Staying with the group

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Jon Harper operates a group and incentive business at East Town Travel in Milwaukee, a business that focuses on, well, practically everything, it would seem.

Harper's clients take theater trips and go on upscale art and architecture tours all over the world, he said.

For baseball fans, there are spring training trips, baseball cruises and so-called "fantasy camps" where participants play the game with current or former professional players. Other tours are "radio come-along" itineraries sponsored by a local station.

There are journeys that fit the profile of social and ski clubs, yoga groups, corporate trips for current or retired employees and, at the top end, custom trips for members of a private club.

Harper runs a small inbound business, too, as the official operator for Frank Lloyd Wright tour programs featuring the work of the architect, who was born and worked in southern Wisconsin.

That's a lot of variety, adding up to 80 to 100 groups a year for what is, in revenue terms, a relatively small agency. East Town Travel grosses between $5 million and $7 million a year, Harper said, and groups are about 40% of that. However, he added, significant numbers of these trips are one-day and weekend getaways.

Four of the agency's 11 employees are devoted to the group and incentive operation. Five percent of the business is corporate travel.

Harper came to the travel business (his third career) because his wife, Penny, was co-owner of an agency and he had managed some incentive trips from the "other side," as the corporate buyer. When he and his partner sold their food service company in 1985, the Harpers bought out Penny's partners. Jon opted to launch East Town's group business, where he is vice president of marketing; Penny is president.  "No one in town was doing a decent job with groups," he said.

He started by promoting incentives to East Town's leisure clients who also owned businesses, and he had a lucky break as a result of an encounter with the owner of a local radio station.

In the years since, for new business he also has relied on word of mouth, cruise nights or other private functions hosted by destinations plus lots of targeted direct mail. But he does no advertising because it doesn't pay, he said.

Direct mail includes the agency's newsletters and mailings arranged by Ensemble, of which the agency is a member.

In addition, the manager of the Milwaukee Athletic Club invited the agency to relocate into the club a year ago. That connection gives East Town access to the club's 1,500 well-to-do members.

The agency has three Web sites, for groups, cruises and general purposes. It encourages clients to use the sites for trip research but not to book. "We want people to come to us," Harper said.

Harper listed three key factors in East Town's success:

" The agency team. The average tenure among staff is 20 to 25 years, and the youngest employee is 47 years old.

"We try to have fun," Harper said. "We're downtown, and staffers are never asked to work weekends; they work 9 to 5. There is a lot of fam time, and there is flexibility."

" The suppliers. Harper said he makes a major investment in entertaining his major suppliers. It is important to learn from them when they want to move space, because "you make money on the buy, not on the sale," he said.

"Suppliers are a key part of the formula," he added. "If they know you are producing, it is amazing what they'll do for you."

" The itineraries. "We look at trips from the bottom up, [asking] what would you like if you were on that trip? ... We keep adding and changing things ... customers will pay for getting what they want."

Harper quipped that his long-term goal was to remain vertical. However, after some rumination, he said, "I will probably work after I 'retire.' " He explained: "If you own a business, the business owns you. There are obligations to the staff, so we will find ways to ensure they are protected."

Meanwhile, Harper has gotten a lot of what he wanted when he switched to travel, and that included the chance to travel more with his wife and kids.

"We've had a lot of fun," he said.

Think you're a good candidate for an upcoming Agent Life? Contact Nadine Godwin, Agent Life editor, at [email protected], and please include your agency name, agency location, telephone number and e-mail address in the message and put "Agent Life" in the subject line.

Perfect Itinerary

Art and architecture in Germany

The following itinerary was created by Milwaukee's East Town Travel for a private art museum group. It features the works of German-American artist Carl von Marr. Jon Harper, the agency's vice president of marketing, said he used Ensemble's on-site suppliers to make exclusive features possible. Also, coincidentally, Harper is the artist's great-nephew, which is why Harper's middle name is Marr. The trip is set for September.

Day 1: After arrival in Frankfurt, tour members are met at the airport and transferred by private coach to the Hotel Eisenhut in Rothenburg for a two-night stay. In the afternoon, they stretch their legs on a guided walking tour of Rothenburg (shown at right), one of the former imperial towns on the Romantic Road. After World War II, the medieval town was almost completely reconstructed.

Day 2: The group travels to Bamberg, a work of art in itself with 2,300 protected constructions that range from the Romanesque to the Baroque periods. Bamberg is on UNESCO's World Heritage list. The town is also the home of the Messerschmidt family, von Marr's cousin. Lunch is at the Hotel Messerschmidt. The group continues to Nuremberg, Bavaria's second-largest city. The home of artist Albrecht Durer, Nuremberg is a city with a medieval flair. It was once an imperial residence and international trading center. Numerous Old Town buildings, monuments and artworks reflect its former importance. Tour members also visit Schloss Faber-Castell to view von Marr's largest work.

Day 3: The group travels the Romantic Road en route to Munich. The road winds its way from the Main River in Wurzburg to the foothills of the Alps. Each bend in the road reveals a variety of landscapes and towns where time appears to have stood still for centuries. The group stops to tour Dinkelsbuhl's Old Town, which is surrounded by fortifications. In Oettingen, the group lunches at a fine restaurant with an outdoor terrace and beer garden. In Munich, there will be time for a walking tour of the old part of the city before check-in at the Hotel Koenigshof, a member of the Leading Hotels of the World and the group's home for four nights.

Day 4: A Munich tour includes the Palace Nymphenburg, the Marstallmuseum with its Bauml porcelain collection and a guided tour of the Nymphenburg porcelain manufacturing facility. Nymphenburg, the summer residence of Bavaria's Wittelsbach dynasty, was built by Ferdinand Maria, elector of Bavaria, in 1664. The palace was a gesture of thanks to his wife for giving birth to the successor to the throne, Max Emanuel. One of Nymphenburg's most noteworthy sights is the Gallery of Beauties. Between 1827 and 1850, King Ludwig I commissioned paintings of the most beautiful women of his time; for the first time, commoners as well as noblewomen were depicted. The Marstallmuseum's Bauml collection documents the development of the porcelain factory from its founding in 1747 by Elector Max III Joseph until about 1920. The museum visit is followed by a private tour of the porcelain manufacturing area, which has produced porcelain products for more than 250 uninterrupted years. There is shopping time before lunch at Restaurant Palmenhaus in the Nymphenburg Garden. The rest of the day is free for group participants to do what they wish.

Day 5: The von Marr family tour begins with a visit to the world headquarters of the Drom essence and fragrance maker, which is owned by Carl Bruno Storp and his children. Storp is von Marr's grandson. The Storp family fragrance business is one of the largest in the world. The group has the opportunity to marvel at Storp's perfume bottle collection. Following lunch at Restaurant Isarbrau, the group goes to Storp's house for coffee and drinks and to see his private von Marr collection. This will be followed by a visit to von Marr's family home, Kirchturmplatz, and grave site in Solln.

Day 6: The group will see the medieval section of Munich, the most exclusive shopping streets and the Olympiapark, site of the 1972 Summer Games. The itinerary includes another famous von Marr work, as well. The afternoon is left free. The final dinner and reception is set for the gourmet Restaurant Koenigshof. From this location, the group will enjoy a nighttime view of many landmarks, including Karlsplatz and the Palace of Justice.

Day 7: Tour members go home or take an optional extension to Prague, Czech Republic.

The Perfect Itinerary is an example of an itinerary an agent crafted his or herself, not available anywhere else, but can be duplicated by other agents to sell to their clients. To send an example of an itinerary you've customized, e-mail to [email protected] with "Perfect Itinerary" in the subject line.

Benchmarks

There's no magic multiplier

By Bob Joselyn

In my first column on benchmarking your agency, we explored the multifaceted benefits of benchmarking. Now it's time to get specific. How many times over the years have you heard someone say that an "agent" had to generate revenue at least three times their compensation for the agency to make a profit?

Too many agency owners and managers actually believe this is true. It might be true for your agency, but it would be little more than coincidence.

Ask yourself whether this rule of thumb seems simultaneously logical for an agency in downtown New York and one in Larned, Kan.

Clearly, while the costs would be wildly different between New York and Kansas, the revenue opportunities per transaction probably would not be.

This wouldn't matter much if no one made decisions based on this, but that is not the case. Some owners and managers make staffing decisions based on this rule of thumb, and far too many use it as a basis for an incentive compensation system.

The ironic thing about accepting a "magic multiplier" is that it is so easy to calculate your own multiplier. Forgetting employee benefits for a moment, simply add your desired (and reasonable) annual profit to your annual expenses and divide this total by the total annual compensation to your sales agents.

It is beyond obvious that by multiplying an agent's annual compensation by the multiplier just calculated yields what, on average, an agent must produce in revenue to cover costs and deliver your minimum desired profit.

Of course, all your sales agents must achieve this multiple for you to achieve your minimum objective.

In fairness to the magic multiplier of three, your multiplier probably should not be much higher than this.

For example, if your personal multiplier is 5.1, it is likely that your administrative, support and/or overhead costs are too high for what is a reasonable expectation for revenue generated by your sales force.

In fact, for those using a multiplier as a basis for an incentive program, I recommend that the multiplier calculation be explained to employees and that it be recalculated periodically.

Show employees that if they can figure out ways to reduce expenses, the multiplier will become smaller, thus reducing their minimum expectations.

Should employee benefits be added to the equation?

If employee benefits are relatively equal, it doesn't make much of a difference. Adding them in will result in a smaller multiplier, but as long as you are consistent it doesn't matter whether you include benefits or not.

If employee benefits are relatively equal, you can just use base compensation. If benefits are unequal, including benefits makes sense.

What about bonuses?

Throughout this column I have used employees' incentive compensation as an example of how the multiplier is frequently used.

It's typical to award bonuses to agents who exceed their compensation times the multiplier being used.

This is not an endorsement of this simple approach to incentive compensation programs -- the appropriate design of incentive compensation should generally include other factors.

There are many circumstances where the simple application of a multiplier, even when it is your own, doesn't address all the relevant issues.

As an example, let's hypothetically assume that your multiplier is 2.5. Employee A is being paid $30,000 with a revenue expectation of $75,000, an expectation she hits exactly. Employee B is being paid $50,000 with a revenue expectation of $125,000, which she hits exactly.

Are these two employees equal because they both met their multiplier expectation? Hardly!

Employee A is contributing $45,000 to support and profit while employee B is contributing $75,000.

Using a simple multiplier approach for bonus incentives works best when base compensation among employees is close to the same and employee performance does not vary wildly.

The magic multiplier of three? Take the magic out and calculate your own multiplier based on your costs and profit objectives. Perhaps most important, if you use it for agency management purposes, think about implications carefully.

Bob Joselyn is CEO of Travel Agency Marketing Solutions and consulting firm Joselyn Tepper & Associates, both in Scottsdale, Ariz. E-mail him at [email protected].

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