NEW YORK -- Travel agents who want to host independent contractors
or boost their number of outside salespeople significantly have to
create a written plan and answer several questions in order to
succeed, said Pam Miller, vice president and general manager of
Magellan360, a host-agency operation.
Speaking to delegates to the recent AAA annual conference here,
Miller advised agency managers to write out a step-by-step plan,
breaking out a timeline by month or even weeks for when various
steps would be taken.
She said the plan must deal with the number of contractors
sought (and if the number is large, an office restructuring to
handle the new administrative work).
It also must deal with the preferred experience level for these
new sellers (the more experienced, the more costly, but the less
training needed).
When making a plan, she said, share it with the staff and get
buy-in from them; establish a budget "and always add 10%."
Once a plan is launched, do weekly updates or checks on your
progress with appropriate colleagues.
Miller manages the services that the Santa Ynez, Calif.-based
Magellan360 provides both to brick-and-mortar agencies that choose
to drop ARC and to more typical individual at-home sellers.
She urged travel agents to consult an attorney, as well, to
ensure the structure for independents is correct, but roughly, she
said, the difference between employees and independents is "you can
tell an employee how and what to do to be paid," but with an
independent contractor, "you can only tell the seller" what to
do.
What do contractors want?
• Their identity. Contractors want their business names on their
cards. Identity is the most-mentioned issue, Miller said.
• Freedom to make their own decisions. They want to set their
own service fees, for example.
• Higher commissions. The contractors need to see how they can
earn more by selling for your agency (sometimes because of your
overrides) than they would by placing business
directly with suppliers.
• Prompt and accurate commission checks. Getting this part wrong
could ruin your reputation, Miller said.
• Support, education and training. Contractors need to have
someone to call for assistance or leads on training because working
at home is "isolating," she said.
• Consistent access to the same people at the host agency.
Designate specific agents to accommodate the contractors.
• Sense of community. Encourage contractors to join relevant
trade organizations and use your Web chat room. Meet with them
regularly, and sponsor at least one social get-together a year.
• Marketing assistance. If your trade group or consortium offers
assistance, share this offer with contractors.
Splitting the Money
• Fifty-fifty commission splits are nearly gone. The 50/50
sharing is "fair" for the greenest outside salespeople, Miller
said.
The issue is the time and support needed for a newcomer as
opposed to having a highly experienced seller. The seller's share
may go up to 70% or 80% of commissions, depending on expertise.
And, Miller said, "be aware that the contractors talk to each
other."
• You may not be able to control contractors outright, but one
option is to provide a more favorable split for sales of preferred
suppliers. (Similarly, the agency can offer training only on
preferred products.)
• The newest trend, Miller said, is the transaction fee.
Magellan360 gives the outside agent 100% of commissions and 60% of
overrides and charges a flat per-transaction fee.
With flat fees, Miller said, the contractor has to provide a
minimum level of sales to be worthwhile for you to be the host.
Determine how many transactions you need, she advised, and make
your program cost-prohibitive for underperformers. On the other
hand, you want the plan to incentivize contractors to put all their
business through your agency.
Also, if you are getting GDS segment credits based in part on
the contractors' sales, share them with the sellers, too.