August 30, 2018 Blog

“Do you have a leads program?” That’s one of the questions that I hear a lot from two groups of people: Those who are considering joining the travel industry, or those who are in it but not having the financial success they hoped for. You know who I never hear it from? Successful agents. Makes sense, right? They don’t need leads.

It is natural to think that leads can be a great way to build a business. A client who wants to plan a vacation reaches out and is connected with a travel professional who can help them. Match made in heaven, right?

Not so fast. There are a few things to consider about leads programs:

Where do the leads come from? In most cases the leads come from your host agency. That means the consumer found the agency and is interested in getting a quote. But just because they are asking for a quote from your host agency doesn’t mean you’re the only agency they are reaching out to. Or they might come from a consortium. The bottom line is the stronger the reputation of the company providing the leads, the better the leads program. But if the agency providing the lead is known for discounts and freebies they will attract people who are only interested in the very lowest price and are shopping multiple agencies to get it.

Whose client is this? Most agencies consider clients from leads to be their clients, not yours. Meaning that even if you rebook the clients in the future those bookings may also be subject to that lower split. Meaning you would constantly be working at a discount. If you ever leave the host agency those clients do not go with you and you would be prohibited to reach out to them and share your new information.

How does a lead affect the commission split? For many agencies the commission split isn’t the same as if the client was yours. Sometimes it is a 50/50 split and sometimes it’s even lower. Make sure you ask the question. Some agencies also impose fees or restrict which vendors you can book for the clients.

What’s the average closure rate? Of course, this varies from lead to lead and agent to agent, but every agency with a leads program has an average closure rate. They range widely from 10% to 60% (the highest I have ever heard). Let’s look at this another way: Between 40% and 90% of the time you spend working with these prospective clients is wasted.

So even considering the best-case scenario in the above situations, is leads beneficial to get your business off the ground? Not necessarily. The problem is that you only have so many hours – and so much energy – to put into building your business. If you spend that time on leads that’s time you don’t have to spend on something else. Like marketing your business.

The big danger with leads is when it creates a false sense of success. You can easily find yourself in a situation where you spend a lot of time creating quotes for leads and then when you look at the amount of money you made from all that effort it isn’t much.

It is really easy to feel like you are doing the “right” thing to spend all your time providing quotes to potential clients – especially when you are just starting out. But that doesn’t leave you any time to work ON your business. If you have your own travel business that means YOU are responsible for marketing and client attraction, not just assisting clients.

Bottom line: Leads are a numbers game and a great way to keep busy. But they aren’t always a great way to build your business since those clients aren’t usually yours and you make less money on them. And remember, staying busy doesn’t mean being successful. You are the boss now and you have to put on your CEO hat and work “on” the business, not just working “in” it.

By Sandy Saburn