Most—if not all—travel professionals I’m speaking with right now are considering making a shift to fee-based planning. And if you aren’t, you certainly should be! Having gone through a year of losses, it’s critical to (at least) explore transitioning your business from a commission-only structure to non-refundable fee-based travel services. Advisors and agency owners who are still in business after the past year’s global pandemic have learned the critical lesson that those in the financial-planning profession adopted many years ago. It’s plain and simple, charging a fee for the work that you do can create a more certain revenue stream at the point your client engages you. With fees, you will have income even if for some reason, the trip has to be cancelled or rebooked for a later date. This eliminates your total reliance on commissions as a revenue source. And because TIS is all about helping you protect your business, we want to be a part of this conversation! And speaking of protecting your business, one of the TIS Keystones is to ensure legal protection. That’s why our contracts are enforceable, continuously kept up to date, and even come with a warranty for covered losses.
Let’s get back to planning fees, though! Think of them this way… Just as you pay an attorney to provide legal services, your clients should pay you for the planning services you perform. Now is the ideal time to consider the concept of planning fees. So let’s get to the nitty-gritty of how to implement fees, if you decide that’s the route you want to take.
FOUR STEPS FORWARD
You have options for setting up your fee structure. You may choose to charge a “plan-to-go” fee, a flat fee for planning, or ala carte rates for an expansive menu of specific services. To begin thinking about it, take a fresh look at everything you do for your clients.
A helpful exercise is to:
- Create three columns on a sheet of paper or computer worksheet.
- Title the columns something like SILVER, GOLD, and PLATINUM.
- Plug in each of your current services under the appropriate heading.
- Think of all the value-added services you also might offer and plug them in, as well.
If you either cannot come up with ideas or don’t want to offer more for the highest level of service, simply omit the third (and highest level of service) column. However, understand that you might be missing the perfect opportunity for both adding value for your clients and increasing your profit!
If you decide to use the plan-to-go fee or tiered approach, decide how much you will charge for each level of travel service. Your fee structure could range anywhere from $50 or $100, to as much as $500, depending on how many add-on services you would like to provide for your highest tier. It’s important to consider that your value is calculated by the level of service you offer, the helpfulness of the advice you give, and the accuracy of destination information you provide. Do your research, ask suppliers questions, talk with peers, and do your homework to increase the extent of your knowledge and earn your clients’ trust. The more you know, the more you can offer to your clients—for value-added fees, whether they are individually priced or combined for one flat rate.
Develop a well-thought-out strategy for informing your clients. Delineate your fee structure in clear and easy-to-understand language. Don’t make a big deal of it, but do make sure existing clients have access to it. When approaching the subject, ask them what they value most about working with you as their travel professional. Chances are, they all will have a similar answer—especially if you are good at what you do! My guess is that their response to your question will be something like, “You take care of all of my travel needs—even before I know I need them! You think of everything, and I always know I can depend on you to plan my travels so that all the details are in place to ensure that things go smoothly.” Think about it: isn’t giving your clients that level of peace of mind worthy of a fee? You must believe it before your clients will! You also can position this change as a conduit to offering new, value-added services in addition to what are already providing, by saying, “I am pleased to announce that I’m now offering a broader range of services to enhance your travel experience, and you have the option of selecting the specific services that best address your needs!”
Develop a Planning Fee Agreement that lists options for your clients to select, delineates everything included in your fee (See STEP 2.), and clearly states that the fee is non-refundable. You’ll also want to make sure your client signs your Travel Services Agreement before beginning the planning process. Having the signed agreement prior to work helps ensure you will be protected.
As we sit on the precipice of travel’s return after the global pandemic, travel pros are being stared in the face with an unprecedented opportunity! The timing could not be more ideal to change your planning services to a fee-based structure. And with a TIS membership, you’ll get all the tools you need to seamlessly make the shift, while ensuring legal protection. Don’t miss this once-in-a-lifetime opportunity!
You also need to learn more about the benefits of getting an insurance with your travel agency.