According to many industry experts, commission-based pay systems
for counselors are key to a profitable shop. But how many agency
owners are really taking this advice to heart?
In our InstaPoll on Crossroads Web site, we found over
three-fourths of all 210 respondents paid their agents on a
commission-based system, with the breakdown as follows: commission
only, 23%; salary plus commission,53%, and salary only, 23%.
But it's not likely that this high percentage of
commission-based agencies will translate to the total agency
population, according to experts we checked with. For example,
Bowie, Md.-based industry educator Doris Davidoff said, "I doubt
that more than 20% of agency owners pay commission on the bulk of
the inside agent's salary."
And in truth, the way we'd written the question -- with a focus
on the positives of commission-based pay -- probably encouraged
more agency owners who pay commission to answer the question in the
We also heard from a number of outside agents as well as agency
owners on this topic. One outside agent had a negative take. "I
personally don't make as much as the salaried agent for the same
amount of time, clients and years of experience," she wrote. "My
pay has gone down since the commissions have been cut and continue
to be cut. To offset the loss, I have to get more clients and work
longer by providing [20 hours, seven days a week] service and
Barbara Arendt, an independent contractor based in Lincoln,
Neb., said, "In the last two years, my commission-only salary has
been exactly two-and-a-half times more than what I made salary-only
as a front-line agent. Of course, I'm an independent contractor and
the equivalent of one year of salary equals my deductible expenses,
so my actual 'net' increase in salary would be 1.5 times."
Arendt said being on commission has definitely made her a better
salesperson. "Before, getting the sale was not my priority. It is
The right pay formulas
Weekly's pay survey elicited the following question: "I am looking
to hire another agent and would like to offer salary plus
commission or commission only but have no idea what structure/scale
is appropriate." -- Maria Snizik, The Travel and Meeting Place,
Here's what three experts suggest as a start:The key, according to industry educator Doris Davidoff, is
what's called the multiplier. To make a reasonable profit, you must
figure out how many dollars agents must generate in commission for
each dollar of salary they make.John Dalton, former industry consultant and now vice president
of agency consortium Travelsavers, suggests rewarding agents on a
salary plus commission program that comes to about 35% of all
income they generate. The agency will then retain 65% of the
revenue, 45% of which should be used for overhead, leaving 20% for
bottom-line profit.Dick Landis, "head coach" at Wayzata, Minn.-based agency
networking group Travel Agency Management Services (TAMS), suggests
a "rolling 12-month pay scenario" that averages out the commission
an agent generates for several months. This helps protect agents
against the fallout from slow-selling months. "It takes several
months of below-average performance to noticeably affect an agent's
pay," Landis said. For more information, call Landis at (612)
Landis also suggests that you prepare your agents six to nine
months before actually beginning a commission-based program. Figure
out what they would be making under the new program and tell them
-- as a motivator for good producers and a warning to poor ones.
You might note on their salary checks what they would be making on
the new program and tell them whenever they want to, they can move
onto the commission-based system -- but they cannot go back.
The agency owners' side
message from Crossroads' Web salary survey came from an agency
owner who said he'd like to pay his agents on commission but
couldn't because he lived in a town where all of his competition
paid their travel agents on salary.
"The problem is that with the shortage of front-line agents
throughout the country, I am the loser if I change the method of
paying my inside staff," wrote David Bradach, owner of All-American
Travel Club in Naples, Fla. These agents "look at the benefits [of
working on commission] but are scared off by the potential loss of
income for not producing. The answer, for them, is to work for
someone willing to say it is OK to draw a salary without a
compensating revenue stream."
Bradach said he's considered hiring good salespeople outside the
travel industry who really know how to produce, but "I don't have
the time and patience to teach them Sabre. When the CRS systems
change I can bring in a go-getter who does real estate sales, but
until then I'm going to pay my agents a salary," he said.
"If I had 35 agents answering my ads [for new employees] -- all
of whom had computer experience -- maybe I'd feel differently."
The fine art of motivating
Continuing with the theme of agency compensation, here are more
thoughts on the subject from the book "Managing for Dummies":
"Whenever you give everyone the same incentive -- the same
salary increase, equal recognition or even equal amounts of your
time -- we call that jellybean motivation. Although this treatment
may initially sound fair, it isn't. Nothing is as unfair as the
equal treatment of unequal performers."
The authors of the book, Bob Nelson and Peter Economy, then tell
a story about a "large California aerospace manufacturer that
decided to be nice and thank all of its employees at Christmas with
a turkey to take home for the holidays. Some employees noticed that
their turkeys were smaller than those of their coworkers. Soon, the
complaints reached the executive suites -- employees with the
smaller turkeys thought that they were being punished for poor
performance. Faced with this dilemma, management ... accompanied
each Christmas turkey with a printed note that stated, 'The weight
of your turkey does not necessarily reflect your performance over
the last year.' "
The "big secret" to motivating employees, according to the book:
"No single prescription can help you motivate all your employees.
Each employee has his or her own unique motivators, and your job is
to figure out what they are. ... The simplest way to find out is to
ask them. Often managers assume their employees want only money and
are surprised when their employees tell them other things -- such
as ... having a more flexible working schedule -- may be much more
Creative selling hints
Here's Dale Moss, British Airways' director of sales worldwide,
on how to develop consultant-like selling skills:
"Creative agents find ways of developing relationships with
customers that transcend core travel," he said. "As long as we
think we're selling just travel, we lose. Agents are also selling
education, fun, family exploration and romance."
Tell clients, "We're going to talk about your vacations for the
next five years" and help them to develop a long-range, long-term
plan. This strategy can include talking to them about putting money
away in a kind of travel club, with the line, "Think of travel as
an investment. Here's how you can afford it."
Such planning can take into account the different kinds of trips
appropriate for a growing child -- from theme parks at 10 to the
educational trip to London when a child turns 16. With a focus on
long-term planning, "you've just raised your level of partnership
with that customer considerably," Moss said.
Looking for seniors?
If you want to find --
and book -- more senior travelers, consider attending the travel
marketplaces run by the Salem, Ohio-based Group Leaders of America
(Glamer) shows that provide group travel leaders with seminars and
exhibits as well as specific events for leaders to network with
In 1999, Glamer will add nine new group leader travel
marketplaces, for a total of 76. The new locations will be
Lexington, Ky.; Branson, Mo.; Akron/Canton, Ohio; Woodland Hills,
Calif.; Palm Springs, Calif.; Dayton, Ohio; Fort Worth, Texas, and
Vancouver, British Columbia.
A third marketplace will be added in the Chicago area, with the
current Chicago South show, which until now has been held in
Merrillville, Ind., becoming the North Indiana marketplace.
The 1999 Glamer travel marketplace schedule will run from March
through June and from August through October; dates will be
For information, contact Group Leaders of America at (330)
337-1027 or check the company's Web site at www.glamer.com.