THOMSON’S Preferred Agent scheme was the cause of much derision when it was launched to a suspicious trade just over 12 months ago.
The strict joining criteria, coupled with demands for customer names and addresses from participants, was condemned by independent agents as another example of bullying from the market leader.
Particularly aggrieved were those retailers who supported Thomson, but were just not profitable enough to be part of the operator’s plans.
But changing market conditions – and a realisation that it was being too inflexible – has prompted Thomson to rewrite the rules.
Under the leadership of sales director Manuel Mascarenhas, who took over from the scheme’s now departed creator William Burton, the conditions have been eased.
Gone is the compulsory totem pole window display and Thomson branding on agents’ Teletext pages. Sales targets have also been lowered to encourage and reward Thomson supporters.
“We are often perceived as arrogant, but that is not the case,” he said. “We have talked to agents, consulted them and taken their flak.
Mascarenhas conceded that Thomson made mistakes when it launched the scheme. “We assumed Thomas Cook would sign. That has not happened.
“We assumed our overrides would be as competitive as other operators yet some now pay 16% or 18%. We also thought agents could not afford not to sell Thomson. The amount of directional selling has disproved that,” he said.
“Look at Travelworld, our share of its business was 35%. It was bought by Airtours and the share is minimal. Because of that it is now on 7% commission.
“We also thought the customer who pops into Going Places would instead go to a Preferred Agent to buy their Thomson holiday. What has happened is that Going Places has sold them an Airtours product.”
This switch-selling has prompted Thomson to try to attract more independent agents to its scheme and the operator wants to sign up a further 150.
Mascarenhas said he is also looking to work more closely with specialist agents.
“We have recognised the need to separate certain products,” he said. “A cruise specialist may do very well for Thomson in that market but not get a look-in in the mainstream products. We have now brought these agents into the scheme.”
One of the largest concessions has been Thomson’s restructuring of its commercial arrangements with Preferred Agents.
Originally, overrides were paid in relation to an agent’s share of Thomson’s business. But such was the amount of Thomson business being driven through Lunn Poly that achieving these targets was proving increasingly difficult.
“There was not enough of the cake left, so we have now given agents targets based on volume,” said Mascarenhas.
Thomson has also begun courting consortia which 12 months ago were not even recognised by the operator.
About a third of Midconsort’s 80 members are already part of the scheme, with the rest expected to follow shortly.
Midconsort chief executive Sue Foxall said: “Thomson has listened and learned the hard way. I wanted to be part of the scheme when it was launched, but they were not interested so we started to switch sell. Thomson then came back and suddenly became interested. I think it was taken by surprise.”
Aspects of the scheme which have remained intact include the names and addresses which Thomson demanded of agents. It has the details of 10m customers and joint direct marketing is soon to begin in earnest.
It is also obtaining details of Thomson customers travelling with non-Preferred Agents. “We are writing to customers directing them back to Preferred Agents,” Mascarenhas said.
Industry observers, however, say Thomson must change its habit of conducting love affairs with independent agents. As one put it: “One minute they are in love with you, the next you are out on your ear. Thomson must learn to be faithful.”
Preferred agents: how the scheme has changed
l Target Thomson sales for each agent branch reduced from £300,000 to £200,000.
l Compulsory branding on teletext pages removed.
l Overrides paid on sales volume, not share.
l Commission increased when sales jump 5%, not 10%.
l Totem pole window display now optional.
l Preferred Agent branding stepped up – now appears on brochures.
l More structured joint marketing.
l Specialist agents such as cruise agents invited to join. Previously excluded for not selling a range of products.