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The Overview
Third parties have become a major source for generating RFP's
for the group business. Their power has grown so much that they
tend to be a burden to both hoteliers and planners alike. Given
this fact, the industry will have to change.
Third party planners receive a commission (typically 10%, some
charge 15%) for booked business that they originated from their
efforts. This is a wonderful concept, but presents a few problems.
First, third parties are performance based. They receive compensation
when someone wins the business. They do not care who wins it,
as long as it is someone they referred the RFP to. Because
of this, many RFP's are sub-par in quality. What does it matter
to them? If you get something out of the RFP, they get paid.
Even worse, the RFP will be referred to as many hoteliers as
possible. This will increase the chances that whoever wins
the business will have received the lead from the planner.
This leads to low-quality RFP's, low closing rates, and low profitability
due to competition.
factors affecting success
- commission percentage of the third party
- RFP to proposal percentage
- proposal to close ratio
- profitability percentage from third party RFP's
Pro's
- They feed you RFP's
- Commission charges can be reloaded into the proposal pricing.
(many direct planners are realizing this happens and are stearing
clear of third party planners even more)
- Performance based - you only pay when business is booked..
Con's
- 60% of direct planners will not use third party planners.
They know third parties receive a commission, and know that
this commission is often wrapped into the pricing they receive.
- Inability to speak with the direct planner until an agreement
is signed.
- Confusion on the original source of the RFP. Knowing
the RFP came from the third party planner first, or from your
own marketing efforts
- Receiveing the same RFP from multiple sources
- Much wasted effort on bogus, unqualified, non targeted
RFP's
'Net profits recommendation
- Use third parties if they are profitable for you, but track
the efforts to ensure they are.
- Move away from Third party planners as soon as you can. The
shift is coming. You do not want to wait till its too late.
- Negotiate the commission rates - as more and more third
parties attempt to capture group business RFP's, you'll have
leverage to negotiate or move to another source.
- Pay
Per RFP Program
- Pay
Per Click
- Pay
per Call
'Net Profits,
Inc.
Phone: 1-877-777-2883
Fax: 1-757-282-2677
info@netprofitsinc.com
or
Make your service
request here!
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