“We’ve really been
negotiating the same way since about 1937,” Cisco Systems global travel
procurement director Susan Lichtenstein said of travel supplier-buyer
contracts. Despite seemingly constant hotel contract negotiations, both sides
remain frustrated. Lichtenstein, though, has changed the terms.
Watch Lichtenstein,
one of BTN's 2015 Best Practitioners,
describe her new negotiating technique, and keep reading after the jump.
Susan Lichtenstein On A Different Negotiating Style
BTN named Susan Lichtenstein a 2015 Best Practitioner for a new hotel contracting strategy that pivots on spend, not market share, a practice she’d like to translate to other supplier segments. Pegging supplier priorities as revenue and loyalty, she matched that to her program priorities, spend and traveler experience. The end results: Cisco travelers exhibit 80 percent compliance with the company’s preferred hotel suppliers thanks to improved traveler experience, Cisco has improved its spend with each supplier and Lichtenstein has achieved new savings within a mature program.
Managing one of the
largest travel programs in the world, “I was already at the best negotiated
rates,” she noted. But when her new chief procurement officer challenged her to
do better, she realized that the true value of Cisco’s business to a hotel
company is spending, not market share or room nights booked.
It took a while for
hotels to pivot in her direction, but eventually, her partners distilled their
needs to two tenets: revenue and loyalty. Lichtenstein said, “What’s important
to me is spend and experience.” So she paired them: revenue/spend and
loyalty/experience. “We had a match,” she said, the basis for mutually
beneficial negotiations.
Cisco signed five
hotel contracts in 2013, each featuring a status-check period in the third year
to ensure that the delicate science is working. So far, so good. After a year
and a half under the new agreements, hotel participants report more revenue
from Cisco and Cisco claims a 25 percent savings off previous negotiated rates.
“You have to be
willing to shorten your list of partners and narrow your search, but we don’t
talk market share anymore. We only talk experience,” said Lichtenstein. “Now
that we have hotel partners by our side and giving us that experience, our
compliance levels are off the chart. They’re over 80 percent in areas that most
[companies] are at 50 percent to 60 percent. It makes perfect sense to buy
everything like that.”
That’s exactly what
Cisco is hoping to do. “We talked to our airline partners. We talked to our car
partners,” said Lichtenstein. “Nothing yet, but it’s simple enough to say, ‘Why
not?’ We don’t ask ourselves that question enough—because they said it couldn’t
be done with the hotels. It’s done.”