City Insider: Transactional vs relational – why the Travel Counsellors model makes sense

City Insider - A City perspective on the travel industry from FT journalist David Stevenson

Where next for travel retail? Travel Counsellors’ non-high street, relationship-focused vision is a convincing route, says David Stevenson

David Speakman, founder of consultant network Travel Counsellors is clearly a man on a mission. He reckons the travel industry is fast approaching a big decision: “Does it want to be super-relational or super-transactional?”

In Speakman’s view, the top echelons of the travel business are too male-orientated and “aggressively price-conscious”. He reckons that their emphasis on transactions belies the fact that the industry is actually dominated by women who prize developing relationships – but can’t, because of the emphasis on transactions.
 
I suspect he’s dead right. As ‘cheap as chips’ travel companies keep failing (there are rumours of yet more firms about to hit the buffers) we may be on the cusp of a dreadful realisation, namely that there is bugger all money in cheap travel, and that the mass transactional model could be fatally flawed.

Put simply, it’s not a growth market in terms of both margins and profits, unless you’re constantly building scale. Or trying to turn Thomas Cook into the new Expedia but with extra bells, whistles and its own line in sun and sea special holidays.
 
Speakman has spent the last 16 years trying to build a different model with many of the same building blocks as the mainstream travel agent but some key twists.

Two differentiators stand out. The first is that the business is structured to free ‘counsellors’ from as much of the drudgery of account management as possible. That is helped by the fact that his central franchising operation takes 40% of all the commissions made through the booking process.

Speakman is surely right to suggest that administration should not be the core of an agent’s function. His best counsellors prefer to focus on “building trusting relationships”, i.e presenting themselves as trusted, impartial professionals who are there to offer the best advice.

In Speakman’s ideal world his counsellors will be like ‘trusted friends’ on Facebook, sources of second opinion and sound advice.
 
I have no way of knowing whether that’s true across the board, but as you spin through his list of 14 Golden Habits – behavioural insights that are ingrained into the business – you do begin to understand the difference.

Habits include “always ask for a referral”, “send a destination guide” and “ speak to the customer two days before they go and as soon as possible after they come back”. Oh, and “send a birthday card”.
 
I have no doubt that dozens of independent and chain-based agents have been busily copying this model for a few years now, cribbing the Golden Habits and tailoring them to their own business, but I suspect they’ll soon run into another key challenge: how you treat your staff.

Clearly there’s a slightly messianic element to the Travel Counsellor model, with its emphasis on big words, aspirations and habits. This stuff wouldn’t be out of place on a sales training course that mixes hip new wave futurology alongside NLP.

But that is the point. The travel industry has got to be about people who believe in the advice they are selling. In my humble experience many network agents are fabulous and very helpful people, but I have rarely run into anyone who really, really, really believes in what they’re doing. It is just a job. A fabulous job sometimes, but just a job nevertheless, and in a hard-pressed retail environment.

What Travel Counsellors have embraced is a dead simple idea: take the best people OUT of the high street and let them act like trusted professionals. The high street is a deadly environment in which to build a sustainable long-term business, and clearly Travel Counsellors has chosen to forsake it.
 
That absence of physical network places a heavy burden on a virtual network to communicate, and that’s where Speakman’s blitzkrieg of seminars and ‘get-togethers’ comes in. His weekly web TV broadcast is watched by well over half of the 700 counsellors in the UK. Internal communications is a key component in any operation that wants to inspire its staff to go the extra mile.
 
So, does it all work? Speakman says growth in turnover is robust – sales are up 5% over the last seven days, up 14% over the last 6 months and up 16.3% over the last 365 days. The growth of franchisees is probably beginning to plateau here in the UK but his business is aggressively expanding abroad and he’s constantly on the lookout for new, luxury-focused segments to aim at.

More to the point, I think he’s onto something when he says that there are big questions about both the traditional “bricks and mortar” model and the pure online travel agent model.

He says of the latter: “Barriers to entry are too low and the cost of acquiring customers through things like Adwords seems to be constantly rising – too many at it and too transactional.”

Maybe a virtual network built around a robust aspirational brand is the place to go?

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