Charlie Funk
I am persuaded that any time someone thinks they have learned all they can, they die the next day. You will notice I'm still writing.
I have to admit that back in 1995, I felt like I had a close call. My wife, Sherrie, had opened the first cruise-only agency in Tennessee in January 1988. Our company had been named Carnival Cruise Line's Agency of the Year in 1990. We had received advertising awards from Travel Weekly and sales awards from many of our cruise partners.
When a new ship was launched, we were at the inaugural. We had become adept at database segmentation and analysis and were frequently consulted by others. We had developed an extremely effective print advertising campaign, and we were growing rapidly. We might have been on the edge of learning all we could.
It was a great era for consortia back then, and there were more than a few. People like Al Minkoff, Mike Spinelli, Marty Braunstein and Sue Shapiro, among others, were well-known leaders of some of the larger ones. Granted, there were different business models, but these early pioneers shared a common goal: Empower travel retailers to be more profitable.
Central to the appeal of consortia for the most part was the higher commissions they offered members by aggregating the sales of all members so agencies got higher commissions than they would otherwise be entitled based solely on their agency's volume.
So when Al Minkoff, founder of the consortium GEM and owner of the consortium Cruiselink, approached us at the inaugural of Royal Caribbean's Grandeur of the Seas in 1995 and asked if we belonged to a consortium, my first thought was: Why would we need a consortium? Upon learning the annual cost, I explained that we saw no upside for us as we were already at the same commission levels Cruiselink offered.
Al went on to explain other membership advantages. And then he said, "Tell you what. How about I give you a membership for a year. If at the end of the year you don't see the advantage, don't renew"
I seldom if ever turn down something free. So began a relationship that extended from Cruiselink to Travel Agent Network to Vacation.com and now Travel Leaders Network.
In that time, consortia have come and gone. Some changed names. Several have been rolled up into a much larger entity. At the same time, the nature of the consortium has continued to evolve even as fundamental business model differences remained.
Let me add here that consortia are distinctly different from a franchise or host agency. Indeed, many, perhaps most host agencies are in a consortium.
What are some differentiators?
- Consortia range in size from a few hundred members (Ensemble, Signature, Virtuoso) to several thousand (Travel Leaders Network).
- Some are cooperatives that require purchasing a share of stock in the company to be a member. Others do not require an upfront purchase.
- Some require affiliation with at least one of either ARC, IATA or CLIA.
- All require a minimum time in business and/or a minimum annual sales volume with that consortium -- e.g., at least a year in business and a few thousand dollars to $2 million in preferred supplier sales.
- Among the cooperatives, consortium profits are distributed to members at set intervals, while others offer performance-based override bonuses.
- Some require using specific technology aids. Others do not.
- Some narrowly focus on a market segment such as luxury, while others are broad based.
- Some restrict sales to preferred suppliers, while others have a broad spectrum of preferred suppliers, allowing members to tailor their own sub-list of preferred suppliers.
- All offer marketing tools and promotional assistance, some with mandatory participation, others with voluntary participation.
- Member agency commission levels are typically a bit higher than might otherwise be earned, but the days of a small agency that would earn 10% as an independent joining a consortium and immediately earning maximum commission levels are gone.
- None (that I know of) allow dual consortium affiliation.
- All offer ongoing education and training online, in regional sessions or at annual meetings.
- All major consortia have at least an annual conference offering concentrated focus on training as well as opportunities to meet and interact with supplier executives and senior personnel.
I cannot construct a scenario in which an agency does not benefit from consortium membership. That said, there are almost certainly concerns a prospective member might have or cautions that ought to be observed. The following are topics that one must consider, with the premise that the prospect has qualified for membership in the selected consortium.
Fees: Is there a one-time or setup fee, a stock purchase or annual fee? There is almost certainly some initial, maybe even an ongoing membership fee. More often than not, ongoing fees are assessed on a sliding scale based on preferred supplier sales, dropping to zero at some point.
Marketing and promotions: Are the programs opt-in, pick and choose or mandatory participation? What is the cost?
Market niche: Does the consortium serve a narrowly drawn market segment, or is it broader based?
Mailing lists: what is the source of names? Is the member required to turn over its database? Many owners have a strong aversion to doing so. I offer for consideration that Vacation.com and now Travel Leaders Network have had our 62,000-name database for more than 14 years now without a single breach, and none is expected. That said, be sure to clarify what happens to stored names if you leave a consortium.
Training and ongoing education: What opportunities does the consortium offer? What online and webinar resources are offered? Are the training modules consortium- or vendor-specific? Are resources offered that help with day-to-day, best practices operations or is only supplier-specific product training provided? What is the cost in time and out of pocket resources? Look for a consortium that not only helps you learn but also provides assistance in learning the best ways to operate your business.
Technology: Look for a consortium with a solid technology suite.
Website: Does it offer a website with strong content? To what extent can it be customized so your site does not look like a cookie-cutter version of other sites? How easy is it to use? How many clicks does it take to get to somewhere meaningful in how much time? What is the cost? If you leave the consortium what happens to your URL, website and content?
Front office, back office and CRM platforms: How steep is the learning curve? How much time is needed to set up the system? How robust is it in terms of report generation, client psychographic/demographic information input and manipulation? What does it cost, initially and ongoing? Most important, if you decide to leave, can you take the platforms with you (continuing to pay the fees) or are you blocked from the data? If the latter, how much data can you export in advance? With apologies to Paul Simon who intoned "there must 50 ways to leave your lover," there are only two or three ways to leave a front office/back office/CRM platform, and they are all extremely time-consuming, extremely expensive or both. And for those thinking, "Well, I know this system that's free," resist the temptation. You'll get what you pay for.
If you are not a consortium member, start looking at what is out there. This is not one size fits all, and it is imperative that you look at the entire offering, not just a single element or two. If you are an IC, your host might be a consortium member. If it is not, it might be in your best interest to reevaluate what is right for your business.
It's like this: If you are not a consortium member, you are leaving money and productivity on the table. That translates directly into higher profits.