Turnover Costs Agency, Corp.
<FONT SIZE="+3"><B> Turnover Costs Agency, Corp.</B>
<B>T</B>his industry has a long and painful history of instability. It has been common practice for corporate accounts to change agencies every two or three years. The rule of thumb for reservationists has been that one of five move on each year for greener pastures. Losses of accounts and personnel turnover are costly for everyone involved and threaten productivity-even as commission revenues dissipate.
When a relationship fails, the agency and client lose the knowledge they have gained about each other. The value of the mutual investment of resources and expertise falls to zero. Smart agencies and their customers learn from each other over time; one or two years is not long enough to understand and adjust to special needs and culture. Even the investment in the contract itself becomes questionable.
Clients change agencies to test the marketplace, or after too much unresponsive service exacerbated by the agency's failure to listen. Revenue losses, following the recent caps, increased client turnover due to disconnects over economics and value. However, even before commissions dropped, it was typical practice to bid out the business to look for a better deal. Consultants benefited, but everyone else paid a price. A competitive bid process is time consuming and disruptive. Client evaluation teams have day jobs, and would rather contribute to the bottom line than pour over massive bids and sort through brochures and hotel directories.
Account turnover costs the agency revenue, damages its reputation and leaves reservationists feeling like children of broken homes; they lack the security in their jobs that builds loyalty. On the next bid, the lost account lowers bid ratings.
Reservationists usually change jobs for slightly better salaries, benefits or working conditions. Large reservations centers have been places of high pressure as agencies are understaffed to hold costs down. Young, inexperienced agents in particular tend to believe that the grass will be greener somewhere else.
The costs of employee turnover, for agents as well as managers, are staggering:
<H3></H3> When the employee leaves, the agency and the client lose the employee's accumulated knowledge of how the customer and agency process works.
<H3></H3> A replacement has to be located quickly and at a high cost.
<H3></H3> More costs are incurred in training the replacement on the unique needs of the client.
<H3></H3> Morale and productivity suffer among other personnel left to deal with the loss. In a dedicated center, this can be devastating.
<H3></H3> The corporation is understandably nervous and thinking it might as well rent a plate if this continues. Part of the motivation behind insourcing is frustration with the caliber of agency personnel, especially those coming and going at on-sites.
There is the opportunity for unprecedented productivity gains to free reservationists to focus on the more complex requirements that cannot be automated. Dramatic technology changes on the horizon will reduce the amount of time reservationists spend on routine and invisible processes such as post-telephone data entry and quality control.
More direct access at the user level for booking should minimize lost time on hold and multiple calls for the same trip. However, new technology will be expensive, and more than a year or so will be necessary to write down investments necessary to obtain these benefits.
Turnover, whether of employees or clients, threatens the investment base for technology critical to needed efficiencies long overdue in the industry. Quality people and quality relationships are not developed overnight. Agencies and customers have much to gain by staying together. This does not mean blind loyalty but intelligent and creative collaborations.
Agency and customer must understand each other better or we will be back to the squeeze game where one side drives hard and the other hopes it can survive by luck and rising ATP. Agencies need to hire, motivate, train and retrain service-oriented personnel. Pay scales and incentives should be aligned with the client's goals. Clients need to understand nothing is free, and a worthy supplier should be profitable and paid on performance.
John Caldwell is president of Caldwell Associates, a travel management consultancy in Washington, D.C.