I didn't think that the time had yet arrived when a cruise line executive would get applause from hundreds of travel agents after telling them to stop complaining about noncommissionable fees and focus instead on selling more cruises. But that's exactly what happened during a panel of cruise line CEOs that I moderated at a combined session of last week's Travel Weekly cruise and home-based-agent conferences (see report, "Cruise line CEOs: Focus on selling, not on NCFs.").
In response to a question from an agent about NCFs, MSC Cruises USA CEO Rick Sasso ended with the words, "We still are your best partner. We have invested in you, and I think that means a lot." The audience response was immediate and positive.
That unexpected moment, however, was not what most impressed Van Anderson, co-CEO of America's Vacation Center, a host agency that is one of the largest sellers of cruises in the world. Earlier in the session, he was walking to the exit to join a conference call when he stopped dead in his tracks, took out his
iPhone and sent a text to his assistant. "I can't make the call," he thumbed.
What compelled him to stay longer in the auditorium was a statement Royal Caribbean International's Adam Goldstein was making in answer to a question I had asked him, Sasso and Norwegian Cruise Line's Kevin Sheehan.
The question was: "Wall Street had been pressuring you to stop distributing through travel agents, but recently an analyst indicated that you're now automating and streamlining the agency channel to the point that the analyst is no longer concerned with travel agency distribution costs. Do you have plans to make the travel agent channel even more efficient, and if so, how?"
The phrase Goldstein uttered in response that caught Anderson's ear was: "We need to increase the intensity of our relationship with travel agents."
Anderson has been obsessed with increasing efficiencies between agents and suppliers, and he believes the greatest efficiencies can be obtained only after changing the paradigm that underpins the current agent-supplier relationship. Goldstein's comments gave him an upsurge of hope.
"Right now, the only measurement cruise lines use to evaluate you as a partner is top line, top line, top line," Anderson told me later that day. "Their criteria is: 'How much did you sell for me this year?' But it's not just top line. There's much more we can do to impact the bottom line and be better partners."
One way that Anderson believes cruise lines can "increase the intensity" of the relationship is to share data that will help both sides look beyond the gross sales numbers. "Let's become more efficient in this entire process, from the beginning to the end," Anderson said. "Let's break down the cost of doing business with me vs. the cost of doing business with someone else. That's where it has to start."
It is on the cost side that Anderson believes agents are underexploited as partners. "I don't think cruise lines are going to volunteer to increase our commissions," he said. "What I think I heard in Adam's statement is that if they work more closely with us to help us change our behavior, or the behavior of our customers, we can save them money. And the expectation [on the agent side] will be: Share that savings with us."
Anderson believes that if cruise lines share data that will help him better understand his clients' post-sale service demands, he can lower costs for the lines. "Travel agents can affect, negatively or positively, what cruise lines make on a sale. Are my customers calling you more often once the sale is closed than customers of other agencies? Perhaps our agents are sending the wrong message to our clients. Helping our customers be better customers can reduce costs significantly. In the new paradigm, we become better partners by reducing costs as well as increasing income."
Expanding the focus of the agent-supplier relationship beyond top-line sales will significantly increase the importance of agents. It was the topic of my very first column for Travel Weekly, in 2001.
"I believe that ... the agent-supplier relationship will go much deeper [than influencing a client to purchase a product]," I wrote. "Agents can be builders of brand and lifetime value on behalf of suppliers. Suppliers that recognize the need to integrate sales and service channels can have, in the agency community, a 'face-to-face' option in building customer relationships."
The alignment of developments in technology, thoughtful entrepreneurs like Anderson and open-minded suppliers can change the agent-supplier dynamic far beyond what I had imagined possible in 2001. The implications are far-reaching; those agents and suppliers who are willing to trust each other enough to share and exploit data for mutual benefit will have a significant advantage over those who don't.
It is perhaps indicative of a new direction in the agent-supplier relationship that agents applauded Sasso when he exhorted them to put aside their focus on NCFs. I don't believe that the applause was an indication that agents like NCFs. They don't. But it may be a signal that some agents realize there are bigger issues out there, and that, during the panel, they heard some cruise line CEOs say they were prepared to address them seriously.
Email Arnie Weissmann at [email protected], and follow him on Twitter.