was talking with an agency owner from
Pennsylvania whom I've known for many years, and he was echoing a
concern I've heard from a number of travel agents recently.
"I know I should be charging $55 in service fees per
transaction. That's where I can actually make money as a travel
agent. But I only charge $42 -- I feel that's all the market in
this area will bear."
His feeling comes from observing where his competitors have put
their fees. However, he also feels he gives better service than his
competitors and wondered aloud whether his clients notice the
difference in service and appreciate him enough to pay the extra
$13 per transaction to work with him.
What should he do? If he does nothing, he will absorb a
financial hit from the elimination of most airline commissions. He
figures he won't go out of business and can try to create new
opportunities for his agency that might make up some of the lost
Or he can simply raise his fees and see what happens. He may be
On the other hand, he can simply raise his fees and see his
worst fears materialize, as he loses ground to competitors whose
fees are lower.
Or he can take a fourth approach. To help make this critical
decision, he can consult his clients before taking any action.
It's a tricky business. You can't ask clients simply, "Should I
raise my fees?" The answer to that is pretty predictable. But you
can get at it from a different angle -- you can try to determine
how valuable your services are perceived to be vis-a-vis
alternatives to your agency.
For good guidelines on how to approach customers to help make
business decisions, pick up a copy of the book "Customer Once, Client Forever," by Richard
Buckingham (Kiplinger Books, 2001).
He has a chapter titled "Gaining Valuable Client Feedback" that
outlines some ways to solicit client response that can both improve
your bottom line and have the important side benefit of deepening
your relationships with your clients.
Among the suggestions he offers for soliciting feedback is the
establishment of a client panel. You would invite six clients for
an after-hours, roundtable discussion.
If your goal is to determine whether you can safely raise fees,
I think you would want to invite the clients you would most hate to
lose -- those with whom you have a long-term relationship and who
each has a high lifetime value to you. Mix up high-end clients with
dependable middle-of-the-roaders and begin exploring the depth of
their commitment to you.
To try to determine whether your clients would abandon you for a
competitor if you raised fees, you might explore why they come to
you in the first place.
Separately, you might explore their attitudes about fees and try
to understand what they think they're getting for their money.
In his book, Buckingham lays out some ground rules for a
successful panel. He suggests that you consider the use of an
Allow two hours for a session, and have a short (five- to
10-minute) break after the first hour. Appoint one of your best
listeners on staff to take notes, and in addition, audio- or
videotape the session for easy review later.
Your staff needs to be prepared. Two weeks beforehand,
Buckingham recommends, ask any staffer who will be attending to
draw up three to five questions they would like to ask, and have a
meeting to review all the questions you've come up with.
Follow-through is important, as well. Immediately after the
panelists depart, while their comments are still fresh in
everyone's head, sit down and analyze what was just said.
Finally, it's time to act on what you've learned. You may
discover that the panelists are extremely price-sensitive and
already are considering alternative ways to purchase travel. It
would not be wise to raise your fees.
Or you may find that they have had negative experiences with
your competitors (or the Internet) and are quite loyal to you.
You'll feel much more comfortable raising fees.
Of course, the answer likely won't be clear cut. You may end up
having to make a "gut" decision, but the decision won't be made in
a vacuum -- you'll act only after having consulted your most
important business advisors, your clients.