here are two types of commissions that are of interest to travel agents: the ones that suppliers pay an agency, and the ones that an agency pays an agent.

Lee Rosenbluth, president and chief executive officer of the 110-year-old, $60 million leisure agency Rosenbluth Vacations, believes there should be a strong connection between the two.

"We not only pay agents on how much they sell, but who they sell -- in some cases, we'll pay nothing. We want our agents' focus to be on our partners and the higher yielding business."

In other words, a preferred supplier is truly preferred, with controls and incentives in place to make sure that the business goes where it ought to go.

It's to his credit that Rosenbluth sees a commission program for his agents as more than just a way to reward volume. He sees it as a way to manage his business. He has designed a commission structure (above a base salary) that is customized to each of the 100 or so travel agents who work for him.

Using a tiered approach, he pays commissions based on an agent's longevity in the industry, seniority at the company and which supplier's products are sold.

And unlike companies that only give a year-end bonus, his incentives are paid out on a monthly basis. "We want the reward to be close to the actual transactions," he explained.

"At the end of the year, there's an additional lump sum bonus that agents can earn based on a combination of their annual revenue and whether they've met or exceeded goals."

Rosenbluth shares information about his commission structure with preferred suppliers to let them know how he uses it to support their products. "They're thrilled with our program," he said.

One other benefit to his commission plan is that Rosenbluth never hears complaints from his agents that they're understaffed. Instead, his crew is more likely to want to limit the number of agents competing for the commission pie.

The commission plan is tweaked on a regular basis in response to how supplier payout plans change, and is completely overhauled on a regular basis.

"Incentive systems have a shelf life of about three years," Rosenbluth said. "You need to refresh it now and then to keep everyone's attention."

In order to accomplish his goals, he's had to customize his back-office system to track individual agents' performance in both gross volume and specific products sold. He believes a similar system can be set up using any CRS back-office system.

There is one type of commission incentive that Rosenbluth won't consider allowing: the type that nonpreferred suppliers offer directly to agents to get them to book. "This circumvents everything we're trying to accomplish," he said.

Using Travel Weekly U.S. Travel Agency Survey data, Rosenbluth confirmed that the productivity of his team of agents far exceeds the national average.

Rosenbluth believes that part of the reason is that the commissions he pays are uncapped -- there's no end to the profit for him or a productive agent.

Perhaps there are elements of Rosenbluth's fundamental approach -- higher rewards for sales of the highest yielding products, recognition of longevity of relationships, prompt commission payments, uncapped upside, bonuses for exceeding expectations -- that can work for the other type of commission, the one suppliers pay agencies.

Progressive suppliers do customize commission programs for their best producers with innovative incentives, but there still are ones who offer little more than flat commission with straightforward override agreements.

To get agents to focus on their products in a crowded and competitive marketplace, these programs, too, may be in need of refreshment.


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