By Taz Bareham — 26 Sep 2016
Direct bookings are great for your business, as they prove that your online marketing strategy is working and it also allows you to increase your profits per customer. However, agents are a necessary part of distributing your tours and activities to motivated travelers. They work for you, and resell your products, ultimately increasing your bookings overall and diversifying your business. It’s an added expense, but they deserve the commissions that they earn. Here’s why:
Those who resell your products will promote your business for you. If you implement a channel manager into your business operations, you will have access to an endless number of agents who are interested in packaging your tours and activities and marketing them to your customers. This minimizes the time that you have to spend on marketing to audiences that can be difficult to reach, and it allows you to focus more on the services that you provide. The time and money that you save on marketing is well worth the commission that you will pay to the agents who help you increase your bookings.
By allowing agents to resell your products, you enjoy minimal risks when it comes to your investment. This is due to the fact that you will establish your own commission rates, and that you will be able to pay a commission that still allows you to make a profit on the booking. In addition, you only pay a commission when a booking has been generated. Other online marketing techniques force you pay for the possibility of a new customer, rather than only paying when a conversion has occurred. For example, with Google AdWords, you will pay-per-click, but not all of the people who click on your site will book your products. Through this technique, you are likely wasting valuable resources on visitors who may never have intended to book your products.
Different agents work with different target audiences. Many of these groups might be difficult for you to reach on your own. By diversifying your business and improving your distribution strategy, you will be able to reach incremental sales channels through the agents that you connect with. An incremental channel is one that you would not otherwise have been able to access, and they are critical to growing your tour company. The more agents that you work with, the more incremental growth you will have within your business. Your investment in their commission plays a pivotal role in the future success of your tour and activity company.
It’s important to set fair yet competitive commission rates for the agents who resell your tours and activities. You might want to consider choosing net or percentage commission for your products. Ultimately, you need to set the commission rates that allow you to be profitable but also encourage agents to book your products for their customers.