Consulting Journal: Style - Loyalty cards (3)

Style: Loyalty cards (3)

by David Blakey

The third article in the series describes how to charge your clients for your memberships.

[Monday 18 August 2003]

We looked at some scenarios for using loyalty cards in the first article and at some ways in which small consulting companies and sole traders can use loyalty cards in the second article. We shall now look at some ways of accounting for the membership fees.

The following items can appear on an invoice to a client:

an expense for valet parking;
a charge for airline lounge use;
an expense for car rental;
an expense for hotel accommodation; and
a charge for hotel accommodation savings.

Valet parking is an expense incurred at the time, so they will be billed by the consultant to the client after the expense has been incurred.

The charge for airport lounge use can be included as a standard condition within a consultant's terms of engagement. Airline clubs often sell passes for their members to bring in guests. It is reasonable to charge your clients the price of a guest pass.

Flights, car rental and hotel accommodation may be booked either by you or by your client. If they are booked by you, then it is reasonable for you to add a handling charge that will cover a portion of the costs of membership of the hotel loyalty programme. The airline and car rental loyalty programmes will probably be free; if they are not, then you can add appropriate handling charges for them.

If your client intends to book your flight, car and hotel themselves, then you should tell them of your preferences. You might consider having a list of your memberships. For each category, such as airlines, car rental and hotels, you can list your memberships. For hotels, you can list the brand names of the hotels within each membership. Where the client is likely to be able to make savings by using one of your memberships, you should state your handling charge for this.

My membership list

As an example, consider my list for clients within New Zealand.

Under airlines, I list Qantas and Air New Zealand, with my membership numbers of their frequent flier programmes. While there are no savings to be made by doing this, it will ensure that the airline will be aware of my preferences for seats and meals. It will also let the airline's valet parking system know of my return flight, so that my car will be ready for me to get into and drive home. I also state the likely expense for my drive to the airport and the charge I add for using the airline lounge.

Under car rental, I list Avis and my membership number. I do not pay for my Avis Preferred Renter membership, nor can the client save money by quoting my number to Avis, but it will ensure that Avis will have the right car for me when I arrive. It is in the client's interests to save me time and trouble in getting from the airport to their premises.

Under hotels, I list my membership of two programmes, and the brands within each programme. I also list typical rates that the client will be charged if they quote my membership number when they book with a hotel and the handling charge that I will make for the savings that they will make as a result.

My invoices

For a client who books the flights, car rental and hotel themselves, my invoice will have the following items, in addition to my consulting fees.

expense for driving to the airport, at $x for y kilometres;
charge for use of airline lounge on outbound flight, at the price of a guest pass;
charge for hotel discount, at a fixed price agreed in advance with the client;
charge for use of airline lounge on return flight;
expense for valet parking, at the amount charged by the airline;
expense for driving from the airport.

You may be able to give a client an estimate of your expenses before you travel. For this, you will need to know:

the cost of airline travel from your local airport to theirs;
the distance from their airport to their premises for fuel use or taxi charge calculations;
local taxi rates, if applicable; and
the cost of accommodation and a reasonable meal at a hotel, at both ‘rack’ rates and your discount rate.

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