The Winning Formula Part 1: How to Successfully Add Sub-Agents to Expand Your Business and Grow Your Revenue Pipeline
Written By: Cris De Souza, Vice President, Sales & Marketing, Nexion LLC
One of the hottest topics trending at Nexion is the conversation around our agency owners adding to their teams, whether it’s by adding sub-agents as independent contractors or adding employees. Our private social networking community, NexionTown, is constantly buzzing about this topic, with our agents helping each other to navigate these often complicated waters.
Notable travel attorney Jeff Miller hosted a workshop last November during Travel Weekly’s CruiseWorld on the topic, where he presented valuable insights. I’d like to highlight and share some with you in this month’s column.
One of the first things Jeff asked the group was, “what are the reasons you want to bring on an independent contractor?” The audience gave these three, key reasons:
- I want to grow the revenue of my agency, as I am tapped out and at capacity.
- I need help in my agency to handle overflow of business and help with “business babysitting” when I am away escorting my groups.
- I want to diversify the portfolio of my business with different product offerings via specialization.
With all of these reasons taken into consideration, consider interviewing your new, potential sub-agent as you would with a potential employee and also have a pre-determined list of criteria identified and in writing before you get started.
Adding a Sub-Agent Successfully
Here are nine critical steps to take and consider that will help set you up for success when bringing on a new sub-agent to your agency team:
- Be familiar with the Internal Revenue Service (IRS) guidelines as it relates to independent contractor (sub-agent) vs. employee (assistant) before you get started:
- What: You cannot tell your sub-agent what to do.
- Where: You cannot tell your sub-agent where he/she can work.
- When: You cannot set your sub-agent’s work hours.
- How: You cannot tell your sub-agent how to do his or her job.
- Know what your expectations are of your sub-agent. Have these expectations defined in advance and in writing.
- Identify key traits of your “ideal sub-agent” and ask questions that will flesh out these ideal qualities in your interview process:
- Do you want someone who is experienced or new to the travel industry?
- If you are looking to expand products, what area(s) of specialization does the potential sub-agent have? What are the reviews like from their clients?
- Is the candidate planning to work full-time or part-time? Do you need someone part-time or full-time?
- Does the candidate possess strong sales ability? Can he or she engage in role playing during the interview process to demonstrate sales approach and technique?
- Is the candidate personable? What does tone of voice and body language convey?
- Is the candidate a good fit for your agency? (Consider having other employees or sub-agents meet with potential sub-agents. Look at taking a personality profile test for your existing team like Clifton’s Strengthfinder or Wealth Dynamics. Look for candidates that “fill in the gaps” and are complementary to your personality profile.
- What kind of references does the candidate have? (Be sure to check them as you would an employee unless you know them well.)
- What level of training, if any, are you planning on providing to the sub-agent?
- What level of support are you planning on providing?
- Why does the candidate want to become a sub-agent?
- Do you want to allow the independent contractor to bring on his or her own sub-agents? How would that be structured? Who is responsible for paying them and handling 1099 forms? Nexion Pro Tip: Be sure to include in your sub-agent’s contract that you require final approval of any additional sub-agents brought on after interviewing yourself.
Remember that in setting up your parameters and criteria, keep in mind that a bad choice in hiring a sub-agent can affect your agency and its reputation as much as a good choice can help you grow your agency and give you the support you are needing.
- Run the numbers on commission splits: 50/50, 70/30, 90/10, etc.
- Consider how much commission you will pay the sub-agent if you give them the lead.
- Consider how much commission you will pay if the sub-agent brings in the lead.
- Consider a tiered structure – pay higher commission levels when they hit a certain number in sales.
- Consider incentivizing the sub-agent to sell certain products by paying higher commissions on that particular product (or products), such as 60% instead of the normal 50%.
- Consider if you are going to charge the sub-agent a monthly fee or not.
- Be aware of the risks. One sub-agent may take other sub-agents with them and start their own agency.
- Be prepared that the relationship can become a temporary arrangement.
- Consider sub-agent versus employee. A sub-agent is less expensive; however, you have less control. Employees are more expensive, but you have more control. What is the true need in your business?
- Finally, be sure to have a written contract that should include:
- Terms of the agreement
- Duties of the sub-agent
- Compensation to the sub-agent
- Method of payment
- Examination of books
- Rights of the sub-agent
- Ownership of clients / payment of future commissions upon termination
- Terminations of agreement (include how much notice one party must give the other party before leaving)
At Nexion, we provide our members with a sample sub-agent agreement to get them started that our agency owners can customize to meet their unique business model and customized needs.
In a near future Travel Professional News column, I’ll share insights and insider tips from Nexion’s best-of-the-best agency owners who have added independent contractors or employees successfully to find out what their winning formula was. Stay tuned for “Part 2 of The Winning Formula: How to Successfully Add Sub-Agents to Expand Your Business and Grow Your Revenue Pipeline.”
About Cris De Souza
Cris De Souza is the Vice President of Sales and Marketing for Nexion®, a fully accredited host agency owned by Travel Leaders Group. In her role, Cris leads Nexion’s Sales, Marketing, Communications and Business Development & Education teams.
Cris joined the Nexion leadership team in 2015 and has been a part of the travel industry for 18 years. Throughout her career, she has proven success building and managing strategic partnerships and teams, developing innovative travel agent training and education programs, creating effective travel agent marketing and sales strategies, and exceeding sales goals and objectives.
Cris earned the Professional Sales Certification upon completing the nine-month Sales Acceleration Academy program in 2017. She is also advocate of sustainable tourism, voluntourism and cultural heritage preservation and earned a Master of Arts in Sustainability and Environmental Management from Harvard University. Her most important role in life is being the proud mom of her two amazing sons, Thomas and Antonio.