There is a perceptible exodus away from our business. It’s now time to brainstorm less about cosmetic service improvements and more about survival.
We are coming to realize that Covid will not leave us anytime soon. Thousands of our friends and industry partners are hurting.
Sometimes I think it is helpful to step back to reexamine just how we do business and to be challenged by new ideas. So let’s forget about selling travel for a moment and imagine that we’re all taking everything we’ve learned and going into the hamburger business together.
Our new concept, Travel Burger, will feature 20 varieties of burgers. What is the most important thing we need to know as we form plans to launch Travel Burger?
Profit margins. We will only be able to mark up the hamburger itself somewhere between 40% and 50%. Therefore, you will have to be comfortable charging $6 or $7 for your burger.
It’s a tough, competitive business, but there is an incredibly important upside that produces wonderful margins: All the things that customers order in addition to hamburgers. Fries, for instance. And soft drinks. The markup on those items is closer to 80%, or as close to pure profit as you can get.
The challenge of Travel Burger will be to get customers to order the most profitable things that we sell, which are not burgers. Let’s apply that lesson to our travel businesses. Here are some things that I hope you will discuss and, perhaps, even seriously consider.
The single most profitable product you can sell is travel insurance. Has your firm designed an inclusive document/package describing the types of insurance you are recommending to your clients? Remember that Covid concerns have now created the need for more than one type of policy when you travel: standard cancellation insurance; coverage for medical evacuation from a hospital abroad; insurance to get you home if you test positive for Covid within 72 hours of your scheduled return to the States.
On the other hand, I do not sell — and frankly, do not understand why other advisors sell — low-margin airline tickets. Why not refer clients to true air ticketing and air concierge specialists who have no interest in selling them anything but air? Given the changes coming in air scheduling, coupled with my observation that the highest percentage of customer complaints are centered on the transportation to and from the travel arrangements I have made, it’s time to give serious thought to whether you want to continue your role as “agents” of the airlines.
Going back to Travel Burger: What is it about Travel Burger hamburgers that differentiates them from the burger joint down the street? Make sure you make that clear to your customers. Likewise, if you have not already done so, promote your specialization in such a way that your new tag line sings. If your specialty is “vacations for vapers,” say so. I find that 90% of the agencies I consult with have no tag line at all. By forcing your company to design one, you will also force an important discussion about the ways in which you want to specialize going forward.
If you’ve been reading my column for any length of time, here’s an idea that may sound familiar: Start thinking about eliminating fees of any kind. There’s a reason burger restaurants do not charge fees.
We’ll talk about this again, but please consider that fees just cover up the fact that too many advisors are selling products that are simply unprofitable and without a decent markup.
The big picture has to do with the products we sell.
Time for some fries and a Diet Coke.
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