BP Consolidates Card Biz With Diners

<B> BP Consolidates Card Biz With Diners</B>

By Amon Cohen

British Petroleum has selected Citicorp Diners Club as its global corporate card provider in the first-ever consolidation of its $100 million annual travel and entertainment spend.

Diners will issue cards to an anticipated 20,000 employees of the oil giant in more than 70 countries.

BP chose Diners after devising an assessment matrix that measured each hopeful supplier against a series of weighted criteria. But the BP purchasing team was in no doubt about which of those criteria should receive the heaviest weighting.

"Management information was the most important thing," said Allen Grimley, BTN's 1997 international travel manager of the year, who led the card purchasing exercise as a consultant after officially retiring from BP at the end of 1997. "To get the best value from our travel, we have to know what we are spending our money on, which is why we have gone for a global card system. Diners' MIS product, Global Vision, is a leading edge product, no doubt about that. We can slice up the data any way we want and put it all into a data warehouse, so that we can pull off the information whenever we like."

Grimley said that card information is essential, even though BP receives high-quality data from its global travel agency, Carlson Wagonlit Travel. Despite having consolidated its travel with one agency, though, "a great part of our spend is outside the agency," he said. "Even if our travelers book a hotel through the agency, we don't know that they actually stay there or at which restaurants they eat. That is where our big gap was."

Travelers now will be obliged to put all travel booked through Carlson Wagonlit on their Diners cards. BP is further mandating that all air, car rental, hotel and foreign exchanges be made with Diners.

Still, one weakness of Global Vision bothers Grimley: that it is not currently used by the Diners Club franchise in every country where BP wants to use the card. Diners, however, has guaranteed to introduce the card into each country as the BP program rolls out around the world. "A lot of those countries had not done a corporate card deal before," he said, "so Diners Club and Citibank are helping by bearing some of the initial cost of the rollout."

With his management information in order, the next most important selection criterion was card acceptance. This is an area where Diners has traditionally been regarded as being weaker than some of its competitors, even though it has increased its merchant coverage from 3.4 million to more than four million establishments over the past year.

"There is a perception that Diners has a lack of acceptance, and that is something we will have to address internally," Grimley acknowledged.

But he also noted that an analysis of the top 30 percent of BP's U.S.-based travelers found that 98 percent of their spend worldwide was at establishments that accept the card, and a similar analysis of the top 35 percent of the most heavily spending U.K. travelers produced an acceptance rate of 97 percent.

Nevertheless, steps are being taken to overcome acceptance fears by pushing the rates even higher. Diners' parent Citibank, which is BP's global banker, has agreed to provide Visa cards or MasterCards in geographical pockets where BP travelers have a real or perceived acceptance problem.

Simultaneously, Diners will blitz these problem areas with a renewed campaign to sign up merchants. Des Shaw, Diners development director of multinational cards sales for Europe, the Middle East and Africa, who led the card company's bid for the BP account, anticipates few problems.

"If we go into an establishment used regularly by BP and tell them that the company is now using Diners, they will almost certainly accept, so long as we are sensible with our pricing," Shaw said.

Diners also will carry out database analysis of all establishments within moderate driving distance of BP locations and make an extra effort to sign them up.

Tied for third place in importance on BP's card selection matrix were price ("The rebates offered by Diners were far superior to anything American Express had to offer," said Grimley) and technological compatibility. Further down the list were cardholder benefits like rewards programs and airport lounge access.

Along with the Diners bid, Grimley paid tribute to the bid made by Midland HSBC, part of the Hongkong and Shanghai Banking Corporation. "We were very impressed with Midland HSBC's attempt to bring together a global situation, but in the end we felt there were too many banking alliances involved," he said. "Diners Club is a series of franchises, but they all use a single card."

Shaw was impressed with the way that BP focused on the bidding process, and the speed with which the company arrived at a decision."Bids went out on Dec. 13 (1997) and had to be returned by Jan. 28," he said. "On Feb. 22, we were informed we were the preferred vendor, and we then went into a series of clarification meetings and negotiations. That led to the contract being signed on May 27."

Shaw attributed the swift process to BP's having "a team of people who made themselves available."

Not altogether surprisingly, he also thought the selection matrix was an effective assessment model. "All the vendors knew what the categories were, but not how much weighting had been given to each of them," Shaw said. "The system clarified which vendor offerings were smoke and mirrors and which were deliverable."

Implementation of the Diners Club card among BP employees will be rolled out in three phases. First on the agenda will be the United States, the United Kingdom, France, New Zealand and Poland, where rollouts are scheduled for completion by the end of this summer. Full implementation is expected to be achieved by the first quarter of 1999.

As well as working on the practicalities, BP now has its eye on introducing an automated expense reporting system, an exercise that would have been difficult with feeds from the 40-plus corporate cards previously used by BP employees.

While the company has several different expense reporting processes around the world, it hopes to introduce a common process on the back of consolidating its card vendor. Said Grimley, "I honestly think we have developed a relationship on which we can build.