In part 5 we talked about vehicle management. In this part we discuss the feature of Sales Agents (intermediaries or representatives), or commission partners – a feature that is absent from much rental software and also underestimated.
What do we mean by Sales Agents?
A sales agent or commission partner is an external party that offers your rental vehicles to its customers and earns a commission on them. Think of a hotel, a travel organisation, a rental platform or even another car rental company.
Which commission models for Sales Agent partners are there?
Broadly speaking there are two models, where the difference lies mainly in whether the end customer pays you as the rental company or pays the commission partner.
Rate agreement model: In the rate agreement model the customer pays the sales agent. The sales agent then pays a pre-agreed (lower) rate to the rental company.
**Commission model: ** In this option, the safest for the rental company, the customer pays the rental company. The sales agent receives (afterwards) a pre-agreed commission on the rental amount.
Why would I engage a Sales Agent?
That is a perfectly fair question. After all, you ultimately receive less income than if you rented out the vehicle yourself.
The advantage of Sales Agents lies mainly in the fact that you can reach customers you would not normally be able to reach. A hotel mostly receives tourists. As a rental organisation, these tourists are not so easy to reach. The same often applies to a comparison/rental platform. Customers who book through a comparison/rental platform are generally looking for a sharp price and the extra trust (certainty) they attribute to such a platform.
A stubborn entrepreneur would say that the examples above are not entirely accurate. They too can reach these customers, provided enough marketing budget is thrown at it. To a certain extent we agree, but in that case you are trading the commission for marketing costs. The question is which ultimately costs you more?
Outside rental, too, there are numerous advantages to engaging Sales Agents on the basis of either a rate agreement or a commission model. Think, for example, of shop owners who agree with their supplier to pay only for the products that are sold (rate agreement). Or of a guide abroad who steers you to a small restaurant (commission).
All in all, as far as we are concerned the economic concept of Sales Agents has already been proven. It is up to you to decide whether or not you want to make use of it.
Which commission model is right for me?
Both commission models are in principle suitable for all rental companies. However, we currently see a clear shift in the popularity of commission models.
The rate agreement model is currently still the most widely used. We see, however, that the commission model is rapidly gaining ground. In our view this is for several reasons.
First of all, many (international) car rental companies are struggling with vehicle shortages and rising prices. These rental companies are better off renting out their vehicles themselves than through a Sales Agent at a lower price. In addition, we see that car rental companies increasingly want to have control over the price at which their vehicle is rented out. It can be of strategic importance that your vehicle is not rented out at a very high or, conversely, a very low price. Finally, the commission model is safer for the car rental company. In the event of the intermediary's bankruptcy, you are not affected in a commission model.
Alternative commission partner strategy
An alternative strategy can be to effectively act as a commission partner yourself. This can be the case if you rent out someone else's vehicles and pay a commission on them.
You will find an example in some franchise formulas. The franchisor supplies the vehicles to its franchisee, and the franchisee then receives a commission based on the rental revenue.
This strategy can also be applied to hiring in, for example. You then do not pay a fixed amount, but a commission on the revenue you generate. to aim for, but in large volumes.
Conclusion
In this part we have looked at Sales Agents, or commission partners. We have explained what the value of these Sales Agents can be for your company and set out considerations that will help you determine your strategy.
Want to know more about the Sales Agent module in our software? Feel free to get in touch. We would be happy to talk to you, demonstrate this module and share our experiences.
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