Many years ago, I read Robert Ringer’s ‘Winning Through Intimidation.’ One of his axioms was the ‘Theory of Reality:’ Essentially, things are as they are, not as you’d like them to be. Failure to acknowledge reality in business is akin to banging your head against the wall. You must accept the present reality and work with it, work around it, or develop other strategies.
Over time, reality changes slowly. When it has finally made a significant evolution, espousing the reality of a decade ago (or more) is incredibly foolish.
Your standing in the wedding marketing food chain is, essentially, your dependence or independence on the referrals, agency bookings, or simple goodwill of others. Living in San Francisco for 25 years, and now in Las Vegas for 9+ years, and talking with business owners everywhere, I observe a changing landscape. In Las Vegas, the change is more pronounced, and is probably leading indicator of changes, elsewhere. Take heed.
25 or 30 years ago, and even a decade ago, a wedding vendor that did a good job could just work their way onto the referral lists of a number of quality venues, and that was it. Just continue to do a good job and you would get a steady flow of excellent leads, many of which became bookings.
As part of this, you usually give some complimentary service, periodically, for the referring venue. All pretty loose.
Then, a few ‘situations’ began to appear that started to muddy the waters. The first one was a hotel’s relationship with Audio/Visual companies. It was not obvious to me, then, that this would have an effect on wedding referrals, but it has become a model for the changing scene.
The financial relationship works like this: Audio/Visual Company ABC pitches Hotel XYZ to be their exclusive in-house service. For that privilege, they offer the hotel a 40% commission (give back) on all the rental revenue. So, the customer who spends $100, actually spends $60 on A/V, and the hotel gets $40 (invisibly), as part of the transaction. This is, to coin a phrase, ‘invisible outsourcing.’
Often, to acquire this relationship, the A/V company would give a substantial advance on commissions, such as $25-100,000. This is a windfall for a hotel to deal with an unbudgeted expense. In fact, in some areas of the country, this model has been used for entertainment services, for a while …. Read on.
Venues, particularly large ones, are always looking to become more efficient, AND earn revenue from every dollar spent by their clients. Consequently, over time, more venues have sought to create more in-house departments and/or use invisible outsourcing, in the quest of client control, quality control, and profit.
In Las Vegas, this food chain has become extended, for both good and bad reasons. For example, a large destination wedding is booked at a strip hotel. The hotel will act, effectively, as a full service event management service.
Certain services, such as an in-house bakery, are now proprietary to the hotel. Flowers might be brokered through the hotel, and marked up to the client.
When it comes to services such as entertainment or decor, life gets even more interesting, and expensive, for the client. Hotel XYZ tells the wedding client that they work with three, approved, DMCs (Destination Management Companies) to provide services at their property. This is the appearance of choice.
In fact, the three DMCs work with their own circle of approved vendors. Perhaps the client wants a live band. The food chain continues as the DMC calls a Talent Agency, that in turn books a band (from its approved list of entertainers).
Can you spell M-A-R-K-U-P?
The client may be getting a band that is priced at $3-4000, but they are paying $8000 or more, because of all the markups, along the way. You also see $40 centerpieces that sell for $95.
From an ethics point of view, I have no problem with middle-men earning a markup for booking a service; however, when the disparity between value of the service and the price paid by the client because so massive that the client feels ripped off, that’s a problem. One can’t forget that the vendor has invariably been asked to discount their service to make these markups possible.
Often, your contact is in the Catering Department; however, these folks rarely make the policy decisions. Those decisions are made even further up the chain of command.
What to do about it: First, accept the reality. That’s right! If you think you are going to change the top-down policies of mega-companies, you’re kidding yourself. We all know that no one sells your service like you do; however, you don’t always have that opportunity.
Here are some steps you should consider in re-evaluating your relationship and wedding marketing.
- You should reëxamine your venue relationships and actively decide which are actually profitable, and which are just churning business, but not much more.
- Perhaps you should be dealing with more medium-size and smaller facilities that don’t have such extreme policies.
- Look at what you can do to improve selling directly to your prospect, to extricate your business from the food chain, as much as possible.
- Band together with other wedding vendors, formally and informally, to support ‘direct selling.’
- Scrutinize your website and make it your highest priority for direct contact with prospects. Websites are the pivotal screening tool for prospects, and you can’t afford to have any prospects overlook you.
- Take the time to look again at all your options for being in communication, directly with brides, such as wedding publications, direct mailing, and bridal shows. Do not live with old experiences, it is today. Look again, in the present tense.
- Cement your relationships with facilities you like working with. Take the time to educate them about the relative quality and features of your service. In order to fully appreciate you, they must fully understand you.
If you represent a facility, and you’re reading this, some of the responsibility is yours.
The vendors that service your clients are an extension of your venue, whether hired through you or not. At least, that is the way the clients and guests see it.
Ask yourself the following:
- Are you doing everything you can to understand vendor services, including the strengths and limitations?
- Do you really understand the difference between price and value of various intangible vendor services?
- Are you acting in the best interest of your client, and your property, if you’ve reached a ‘lowest bidder mentality’ when subcontracting services?