The initial marketing partnership between Concur and the commercial card division of American Express Co. to sell and promote Concur's Expense software could be expanded to American Express Business Travel and include Concur's end-to-end suite. Separately, Concur has built a pricing model that emphasizes expense reports over travel transactions.
"We are currently discussing with Concur how to provide, on the Business Travel side, their end-to-end travel solutions--in parallel to the GetThere solution and to the Axiom solution (based on the Rearden Commerce platform)--to provide a full array of online capabilities," according to American Express Global Travel Services president Charles Petruccelli, writing last month during an Amex-hosted online chat with reporters and others.
When American Express in July announced its partnership with Concur--which included an equity investment and replaced marketing support for the IBM Global Expense Reporting Solution--it suggested the deal would not conflict with an investment in Rearden Commerce because Concur would be promoted only by the card side and would exclude travel booking services.
At the time, BCD Travel said its arrangements with Concur were unchanged because "the Amex-Concur agreement solely revolves around expense management and doesn't include Concur's booking engine, Cliqbook."
Regarding the apparent shift in Amex's view of its Concur partnership, "I understand why American Express Business Travel is approaching the market with the full array of online solutions to ensure they service the needs of their diverse customers," wrote Rearden Commerce CEO Patrick Grady, in an email sent last month to Management.travelsister publication The Beat. "This has no impact on the preferred relationship we enjoy with American Express Business Travel, which is demonstrated by the 1,900-plus corporate clients now transacting on the Axiom platform, powered by Rearden Commerce. Additionally, we plan to launch together in Q1 2009 Axiom Mobile, a groundbreaking mobile solution which will give all the power of Axiom to the traveler while he/she is on the move. And, we will continue to bring future innovations together to the marketplace in 2009 and beyond. As I have said time and time again, we believe customers should have choices, and they should be the ultimate arbiter of what's good for their business."
Before Petruccelli mentioned possible cooperation with Concur and American Express Business Travel, Concur executive vice president of corporate development John Torrey during a November conference call with analysts detailed the "three different sales programs that we have contractually with American Express" commercial cards. Designed to fit corporations of various sizes, the "referral program is where an American Express sales person can generate a lead for us out of their customer base and throw that lead over the wall and our sales people will go close that business. The co-sale program in which an American Express sales rep will collaboratively sell with a Concur rep and do a customer opportunity; and the reseller program, which is fundamentally an agent program, in which Amex will sell on behalf of Concur without any intervention by a Concur rep. What is common about those sales programs is that every one of those deals is on Concur paper, serviced by Concur and supported by Concur over its life.
"It's probably fair to say that those three different sales programs are appropriate for different customer sizes," Torrey continued. "Co-sales is probably most appropriate for global customers; referral for everything in the middle and the agent program appropriate for smaller companies. American Express' own definitions of its target market are very well aligned with our own and extend down to 100-person company today."
On the travel booking side, "providers tend to charge on a per-transaction basis for every itinerary that you generate out of that booking tool," Torrey said. "What we do is say, 'There is no booking event that doesn't find its way onto an expense report. So we're not going to charge you twice for two separate transactions. They're ultimately part of the same connected transaction. We're going to charge you for that connected transaction, but at a higher rate than if you were a Concur Expense customer alone.' "
Torrey later explained Concur's pricing to analysts. "If you are a Concur Expense-only customer and generate $1 of revenue (and it's a meaningless number other than as an index), if same customer also takes travel, add 25 cents to the dollar," he said. "If that same customer takes Concur Pay--the reimbursement service--it adds about 15 cents. If that same customer takes our Analytics service, we think it will add about 25 cents. And if the same customer takes Concur Invoice, it adds about $1. Every one of those lists that I just described is based on actual deals with actual customers, who are deployed today," with the exception of the Analytics service that just launched. He concluded: "So, $2.65 on a $1 [charge for] Concur Expense."
Torrey said Concur sells on a "volume-based pricing model, so the more transactions you generate, the lower the per transaction price ... $1 to $2 on the low end; mid-$20 at the high end."
Concur "rarely" sells Cliqbook as a standalone product anymore, chairman and CEO Steve Singh told Management.travel, but when it does, it prices the tool like competitors do, on a per-booking basis.
E-receipts are included in the pricing. "We don't charge for it," Torrey said. "We don't charge our customers for it, we don't charge suppliers for it. It's simply an element of functionality we make to drive the integrated travel and expense experience for our customers." With the functionality, electronic receipts for booked airline, hotel, car rental, rail or other suppliers that participate are integrated into the expense process. Most recently, Enterprise Car Rental added its Alamo, Enterprise and National brands.
On its quarterly earnings conference call last month, Concur executives emphasized that "demand" is driven by the expense reports. "The demand environment in [fiscal] Q4 was stronger than in any previous quarter, and we see a solid demand environment for our services as we head into fiscal 2009," Singh said.
In its fiscal fourth quarter, Concur added a record-breaking 800 new customers--half of which signed up for Travel & Expense, Concur's integrated booking and expense product. Across its total customer base of more than 8,000 accounts, about 15 percent to 20 percent have contracted for the integrated product, Singh noted.
~ Jay Campbell and Mary Ann McNulty provided reporting for this article.