Profiles In Travel Management: CTD Move Triggers Savings, Control For WellPoint

Since coming to health benefits provider WellPoint at the beginning of 2009 as manager of strategic sourcing for travel, Cindy Heston embarked on a string of initiatives that included changing the company's travel management company configuration, implementing new technology and bringing the meetings program under the travel and procurement umbrella.

Heston joined Indianapolis-based WellPoint from technology and consumer electronics company Thomson, where she was honored by BTN as the 2000 Travel Manager of the Year and a 2008 Best Meetings Practitioner. The first task for Heston at WellPoint, was to evaluate the company's travel agency relationship and bring more automation to the travel reservation process. That sourcing effort generated a far more drastic change than merely a travel management company switch.

Following the request-for-proposals process, which began in February 2009 and ended in July, Heston and WellPoint decided to transition to an ARC-accredited Corporate Travel Department structure, outsourcing agency operations to Travelocity Business. TBiz handles all reservations and support for the company's $65 million travel budget and 10,000 travelers. WellPoint implemented the new configuration in October.

Part of the decision to obtain the CTD designation was to enable WellPoint to collect all commissions, eliminating a murky aspect of many TMC relationships. WellPoint uses a third party to monitor and audit commission collection.

"When working with agencies, one of the areas that is a big question mark is what the income in that particular arena of commissions is," said Heston. "You can work with seven agencies and have seven different offers, and one area that is not clearly defined is the commissions. If you take that out of the way, you can rationalize agencies based on their services and costs. It takes away that whole gray area."

WellPoint's travel behaviors create a high number of unused tickets, which before the move to the CTD raised questions among agencies and airlines about unused ticket liability should the company change travel management companies. Those tickets now are associated with WellPoint's ARC number, and all of the unused ticket liability transfers.

"It was quite a dialogue and negotiation with each airline about what to do with those tickets," said Heston, who added that 70 percent to 80 percent of the company's tickets are nonrefundable. "We're not going to have that discussion going forward. That uncertainty and that transition issue is now gone."

Armed with a stronger program and technology to back up the policy, WellPoint launched a new preferred airline program in December. In January, Heston was able to shift 13 percent of the volume in an unidentified key market to another carrier, she said. The new program has more than doubled initial overall savings targets, she said.

The online booking tool launched in mid-October. The communications process started that month with a series of road show events and webcasts. All training sessions and tutorial videos were posted on the company's travel website. More than 90 percent of the company's tickets now are booked online, Heston said

Parallel to the CTD implementation, Heston in June tightened WellPoint's travel policy with mandates to book through TBiz, use preferred suppliers and purchase travel with corporate cards.

The policy also requires all of the company's 300 internal and 200 commercial sales meetings bookings to go through the procurement department. "They can still go out and negotiate on their own, but before they sign that contract, they had to provide it to us, we had to review it and then get the approval for the terms and conditions," she said.

Meetings bookings are funneled through the TBiz meetings site, which recently integrated with WellPoint's online registration tool, Cvent. The new meetings technology allows additional visibility into company meetings spending, she said, which WellPoint can use when negotiating transient travel contracts.

Before the move, Heston said, preferred supplier agreements were often misaligned. For example, group air discounts would be applied when the transient rate would be cheaper or vice versa.

The procurement team reconfigured the transient hotel program to focus on properties that could support WellPoint's meetings program, Heston said. "For now, it really helps them and cements our partnership. Not only are we giving 40 percent of our transient business, but also 60 percent of our meetings."

WellPoint meeting planners customize about 20 individual meetings subsites per month on TBiz, through an online template that only includes preferred vendors for a specific event and controls messaging to attendees. The increased visibility has given administrators and event managers more control over their meetings.

"Those decision makers need to have a clear vision of the agenda and all that's going on with their meetings," according to Heston. "We can focus more on saying, these are the hotels you're staying at, and these are the airlines we negotiated."