Why Leads Programs Can Be Traps

As an entrepreneur selling travel, you are likely to encounter times when business is slow. It’s rare that any business receives a consistent pipeline of new inquiries and the travel business is cyclical because travelers have a tendency to book their vacations at certain times of year.   When you are new, it takes time to build momentum so it’s likely that business will be slow. 

Along comes a leads program…  How tempting it can be for so many entrepreneurs selling travel to jump right into a leads program.  It can appear so compelling.  But, in my honest opinion, if the entity providing the leads is taking a cut of the commission (over and above a host agency split), it’s a trap.  And most entities providing leads are taking a cut of at least 50%. 

Why is it a trap? Because it gives the travel expert potential business that will NEVER lead to sustainable profitability.  And most people who are successful at closing the leads in a leads program get sucked in and then become dependent on those leads.

Let’s get specific and look at some numbers.  Suppose you get a lead for a Celebrity cruise for a party of 4.  You close it and the booking generates $420 in commission.  Your net commission, after the lead provider takes its 70% commission cut, is $126.  Let’s also assume you are a single mom, providing for 2 kids and this is your full time job.  Your total business expenses are about  $25,000 per year, including travel, and you need to pay yourself $6,000 per month to provide for your family.  Thus, your business needs to generate $97,000 per year in revenue.  If you are making $126 on a booking, then you will need to make 769 bookings per year to meet your revenue goal.  That’s 64 bookings per month, or 16 bookings per week.

We all know that not every lead closes. So to get 16 bookings per week, you must be working on at least 32 inquiries per week.  That’s a LOT for 1 person.  I’m sure there are people who can juggle this much workload, but not for long.  And that is why I say it’s not a sustainable business solution.  In fact, it will run you into the ground. 

Taking leads where the lead provider is taking a significant cut of the commission is evidence of entrepreneurs acting from a place of desperation, not inspiration. To me, it’s evidence that the entrepreneur selling travel doesn’t believe in themselves to generate leads on their own. 

Your Assignment:  If you are actively involved in taking leads from a leads program, I have 2 pieces of advice for you.  1) Give yourself a mindset check.  Are you coming from a place of desperation?  If yes – no judgement here as we all go through that – recognize it and the opportunity to shift into inspiration.  Here’s my inspiration for you – you can do this!  You have the ability to generate MUCH better quality leads for yourself with your own marketing plan.  There is so much business waiting for you and I am talking about business where you keep 100% of the commission.  You have other choices.  Make the choice that empowers you.  2) Spend the time you would spend chasing those leads on your marketing plan.  Put yourself out there.  Own your brilliance.  There are people who need you and your expertise.  They will pay.  your job is to go find them.

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