Thank you to ACCED-I Corporate Member Kinetic Software for contributing as a guest blogger.
- By Laura Lafferty
As one conference season winds down, it is time to look toward the next one. For many, contracting your repeat customers happens right away.
Before you sign everyone on to next year’s camps and conferences with your existing contracts, take a step back and have a look at them. You may want to consider making some changes to incorporate contracting best practices that may be missing.
We have compiled some of the most common terms and conditions to help you determine what you may want to add to your contracts.
Best practice #1: Attrition Clauses
If you don't have one, put one in. An attrition clause essentially protects you if the actual attendee numbers fall below projected numbers.
Attrition clauses are frequently used with "bedroom reservations held" vs "bedrooms actually used". Without an attrition clause, you could end up with empty bedrooms that could have been sold to another group, resulting in lost revenue.
For example: a group holds 150 bedrooms but only 80 are used (and invoiced). If you had an 80% value on an attrition clause, then you could have invoiced for 120 rooms, not 80.
If you provide rented linens with your rooms, not having an attrition clause means you will have also paid for linens that went unused with no way to recover the cost.
Take a look at your overnight groups from the past summer. How many of them missed their numbers? How much lost revenue did that mean for you?
Best practice #2: Guarantee Counts/Numbers
You should be requiring your client to provide you with a guarantee count for food service. But it shouldn't end there. Be sure you have a minimum threshold for which they will be held responsible.
For example, a fairly common standard is 95% of the guarantee count or actual number, whichever is higher. As with the attrition clause, this ensures you don't lose even more forecasted revenue on an event that has lower attendance than projected.
Your food service department will bill you for the count you gave them. Without a guaranteed number from the client, you would be responsible for paying the difference.
Best practice #3: Deposits
I am always amazed at how many people still do not require deposits with a signed contract (or even non-refundable deposits). Without a deposit, anyone who contracts, but then backs out, means lost revenue for you.
Did you have to turn away another prospect for those very dates? Deposits (especially substantial deposits) help protect you from losses and ensure you are holding space for only those who are serious. Often if a client is reluctant to pay a deposit, it is because they lack confidence in the event.
Unsure how to introduce deposits or what terms work best? Here are 3 ways to incorporate deposits into your policies:
Determine your comfort level as well as what you can easily manage.
- Start small, introducing one nominal deposit and then increase it over time.
- Choose to require deposits of new business only.
- Require multiple smaller deposits over a period of time.
Best practice #4: Cancellation Fees
There are many conference operations out there that do not have cancellation fees built in to their contracts. When asked why, many say they "feel bad" putting them in. They don't want to send a message of being customer-unfriendly.
However, from a business perspective, cancelled conferences/events mean lost business for you.
If that cancellation happens very near the start date, it is highly unlikely you will be able to rebook the spaces and recover the revenue. You can be customer-centric, but still protect yourself.
Using a phased or gradual approach can work where the fee increases the closer you get to the start date. A phased approach would be something like a cancellation 90 days before event start date equals a 25% fee, 60 days is 50% and 30 days is 75%.
Again, determine your comfort level but keep in mind that a client cancelling on you at the last minute should bear some of the financial hardship.
Best practice #5: Deadlines and Penalties
This final topic can be controversial and therefore is often not as widely adopted as the others. However, having deadlines, and penalties for missing deadlines, may help save your staff last minute runaround.
The worst offenders are usually rooming lists (housing rosters). You want the list at least a week ahead of time so you have ample time to prepare the rooms. The client gets it to you the day before check-in.
By requiring a deadline of 14 days ahead of check-in, with a penalty fee of say, $200 for failure to submit by the deadline, could be all the push your client needs to meet your deadline and save your team headaches.
This one should be weighed carefully as it can often be seen as the most punitive of practices. Be sure if you choose to implement this, you are prepared to enforce it.
Secure Business and Protect Your Interests
Contracting is more than just securing business from your clients. It also needs to be about protecting your interests. Many contracts do a great job at protecting your campus’ interests and mitigates risk, but too often they fail to protect your department’s financial interest.
By determining and closing the gaps in your current contract, you can safeguard your business (and bottom line) from the unexpected.