It always amazes me how much animosity there is between travel suppliers and their tour operators/wholesalers. These are companies that rely upon each other for their livelihood; however, suppliers are always complaining about their contractors and the commissions they pay. I’ve heard it a thousand times before in many different forms:
- “They hardly send me any bookings, so why should I do them any favors?!”
- “Why should I care how long it takes or how much it costs a contractor to load rates? That’s why I pay them a commission!”
- “I email out my rates, and the contractors never complain. What they do with them is their problem, not mine.”
While suppliers typically grumble about commissions, we recently surveyed contractors and learned that loading rates was a major challenge and source of expense and frustration for them. Clearly, both sides have a problem with some aspect of the relationship. As part of our ongoing efforts to educate and improve our industry, today we’d like to share the top 4 reasons why suppliers should care about the difficulties contractors have loading rates.
1. Your products aren’t getting loaded.
That’s right, if you have products and rate sheets that are difficult to load or don’t have a strong sales history, they simply aren’t getting loaded. Our contractor survey clearly shows that tour operators can’t currently load every product a supplier sells. So they prioritize, and across the board, contractors told us that confusing or complicated rates get the lowest priority.. And, I’ve got news for you, everyone thinks their products get loaded…but the data clearly indicates that only 46% of products are actually loaded.
Bottom Line: Less than half of all products get loaded, and if they aren’t loaded they aren’t getting sold.
2. Your commissions would be much better spent on revenue generating activities than on administrative costs.
The whole concept of commissions is to reward those companies that sell your products on your behalf. In a perfect world, a significant portion of the proceeds of those commissions would go towards generating even more sales; however, in the world we live in today, commissions are increasingly being used to simply cover the administrative costs of loading supplier products to make them available to agents.
Bottom Line: You should care how your contractors are spending their money. You want them spending money generating sales, not on administrative costs.
3. You spend precious time and money on relationships with contractors, only to let bad data fail you when it comes to bookings.
Suppliers spend thousands of dollars each year going to trade shows, doing sales roadshows, and cultivating relationships with product managers and sales agents. You work with product manager so they will include your products in their system and/or brochures. You then get to know the sales agents so they will like your products and begin including them in itineraries for travellers. There is one thing that can bring all of this to a screeching halt – when a sales agent goes to put an itinerary together, and your product isn’t loaded or doesn’t have up-to-date rates. Sure some agents will track down a rate, but the vast majority will pick some other product, because they don’t want to jeopardize their sale because they can’t send a quote out while they wait for your rates. You just lost a sale because your spreadsheet was too confusing.
Bottom Line: If your products aren’t in the system and up-to-date, most agents will sell something else.
4. Contractors are your partner, and they send you business that improves your bottom line
As a supplier myself, I understand how paying commissions to a wholesaler or ITO can be frustrating. But, we have to understand that these companies are bringing us business that helps our bottom line. When we can get past the mental hurdle of paying commissions, we can begin to work together as partners. As partners making the process more efficient, you and your tour operators can both share in the rewards of a more efficient and nimble relationship.
Bottom Line: By working together, we can all benefit from reduced costs and increased profits.
It’s very easy to continue thinking that once you send out your rates, what happens to them isn’t your problem. However, as we’ve shown through our research, it’s clear that you should care about how easy your products are to load. Spending a little time and effort to make your tour operators’ lives a little easier can go a long way towards improving your bottom line.
What do you think? Do you still think it should be the contractor’s problem? Does this information make you look at contractors differently? Are you frustrated by the current limitations in rate loading? We’d love to hear your thoughts in the comments below.
The contractors have spoken and shared some of their challenges. Next, TourConnect will be sending out our first-ever supplier survey. As with the contractor survey, our goal will be to provide valuable insight into our industry so we can all grow and improve together. If you’d like to participate, follow us on Twitter, Facebook, or LinkedIn – or, even better, join us and create a free TourConnect account today.
