The South African Commissions Issue Exposed – Warts & All

Extracts from an article which appeared in TAM earlier this year makes for interesting reading authored by Sue van Winsen

Treasury has been looking into its policy for PCOs, and concerns have abounded in the industry about the likely implications should it prevent PCOs from earning commissions when organising public sector events.

Further alarm was raised when SAACI sent out a survey to request the views of the industry, in order for them to liaise with Treasury.  Rudi van der Vyver, ceo of SAACI explains: “We are assisting Treasury to avoid unilateral decisions that could affect the entire industry.”

The problem with the commission structure, he notes, is not commissions per se. “There are some organisers who invoice a management fee as well as additional charges and do not disclose their commissions. We are on a fact-finding mission to determine the best way to present an ethical, professional front for the industry,” he says.

In response – PPS Subscribers have penned the real commission facts:

There are two issues within the South African event commission framework which hinders both professionalism and transparency.

The first issue are the Willing Parties……

While there are a myriad of event suppliers – primarily venues – who will eagerly pay commissions – ranging from 5 to 20% dependent on how desperate the supplier is for business – the market forces will continue to prevail.

Whether transparent or not – the commission method of reimbursement for business provided is at this time non-negotiable.  It is with this backdrop in mind that corruption, abuse and unethical behaviour seriously kicks-in with professionalism and ethics taking a back-seat. To some ‘PCOs’- it is easy money personified.

The simple truth is that suppliers cannot get a better deal than commission-based remuneration business. Think about it:  there are no salaries, large hit-&-miss advertising or social media costs in an industry difficult to source at the best of times.

Advertising usually waves the supplier’s flag and may provide higher visibility but land more market share?….not likely. The high advertising expense in relation to ROI is just not a practical proposition unless the supplier has real, long-term money to burn.  Most suppliers with their one eye on the ongoing, operating expenses – want the business now – like in the next month or so and pushing the commission button is viewed as the quickest method of achieving a greater bookings schedule at a low-to-no-cost.

Event suppliers are their own worst enemies with highly-limited understanding of  effective marketing.  Because it is an intangible, marketing does not even warrant vague consideration. How to draw business by adding value as well as understanding the importance of repeat business together with positive word-of-mouth comments is simply either not understood or are blinkered aspects to the average supplier.

The second issue are Questionable Industry Definitions…..

One in particular is the acronym PCO.  Adored by the supplier sector – the acronym places a number of highly suspect entities into the realms of significance.  PCO is supposed to be the term used for an individual who undertakes event organising at a high, professional level and as such gets remunerated for their expertise.   Yet there are a number of ‘PCOs’ who do not even visit the venue on behalf of the client but merely charge a commission to the venue (and sometimes the client as well) for the booking to be placed at that particular establishment!  Perish the thought that the ‘PCO’ would be on-site the day of their client’s event.  It’s not going to happen.

It is assumed that the PCO is meeting the needs of the client and if this is indeed the case then surely these ‘PCOs’ should be known as Professional Venue Marketers ‘PVMs’ or similar? Of course it begs the question as to who within the client company is receiving part of the commission for ensuring the booking goes through the PVM.

How any self-respecting independent planner – of which there are many – allow themselves to be called PCOs is beyond the average intelligence of most in the industry as the good planners are immediately tainted with the reputation of  the so-called ‘PCOs’.

Clearly the reputational damage of those posing under the guise of ‘PCO’ defies any attempts to professionalise this particular event service provider – let alone consider the overall reputation associated with the acronym.

Therefore whether it is the national treasury or corporate organisations – unless there is a solid plan going forward in relation to the methods in which commissions will be earned, the unfortunate situation is likely to continue albeit – even more – under wraps.

There is a win-win situation while ensuring independent planners are recognised with the credibility they richly deserve.   The PPS unit of The MICE Academy will lay bare the ‘Commission Issue’ at the May Breakfast Briefing. / ends

 

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