AV Travel Fees Video Transcription:
Lara McCulloch: So, let’s get started. First, let’s start off with the very basic groundwork question which is ‘why are AV travel fees charged in the first place’?
Chris Gerhart: Essentially it’s been the status quo in the industry. It’s an expense that we all face getting our equipment and our people and the logistics behind it into place for an event. I think the old way of thinking has always been, offset that expense with a invoice, and off you go. I honestly don’t think it’s the right way, but it’s the way it’s always been done.
Lara McCulloch: Okay, so let’s talk about that. When I first started working with you, I remember when I sat down with you and I was like, “Tell me what makes your company unique or different.” One of the things that came through is that you don’t charge for AV travel fees. And I was like, “What?! You don’t charge for AV travel fees? That’s so standard in the industry.” So why don’t you talk about why you don’t believe in charging for those fees.
Chris Gerhart: Well, I think anybody who knows me or knows of our company and the way we operate … life is about partnership. It’s all about the partnership. I remember very, very early on in business picking up every business book that came recommended, and of course there’s some standards that just about every entrepreneur has read. One of them was Tony Hsieh’s book on his company, Zappos. One of the things he talked about was how the majority of the things they do that are unique in their shipping process are actually expensed to a marketing budget. They use these costs as a way to build client relationships. So anything from the free returns that they offer, to when you get their standard shipping for free…That’s an upgrade that they took the expense to offer to help build the relationship and make you that much more excited about the brand. I think this is probably the biggest obstacle with online retail, right? The waiting time. That’s probably the one thing that keeps big box stores around is that you can walk in and get what you want right away. But with Zappos you eliminated that hurdle by saying, “We’re gonna offer our standard shipping for free and we’re gonna upgrade you at no charge.” Boom. Their customers are super happy and wowed by that experience.
In our case, about 10 years ago, we had a customer who we worked with in Charlotte. Our first event with them went really well. Everyone was excited, we were talking about how we could keep the partnership going. And the planner came back to me and said, “Our bylaws don’t actually allow us to pay for supplier travel.” You see, their company viewed AV is a commodity and, so, couldn’t justify spending money to travel when they thought they could just buy that commodity locally. So I thought, let’s just adopt this Zappos concept of turning something that’s typically a charge-back cost to the client and instead absorb the fee. The end result is that partnership has lasted until this day. It was a fantastic decision.
Lara McCulloch: Okay, great. So the concept, or the idea is you work with a client and understand that the objective is to work with them over the long run so you absorb those AV travel fees, and in turn, you’re building a relationship with somebody who wants to be able to take their AV company from city to city to city, no matter where it is in the US and have that consistency in that relationship.
Chris Gerhart: Absolutely, and I think that the biggest point of positive feedback we’ve received from our customers is the fact that they don’t have to reinvent the wheel with a new supplier every time. When you sit in the mindset that AV is just a commodity and all you’re getting is the equipment, you’re losing sight of the people and the relationships and the experience that you build on in time. There’s no question, when we produce an event for a first-time client, it goes well. No question, though, the second and the third and the fourth and the fifth events go even better because of the history we’ve built with that customer.
Lara McCulloch: Right.
Chris Gerhart: And when a customer has the hurdle of paying … you work with them in a local market and there’s no AV travel fees, then you tell them, “Hey, your next event … we really want to work with you again, but your next event gonna be several thousand dollars more because of the travel.” You’ve just added a hurdle to the relationship. My whole mindset is let’s avoid hurdles. Why put an impediment to continue to work together. So, we rolled the dice on the idea. It’s worked out because those relationships have lasted for several years. I don’t know that it would work if it was every show was just a one-off kind of a thing, but the partnership is really what has paid the dividends for that trade-off.
Lara McCulloch: Makes sense. Okay, so I’m a planner and I’m watching this right now. I’m not currently working with you, Chris. I’m working with somebody else. How do I go about finding a partner that doesn’t charge AV travel fees? Or how do I go about not paying fees with my existing supplier?
Chris Gerhart: If you’re working with an existing provider and they’re accustomed to charging AV travel fees, it’s hard to ask them to stop charging them. They may say no. So, instead, you can try and negotiate fixed costs. In my 15 years of running events, there have been times we’ve had to charge AV travel fees because it may be a super-last-minute booking. An event gets booked literally two days before load-in and our AV travel fees are skyrocketed. So we tell the client, “We are going to have to charge something for a flight here.” Or whatever the case may be. But, we’ll cap it at X, Y, and Z. So I think that that’s not an unfair request.
Also, you can work with your provider on how many people they’re bringing in for the event. Are they charging you for every flight when they don’t need to be traveling in the people that are going to set up, say, pipe and drape and screens. Instead, they can travel in some key operators. This will obviously reduce the number of flights, the number of hotel rooms, all of that kind of stuff.
Another thing to consider is food. You can work with the vendor to provide their crew with food; thereby minimizing per diem costs.
So there’s a lot of things you can do, but I think if you have an existing relationship that you want to preserve, you have to go into it understanding that you might be trying to change the status quo. And while that’s okay, you want to do it in a way that’s sensitive to what you’ve always historically done with that particular relationship.
Lara McCulloch: So let’s say in the negotiation phase, I’m a planner and I’m talking to my AV company, and they don’t have an existing protocol where they don’t charge AV travel fees. So I’m going to them and requesting for them to remove it. Is there a way for me to be able to soften that negotiation? So, in other words, talking to them about, “If you’re able to remove AV travel fees, I will be willing to sign on for multi-year.” Or something along those lines?
Chris Gerhart: Absolutely. And we have done that. We’ve gone down that road in the past where we were concerned about the overall budget and the show and the travel fees being something … yeah, we’re going to absorb them, ’cause that is the way we operate it, but it might make this one particular show kind of questionable as to whether or not we want to go after it at that point. So then we’ll work with them on, “Let’s put together some sort of a multi-year with an Out Clause after the very first show.” And it’s kind of a no-questions-asked Out Clause.
My philosophy on something like that is we’re gonna do a good job. And I will roll the dice on our margin on the first show we do together on the basis that we’ll do a good job. And if you don’t feel like we did, then you can get out of the contract, the multi-year part of the contract, without having to retroactively have to pay for those AV travel fees or anything like that. And I think it really comes down to a confidence level that we have internally that we’re gonna do an amazing job, that we’re gonna wow the client.
Lara McCulloch: Right. So what would you say are the biggest AV travel fees? Is it airfare? Is it hotel? What are the biggest chunks?
Chris Gerhart: Yeah, it can be all of the above. Airfare, hotels, trucking. Trucking is a huge one. You’ve got driver, fuel, insurance, road time, permits, all of that kind of stuff depending on how big the show is and what the trucking situation may be. But it even can come down to parking vehicles, it can come down to Ubers to and from the airport. Granted, it’s relatively inexpensive, but they all add up. One flight’s not terrible, but when you’re traveling in ten people and they all need hotel rooms and you’ve got a truck or two coming into the venue and parking and all of this stuff, it adds up. It can be several thousands of dollars.
Lara McCulloch: Got it. So you said, if you’re working with an AV supplier, you basically have one option, which is to go back to that AV supplier and renegotiate no AV travel fees. Or, at least, if they’re unable to renegotiate no AV travel fees, then you talked about three different things: 1) Really understanding how many people are traveling, and making sure that you’re managing that based on the minimums you need to be able to do the job well. So you’re not going to be paying for an exorbitant number of people traveling to your event. 2) Cap those costs so that you have an understanding of what your maximum costs will be so you’re not getting a big surprise. 3) And then you also mentioned food on site. Can you go into a little bit more detail about the food?
Chris Gerhart: Well it could be per diems, for example. If you’re bringing a bunch of people and you’re already doing some staff meals for your team, perhaps including the AV team in that could help offset costs of per diems. And per diems can be pretty significant if you go out to, whatever it is, the IRS website and you find out what the per diem is in a local marketplace, it can add up pretty quickly. It comes back to how many people you’re traveling in, because those are the ones that would actually need per diem.
But then, if your work schedule is one that has limited breaks, not only are you going to go a long ways with your AV team, if they have limited breaks to support them getting through getting them a meal where they might otherwise only have time to run out and get fast food or something …
But the other side of it is, you could offset some pretty significant per diem fees by just including them in a staff buffet lunch you’re already doing, or something of that nature.
And again, it all comes down to the negotiation. Some companies won’t. They’ll say, “Hey, we appreciate the lunch and we’re still gonna charge our per diem.” There’s different elements … I’ll be honest we look more to a client to support us on the meal front from a scheduling perspective. We still give our traveling team per diem even if a client is going to offer meals.
Lara McCulloch: Right.
Chris Gerhart: But we look more for the client to support us if there’s a scheduling challenge that will make simply getting out to get a meal a challenge. So that’s kind of our philosophy. But like I said, there’s just a lot of variables to it that you can work in, and I just think it’s about having an open, honest dialogue about, “Here’s what we’re trying to accomplish. We want to keep these fees in check or nonexistent.”
And then seeing what they’ll do, generally speaking, in exchange for, “Let’s talk about a bigger picture partnership here as opposed to a one-off event.”
I think that all too often, companies get stuck in the mindset of, “Let me maximize, 110% maximize my revenue on this one show.” And it’s just not a philosophy that I believe in. I think, let’s create a partnership. Your events are gonna go better, we’ll have continuous revenue and relationships, we can count on your shows for years to come.
Lara McCulloch: Yes.
Chris Gerhart: And together we’ll grow in quality.
Lara McCulloch: Awesome. And I should mention at this stage, too, if anybody does have a question that you’d like to ask Chris around AV travel fees or around travel for team members of your AV company, please ask them below in the comment section and we will absolutely get to those questions.
So, Chris, if you were to give your top two or three takeaways from this talk, and say, “Here are the things that are really important for planners to think about when they’re thinking about how to lower those AV travel fees, what would they be?”
Chris Gerhart: I guess I would say… Look at your AV company as a partner that’s reciprocal. You’re asking for something, reduce or eliminate these AV travel fees. So what can I give you in return that’s going to be of value to you, possibly in the long run? Again, our philosophy is we’ll eat a few thousand dollars of travel fees, we’ll do an amazing job, I’m not asking anybody to work with us simply because we don’t charge travel fees, and I don’t think any sane-minded planner would do so. But, the idea is, we’ll eliminate this several thousand dollars in travel fees, but we’ll get to work with you for years to come.
So I think looking at your AV provider instead of as just a commodity vendor, but look at them as a partner, and then figure out how you can work with them in that to make it mutually beneficial for them to remove those AV travel fees. That’s ‘Item One’.
‘Item Two’, if you don’t have an existing relationship, include it in our fee. Put out the bid and say, “This is just something we’re not willing to cover.” If you have an existing relationship that you’re trying to preserve, that’s where you have to kind of look at how you can partner up on it. But, if you don’t have an existing relationship, see what you can do to leverage the RFP process to earn that concession.
And the the third thing is, just be cognizant of what the AV travel fees are, and how can you help cap them. How many people are you traveling in at what roles? Hey, is there any chance of hiring that role more locally as opposed to having to travel them in? If you are traveling them in, obviously flight costs can get crazy. Are you booking your team first-class or coach? Are you sharing rooms, or are you not sharing rooms? There’s a lot of variables there that you can understand better, get a little bit more on the nuts and bolts of, and then work with your vendor to say, “Okay, we’ll cover AV travel fees, but maybe only to $500 a flight and double down in the rooms.” And whatever the case may be. There’s definitely a lot of angles you can do that. But I think that comes down to looking at the specificity of it and trying to work with your provider to understand what they’re doing, what the goals are and help navigate that so that they’re capped.
Lara McCulloch: You know, it’s interesting. From today’s talk and then the one we did a few weeks ago, what’s become a really interesting theme is, “Know your contract details.”
Chris Gerhart: Yeah. Oh, yeah.
Lara McCulloch: Like, really ask questions and dig deep.
So, you’ve just talked about, really be aware of the fees. And I assume, and I might be assuming incorrectly, because I’ve never actually looked at an AV company’s invoice other than yours. I assume that it’s probably a line item for AV travel fees, or is it a detailed breakdown?
Chris Gerhart: Often times what I find to be the scariest when I’ve reviewed other AV company’s contracts with customers is, often times it’s a line item that’s not specified. Travel fees will be added for four technicians, flights, hotel rooms, per diems, blah, blah, blah, blah, blah, and there’s no dollar amount provided.
Lara McCulloch: Right.
Chris Gerhart: And we’ve absolutely won relationships, won accounts and built relationships on the fact that, we might be apples to apples in the initial bid but then they’re like, “Oh my goodness, that could be $1,000 or it could be $10,000 dollars, I don’t know.” And that scares a lot of planners off, I think justifiably so. And again, I think that’s that third point that I make. If you are gonna pay AV travel fees, get clear on what they are, and get the company you’re working with to commit to capping them.
Lara McCulloch: So, I actually think that could be a really great giveaway from today’s talk. So last talk we gave a cheat sheet, and I think a really good cheat sheet for this talk could be, “What are the top five or six or seven different line item questions you should be asking to get clarity on where your travel fees are going?”
Chris Gerhart: Yeah, just to make sure they’re not gonna come bite you on the back end when the final invoice comes through.
Lara McCulloch: So, Chris, do you have any other lasting comments that you want to put out there?
Chris Gerhart: You know, it’s funny, you said that you talked about the common theme from last to this. And I think the other that I would say, and I would say it would come up on probably every Facebook Live we do in some sense or another, is find and build a partnership.
I think that there is just an old way, kind of going back to the travel being kind of an old way of thinking. Oh, you’re gonna charge for this, that, and the other, and it’s just become kind of a standard, accepted thing. I think it’s all too common to view an AV company as, because it’s been a commodity industry for so many years, as a vendor. And I think the moment you can snap out of the vendor mindset, yeah, I think at the end of the day any AV provider understands that on site, there’s a hierarchy and that the person in charge running the event is passing information on to the AV provider and they’re facilitating it. So yes, I don’t think there’s any question about the hierarchy of who’s directing what. But, the moment you can look at them as a partner and rely on their expertise, their help, their support, and then in doing so build a relationship that lasts for years, you’re gonna realize economies of scale, you’re gonna realize savings, and you’re gonna realize much more successful events because you can build that relationship over time.
Lara McCulloch: Well said, and a really great place to end today’s chat. Thank you so much, Chris.