliers for granted, just as many suppliers don't fully appreciate the efforts of travel management companies. In fact, some supplier relationships border on the adversarial.
Traditionally, travel companies have formed preferred relationships with vendors. All too often, these relationships were largely superficial. They focused on joint marketing efforts, exposing vendors' products to a consortium's membership base, and providing overrides and exclusives to agencies which enjoyed a preferred relationship with a given vendor.
While this model existed for many years, it has at least two intrinsic flaws. First, these relationships provide little in the way of a concerted effort at driving a preferred vendors' sales. In other words, they are largely symbolic deals that are difficult to translate into measurable action or results. Secondly, the "preferred vendor" concept often carries no real meaning, let alone any promise of exclusivity. Agencies routinely deal with vendors who have no effective method of tracking their performance. This relationship is inequitable for both vendors and agencies, because neither party can ever be sure that the other is living up to its side of the agreement. Often, agencies have so many competing preferred relationships that no supplier is truly preferred. The same can be said of supplier deals with agencies--a very short-sighted approach.
Recently, Woodside Travel Trust pioneered a new model of vendor/agency interaction, aimed at driving sales for both parties. As consolidation and disintermediation continue to change the nature of the travel industry, we have worked with suppliers to discover new ways to bring added value to our relationship. Improved technology has made it possible for us to analyze the sales production of each of our partners, even at the branch level.
In other words, we are now prepared to enter into relationships with vendors that guarantee specific sales goals will be met each month.
When our partner agencies meet or exceed these levels, our preferred vendors can reward them appropriately. Should an agency fail to meet its sales goals, we can use this data to pinpoint the locations that may not be performing at their peak. By using this proprietary, branch-specific data to guarantee specific results, we finally can harness the true combined buying power of our partners. The relationships we forge with suppliers are now more tangible than ever before, because we can back each and every one of them with measurable results.
When agencies and suppliers work together to increase sales, the benefits can be enormous. By concentrating their sales efforts, agencies and suppliers can form an entity far more powerful than a joint marketing team. Instead, they can act as true partners, committed to selling high quality products to a large customer base.
The benefits of this new type of relationship to both parties involved are clear. For the vendor, preferred relationships with travel management companies or agency groups ensure the wide distribution of their product. While an initial investment in infrastructure is required, vendors willing to make this investment can be virtually certain that their partner will deliver.
For travel management companies, these relationships offer a surefire way to offer the lowest prices to their customers and the assurance that the vendor is committed to making the partnership work.
This is just one of the innovative ways that Woodside Travel Trust is working with our partner agencies to ensure that our agencies will be exceeding our clients' expectations well into the 21st century.
We view industry trends as opportunities, not threats. We invite the rest of the industry to join us.