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Andrey Zakharenko, Russian Connections | Always Travel

Stephanie Lee (Host Agency Reviews): All right everybody thanks for joining us this is our first actual interview with an agent and today we have on the call Andrey Zakharenko. And his last name he was just telling me that I said it good and so I'm not how do you say Andre just so everyone knows properly

Andrey Zakharenko (Russian Connections & Always Travel): It's Andrey Zakharenko.

SL: Gosh, okay. So close. Andrey with Russian Connections and Always Travel. He's been in the business quite a while. He started the business when he was 17 years old, and when he was 32 he became the sole owner of Russian Connections and Always Travel. He's had an interesting route into the industry and I also think it's pretty unique because he's got a dual brand that he's working with. He's out of the San Francisco Bay area and Andrey and I met maybe 4 years ago at the Travel Agent Magazine’s Young Leaders conference in Las Vegas. Is that right Andrey?

AZ: Yeah about that. Maybe 4 or 5 years ago. Something like that.

SL: Yeah it was pretty fun. It was pretty awesome now we're not as young though so . . .

AZ: I know we aged out. [laughter] But people will still take us still.

SL: We're getting grey hairs now, it's all so horrible!

AZ: That's right We have more wisdom.

SL: That's true, and that's what we're trying to share with everybody on this call so . . . Well let's see so Andrey you been in the business for a long time. You started with no experience as a 17-year old-working for Russian Connections and what was it like when you first started as a newbie. What . . .

AZ: Well, I was going to college and studying business for my undergrad. So early on I was very excited to do all of my business skills for Russian Connection. Oh my God. I was really excited for Excel reports and profit-and-loss statements, and . . . a dollar sold on an airline ticket mean to be a make $0.13. But a dollar sold on the hotel, we make $0.25 so we should focus on this because of dollar goes longer.

SL: Nerd alert!

AZ: And oh my God. Those Excel report for financial reporting that I did. Some of them I think, were tedious work half the time. But unfortunately at some point I realized that except for me, nobody else cared. Nobody else cared. I created these intricate, automated, awesome machines that tracked everything, analyzed everything and then the response was like, “well that's great,” and put it in a binder to never look at it again. So, that was my entry into the business. I still got excited mostly because . . . from going and doing the Excel spreadsheets, We also then decided we should publish a magazine. So aside from my Excel skills, I also got to use my design skills and we actually published two magazines that featured travel destinations around the world that we distributed through our office, and then we sent it, we sent them by mail and that was really fun. That actually led to me designing ads on the side for other businesses and some airlines and I have a portfolio and now of things I did on the side with that. That was really exciting because it got me to express my creative portion, and the more I got into it––the business––and, I realized that if I just took more initiative I could take charge, and I did and that was what kept me around so . . .

SL: Yeah so, ‘cause you'd become the sole owner in 2012. But before that you’d kind of seen the transition from . . .well, I joined the industry—well I grew up in the industry—but I became full-time maybe around 2005 or 2006. And, around that time too when—especially in 2008 when travel agencies were really really struggling—when you saw that happening you'd been doing these magazines or you done them in the past. What kind of marketing did you turn to after the recession, and do you use now that is helpful?

AZ: Well we still kept . . . you know as they say, the recession is this the best time to gather clients, and we still, at that point, kept some of our press advertisements. There were some publications in the Bay Area that had our advertisements and we continued promoting them. Also those events definitely brought to the forefront the importance of kind of keeping track of the clients that you already have and tapping that resource versus trying to acquire new clients. To that point we, would just have, you know, the client come in, they’d get something, then disappear and we’d never do anything. Well, you know, when the times got tough you have to figure out, well no this client travels we have their information why don't we reach out to them? Why don't we follow up with them? We should send them a either a marketing piece or an email or a phone call to see if they would like to continue the relationship. And so throughout all of the years––because at that point the business had been around for 11 years––we definitely had a database. The database was not very much digital and so actually I hired an intern to just do data entry and that kind of started as the base for our first CRM. And we used that a lot to promote the business. But aside from that, also at that point, I'd become more, more of tooting the horn, go into events in San Francisco traveling and promoting the brand as much as I could.

SL: Do you use client base as your CRM?

AZ: I do use client base . . . and still probably only use 10%. But I swear I’m going up to 15 or 17 in 2017.

SL: [laughter] It's a really comprehensive CRM, that's for sure, for agencies.

AZ: That's right it's too comprehensive. Maybe I don't know.

SL: Now there's two things you mentioned during the call earlier, and that was—one thing I thought was kind of unique is when I look up Russian Connections on Yelp, you guys have quite a few reviews and we had spoken about kind of your experience with Yelp and whether or not it was worth it for your agency. Do you mind sharing your thoughts on that again?

AZ: Well the thing is especially for the Russian Connection business, Russia to this day—and, as I said, as somebody who’s from there, and very familiar with the country—I thought at this point we’d have amazing relations between the countries and people were just really travel between the two of them, but unfortunately that's not the case. So it’s still a very difficult country for people to travel to.

SL: Mm Hmm.

AZ: So, anyway I could legitimize my business and show that I have been around for a while, I do a good job, and I can be trusted, I take full advantage of and I sign up for it Because unlike Always Travel where people are willing to give me a chance, Russia, and passports, and travel travel abroad, and traveling to destinations that people still to this day think, “why would I go there? People aren't going to speak my language and I'm going to get lost or I'm going to get discriminated against or I'm going to be hated because I'm American.” They really want some business that they know what they're doing to give you the right advice, And Yelp definitely gives you another level of legitimacy. I have reached out as I said to a few clients that have written me very nice emails and I pointed out to them that this is a very nice email, and saying thank you for sharing all these good things but I'd really like the outside world to know what you think about me and not just me.

SL: [laughter] You’re not narcissistic.

AZ: Yeah unfortunately out of my non, my slight begging of them to review me on Yelp, probably only 15% do. The rest of them I think maybe the email goes to spam or something I have no idea why.

SL: [Laughter]

AZ: And so the ones that do, I did find out that since many of them are not active Yelp users their reviews actually never show up. So they're there and I'm waiting for the day when they review at least two more restaurants and/or local pubs and I don't want to be the one reaching out to them and telling them they should really should review the restaurant they just went to yesterday.

SL: Mmm Hmm.

AZ: But, I'm very close to being that person—being like, "I remember that review that I didn't ask you to write, but you did, and Yelp will not acknowledge its existence unless you review something else. So could you please write about the dinner you had Friday night?"

SL: [Laughter] Here's a gift card. Go this place and review it.

AZ: Here’s a gift card. Go the local restaurant and please write a review. Because all I need you to do is to have two reviews and suddenly you’re legitimate in Yelp’s eyes.

SL: Perfect. Well another . . . I feel like another thing that you said is really effective in getting new clients in terms of marketing was you throw a holiday party every year.

AZ: Yes. So I I like to get people together. As I said, this is what makes me be—I don't know if it's wisdom or just being old, but I am in the Generation X part where I like—I realized, I haven't met a lot of my clients. I’ve only communicated with them through phone and email, but if I can, I really do like to meet people and communicate with them and kind of show them fun things.

So once a year we have a holiday party where we partner with some suppliers—I personally like to showcase suppliers that have destinations that most clients will not think about. So it's not Hawaii, Mexico, it’s you know, Patagonia, it’s Cuba, it’s Morocco. So, some destinations I feel will appeal to the base of the clients, but also something maybe that they're not considering that just kind of stimulates their thinking, and thinking outside the box. And also it's a very good time just to say, "thanks," to the clients that have supported us throughout the years.

Hopefully they also invite new clients so they can see how much fun we have. Because travel is one of funnest industries you can be in. I've heard this from other people in other Industries. What's not fun about getting together having some champagne and having some hors d'oeuvres and just having a good evening together? And I feel that that kind of rejuvenates the clients that have been with us for awhile. Some of them travel every year some of them don't, but it's a good reminder that we still care about them. And some new people, as I said, are excited to be cared for and also excited that there’s travel agents out there that are looking to help them have an amazing trip. Some of them don't realize where these people are and how to reach them and here, right away, we start them off with a good bubbly note. 

SL: [laughter] Do you then . . . . when you send out the invites to all your existing clients, do you specifically ask them to bring along friends or family or something?

AZ: So actually, before picking the date, I call let’s say the five clients that I definitely want to show up and I ask them which date will work for them.

SL: Mm hmm. Oh nice.

AZ: Because I want to make sure that the most important clients—the biggest promoters of the business—are there.

SL: Ahh.

AZ: And once they confirm the dates I do tell them—no I'm not coy about it—I would like you to invite your friends. And I also tell them that I would like them to invite their friends that want to travel and don't have an existing travel agent relationship. Because I'm not there to poach and steal them away from other businesses. So I make it very clear. I'm not looking for them to invite people who want the free champagne drink. But I do want them to provide clients that they think would be good fit for me. So since I know how to work with me, I kind of put it on them to prequalify people that should show up.

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SL: Okay

AZ: And so after that basis, after they've confirmed, I do send it out to a few other clients that if they do show up, great. If they don't show up, it'll still be a fun night. But I definitely don't have the same pep talk with them. With the rest I just want them to show up and have a good time. In the invite I do say that it's, you know, they're more than welcome to invite guests. I do want them to RSVP because I do try to limit the party to 50 or 60 people so it's not too crowded and we also know how much champagne and hors d'oeuvres to order.

SL: Cool. Well, so when we were talking earlier—you have great depth of experience in the industry, and you talked about a couple of things that were interesting to me. The first was that you started charging planning fees way before most people did and . . . maybe like in 2007, you said. . . . and then you also talked about how you like to work cooperative and do like a cooperative booking with clients, which I think is something with agents often think is, you know, if a client is saying, “I want to book something online,” it's white or black. It’s, fine go book it online, I’m going to help you then. But you look at it a different way. Can you chat up more on that the planning fees and then the cooperative booking?

AZ: So yeah I think around 2008 or 9 I've definitely started to feel that people were very active on the internet. And suddenly all these deals became available, all these opportunities especially sometimes, you know, hotel offers and flight offers were popping up, enticing them to book now. And so I always preferred planning very unique itineraries. This is why I'm, in one way, a horrible person for tour operators and package groups because they always ask why I don't book their packaged trips, that they're amazing. . . they probably are, I just don't want to squeeze somebody for seven days to be part of a group. I don't want to force them to do it. I would probably book them up for 4 days and plan another trip somewhere else, and that's just more exciting to me than to book a 7-day trip. That's kind of how I've always approached most travel and so early on I came across some clients who are like, “You know, I saw this hotel online,” and you know I've also had to explain to them my methods of booking. And I realized early on that there were really way too many websites out there for me to look at all of them and I also thought that a lot of people have control issues. And I don't want to deal with their control issues. I want to enable them to feel in control and to be searching all the websites because it's fun for them . . . I think. I think they probably have a lot of time to spend, but at the same time I would be there to make sure that they have an amazing trip at the end and consult them along the way. That of course led to the idea of, “well this is all great I can't do this without charging them a planning fee of some sort.” 

SL: Mm hmm.

AZ: And that's actually the planning fee compensation has to this day been a very difficult one, not for me not to charge it or to charge it, but what is it. Originally I started charging 10% to 15% on top of the final price. With a lot of clients, I charge about $150 - $250 upfront fee that was refundable. If they booked a trip, that went toward the trip if they booked it, and if they did not, it was not refundable and just went towards my compensation for the time. And, that worked fine although, as the demographics changed and I did decide to go more into––let's just use the cliche––The millennial Traveler . . .

SL: You're so hip

AZ: You know the traveler that doesn't spend as much money on the trip but travels a lot. What I found there is that, since the final price was not that high, the 10% was really not worth the time and effort that I put in. A lot of times with these trips it was small boutique hotels. It was, you know, non-refundable flights. So I wasn't getting any other compensation except for the 10%. So that led me to reevaluate. For example now I charge per person fee plus a percentage on top of that. So the per person fee ranges between $50-$200 per person. And then the “on top” fee ranges from 5–15% depending on the complexity of the trip. I found that works way better because even on a trip that, for example, I had somebody do the marathon at Disney World and all they needed was flights there and a couple of nights, because I had the hundred dollar planning fee plus the 5% I still made $200 on the trip even though it was a 4 or 5 day trip but otherwise I would have made $30 or a $40 on, based by the old model.

SL: Mmm-hmm

AZ: So yeah early on I decided to—kind of like—be the fee person. As I said I've been talked to about it and I've been questioned on it, in a sense, because some people do ask, “well aren't you being compensated by the airlines or cruises or hotels?” And I tell them that those are compensations from them for if they do come. Which I said this is why I tell them it works––sometimes they come and sometimes they don't come. I don't rely on them. There are also compensating me for selecting that property or the airline for your experience versus another one. Also then you clearly know how much you're paying for my time and my expertise that lasts before, that last during the trip, and that lasts after the trip. And so there's a clear line item of compensation for what I'm doing for you, and there's no hidden ledger, which I think is one of the reasons the travel industry was suffering and could be still suffering. Because there is this hidden compensation that nobody knew about that people assumed was there. When that went away, there was, you know, the client was not ready to . . .

SL: Pay . . .

AZ: … just create value whereas before it was hidden so that definitely created issues.

SL: Yeah. Do … So in your office there’s four agents total and you have 7 outside agents. Do you encourage them for their fee structure to be based kind of on their tenure and how experienced they are?

AZ: I do. I just said, so I tell and encourage all of them that the fee structure has to be transparent. Because I've known other agents that hide their fee structure. And I'm like, we live in a very transparent world and there's enough information out there that they will find out most likely what your cost of the trip is of their cost of whatever their traveling is. And when they do it they [indiscernible] will see that price discrepancy and it's not your compensation, not clearly. They will feel that you are either lying to them or that you can't be trusted. And why do you want to go through that versus having a clear line item of this is what the prices, and this is how much you’re paying me. When they look they're like, “Oh yeah the price is good and that's just the compensation, so that's why the price is different from somewhere on the internet.” I've also told people, I don't know why this is true, but when people know they're paying for your time they value your time better and they actually treat you better.

SL: Yeah, I’d agree.

AZ: Then when you somehow hide it altogether somehow the people are like—well—are not as nice, to you and don't respect you as much so . . . I don't . . . I advise them, I consult them, I don't tell them how much to charge, I just say that you have to charge and that it has to be transparent. That's pretty much my two words of advice, my two kind of requirements. How much it is—that's for them to decide. Because one of the other things I've always told at other events and to other agents, “with everything confidence is key.” So if you don't think you deserve the fee, it's got to be very hard for the client to pay it to you.

SL: Yes. exactly.

AZ: They will hear over the phone or in person that you're not really confident that this is the right move. And if that's the case, you have to either, you know, figure out why you're feeling this way, or maybe as I said, sometimes lower the fee. There's always for me for example, a number that I feel really confident that, “this is good.” And that this is what this trip … this is the compensation for this trip and I have no hesitations charging the client it. But there's other times where I’m like, “Well, I've really worked very little and and will probably just charge them this.” And as long as you're confident about it, the client very rarely is dismissive of it or questions it. But if you're unsure then yes, it's obvious to everyone that you kind of are just pushing something that you don't yourself believe in, or are not able to justify it in your mind. So work on that, then definitely it'll be much easier than you think it will be.

SL: Mmm hmm. So let's see. I talked a little bit earlier about how you have two brands, Always Travel and Russian Connections. And you’ve said that Russian Connections is kind of how the business started up and later on Always Travel came in as a more inclusive or, like an all-inclusive or encompassing travel so you can serve a broader range of clientele. With . . when you moved on to Always Travel and added that in there, what was the challenge of having two brands for you?

AZ: Well it was a huge challenge. With Russian Connections from, just from a business marketing perspective, “Russian Connections,” the name explains what it is for the most part. You also knew that where your client is and who the client could be. So it definitely narrowed down the list of where, what, when, how. All of that was much easier with Russian Connections than it was with Always Travel. Always Travel always grew out of the desires of clients from Russian Connections to travel to other destinations with us. And, mostly with me. So from that, it was very hard for me to place with Always Travel, what are the destinations that I want to specialize in. Do I need to specialize in? And I definitely had a lot of issues with it for many years because I kind of wanted to use the same approach that I used for Russian Connections onto Always Travel. It just wasn't working. It just was not working. Because I didn't know which destinations would work. I didn't really have a clear favorite or clear goal.

At some point I had an agent who was an expert in Hawaii so we tried to do Hawaii for that. But, again, it just kind of didn't stick long enough to do it. And I also think for when Always Travel came about, and when I had a full kind of rein of the branding, it became clear the the Always Travel brand was mostly clients that wanted to work with me to travel around the world. So I realized that in a sense, it became ... I became the brand, and Always Travel was just kind of the parent company. That, it was on the business card, and that people saw, and that it was on the website. But really after serving the clients that I've acquired, they all resoundly said they wanted to work with me. And really, Always Travel didn't exist for them as much. So that really refocused my approach to the business as well. Always Travel is a name. It starts with an A. It has a presence. But I'm really going to focus on promoting me as the business and promoting my skills of planning trips, of talking to people, of having relationships with hoteliers, suppliers, Airlines ... being in the industry over 15 years, so knowing what's the best time to go to places, what's the best time to visit certain destinations, how is the best time to fly, to use miles, and also having a very thorough book of contacts in most places around the world. Also at that point, having very thorough contact lists of both other agents and suppliers I could reach out to if I needed some advice on a destination and then use their expertise to better serve the clients that I had.

SL: Mmm hmm. Alright. I think I have one last question for you before we're going to run out of time. You are a little bit, well, a little different than most agencies in that, number one, you’re a storefront which is rare nowadays, and then also you have a significant portion of your sales that come from air, and that you have private fares and negotiated contracts and some corporate. When you have a new agent that comes into your office with no experience, or maybe they just have no experience, or they have a hospitality degree, about how long do you feel what's the process for training them in the GDS? Because you're on Amadeus right?

AZ: Yeah. Where on Amadeus and on average it takes about 3 to 6 months. It's quite difficult. I'll be honest.

SL: Mmm hmm

AZ: Because as they said all of GDSs, as you know, they’re, you know, kind of like coding.

SL: Exactly

AZ: You’re learning a coding language. So teaching people how to code, a lot of people just turn off right away. [Laughter] Because as I said they just want to travel and sell travel, they don't want to be coding. And so that's very difficult. And when you do teach them, airline tickets are very [inexpensive?]. We do have corporate clients we work with. We do have individuals that call us, travel companies that call us to book their flights. But since it's not a very differentiated product, people don't get excited for it. To new agents that go in they want to book the fun trip to Europe, they want to book a fun trip to Hawaii. They don't want to really care about learning all of the secrets of the airline business, and I think those secrets are a definite advantage once you learn them.

But the thing is you never want to learn them unless you're doing it day after day after day. Pretty much just going and booking and then—and booking some other ticket and then kinda just even for yourself having fun with it. Figuring it out, what if we go to this destination and what if we go to this port? I don't know, as I said, if maybe it takes a certain type of personality, but I find it that, yes the training definitely takes 3 to 6 months and then most of the people that are trained, they don't do it with enthusiasm that, for example, I have for it [laughter] because I think it's a different change of pace and it's always fun. Because first of all, as I said, everything checking, you know comparing it to TripAdvisor and kayak comma it's much quicker.

SL: Mmm-hmm

AZ: It's much quicker than all those things. And then also you could—there's so many factors you can play around with that it's just, it's just fun sometimes to see what you can come up with if you kind of know what to look for. But that's definitely a time-consuming job, and also not exciting for people that start out. Because once they learn, for example, I try to switch them over to a corporate client, then yeah, all you're doing is booking the same place over and over again and they learn how to do it but it's not glamorous. It's not fun. It’s . . .

SL: It's order-taking.

AZ: But it works, it gets the job done. And then, hey it's a very important aspect, especially because … especially for corporate travel or for groups. Once they've done it, suddenly they need to change something, they need to move something, and it's a hundred times easier to do it once you booked it through an agency than if they booked it somewhere else. So I enjoy that basic aspect of it a lot, and I've done it for a long time. But yes we're both unique in the fact that we do have a storefront and we still sell a lot of airfare.

SL: Yeah.

AZ: But I will be honest. Airfare is pretty much—as they put it in market talk—it's close to a lost leader. It's a service we offer. We don't do it for the margins we do it for the full service. Once in awhile the margins bait, but we have contracts with them, but many times especially, the non-corporate clients, they don't extend to all classes—so it's just kind of providing in the full service experience where we have the flights, and the hotels, and the packages, and the tours all in one spot versus them going somewhere else.

SL: Mmm hmm. Yeah well before we close out, I just wanted to also let everyone that's listening to know that Always Travel and Russian connections, you do work with travel agents. So if someone maybe has a client that's going to Russia or to the independent states and isn't familiar and a little bit nervous, they're more than welcome to call you up and you work with them, correct?

AZ: Pretty much. And we let them do as much or as little as they can. We've had cases that deal with a travel agent, and they tell us what they want and we set them up in terms of how to do it. Then we've had clients, agents, that pretty much said,”Here is my client. Just work with him directly, I don't want to be in the middle of all this,” and we take care of them then we send them back to their clients happy.

SL: Cool. Well perfect. Thank you so much for sharing all your experiences with us today Andrey. It was wonderful catching up.

AZ: Of course. Always. Yeah it's been too long. You know we have to celebrate our 5th anniversary.

SL: I know. I'm waiting for my invite to your holiday party. [laughter]

AZ: Oh wow. Yeah. Exactly. The invitation will be in the mail.

SL: Excellent. I can't wait. Alright. Well have a wonderful rest of your day we will talk with you later.

AZ: Thanks.