This week, Martin Pickett of UK-based agency LANACOS talks about the issue of non-payment of commission by schools chasing direct bookings and provides some advice based on his experience.

 



“The simple answer to the question ‘What do you do if a school doesn’t pay your commission?’ is, “Don't send these non-paying schools any more clients and slow the business to them down!” However, I know, in reality, this can be problematic, but like all good businesses you should not put all your eggs in one basket or depend on a big chain of schools.

Every school says they pay commission for direct or indirect enrolments, but the truth is somewhat different. School staff constantly move and change; a person's word these days is not what it used to be. We all get tired of excuses and spurious reasons why commission cannot be paid. For this reason, LANACOS has joined [pan-European agency association] EAQA to formalise and identify schools that are constantly avoiding commission payments and going straight to clients as if the agencies’ ‘role’ is a luxury and even in their eyes an unnecessary cost.

LANACOS already has a blacklist of schools we do not do business with any more because of constant and repeated non-payment of commission for direct or indirect clients.

Ultimately, it all comes down to trust and having a good tracking system. Also find out from the start if the school's sales staff have an internal commission and incentive system that will compete with agencies’. Ask yourself: Do they have a vested interest in not telling you about your clients direct or not? Are they offering special 15-25 per cent discounts on their website for direct enrolments?

These are all tell-tale signs that they are not serious about having a proper school-agency relationship. I like to call them industry opportunists. Their strategy works in the short term – they increase market share – but in the long run their reputation precedes them. Good agencies avoid working with these types of schools. And this is why you need to talk to other agents, read the industry press and speak to people in the business. In the end, the truth comes out!

Is there a protocol?

Having worked with hundreds of schools around the world from Spain, China, South America and back to England over more than 20 years, it is amazing how different each school’s commission structure, payment terms and method of doing business is. I would suggest a checklist is important:

·         You should decide whether you can trust the directors and keep records, and even let one of your clients enrol directly and see if the school reacts in a professional manner.

·         Keep tabs on clients, and remember the bigger the organisation the more people there will be who have vested interests.

·         A good question I like to ask schools is, ‘Do you see commission as a cost or payment for work done?’

They only see the tip of the iceberg. A good agency doesn't waste the school's time or the client's time and gets high satisfaction rates.

I communicate with other agencies around the world. We have our own league table of good and bad payees. Now that we are part of EAQA, LANACOS intends to work with other agencies on a more formal level and we will name and shame those schools that claim that they pay commission but don't.

This is particularly true in our experience of working with groups when you spend money, time and other resources getting a group and then they try to go direct to the group leader, offering them a cheaper price and avoiding the ‘middle man’, as if our only raison d'être is to collect commission.”



Editor’s Note

The issue of non-payment of commission is the theme of Industry Issues in the March 2015 issue of StudyTravel Magazine (STM), with contributions from a number of agencies worldwide. The issue will also be explored in a special feature in the forthcoming July issue of STM.

 

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