As an attorney, I resisted the term "partnership"
to describe the relationship between my corporate clients and travel management
companies. To me, a partnership is a specific legal relationship in which two
or more parties share responsibility for the management and profitability of a
business venture.
I could understand why travel management companies want
their customers to think of the relationship as a partnership. After all,
partners cooperate and support each other. They share responsibility for making
their venture successful.
Half of those who read that last paragraph probably are
thinking: "Yeah, right! TMCs and corporate clients are perfect examples of
a partnership." I'll guess, though, that most folks who think that work
for TMCs.
The other half probably sees the problem. How can travel
management companies and their clients share responsibility for profitability
when one pays fees and the other collects them? Especially when it's not
uncommon that service problems require additional funds to be resolved.
Travel management companies benefit when customers pay
higher fees, and suffer when fees decline. Combine that zero-sum reality with
the fact that most TMCs—particularly most large TMCs—get substantial revenues
from suppliers that are not disclosed or shared with clients, and the
partnership terminology gets increasingly hard to justify.
Other than on financial issues, though, companies need their
travel management companies to be as close to partners as possible, because
they manage an essential part of corporate operations. In a very real sense,
they need to become part of the company ecosystem, just like facilities or
human resources.
The problem, then, is how to create a partnership in a
relationship in which the company pays all the bills and the travel management
company is exclusively responsible for profitability. If you push your TMC to
the wall on pricing, they may not—or, from their perspective, may not be able
to—be the partner you need in taking care of all your travelers 24/7/365.
The challenge is in reconciling this need for partnership
with the business reality that both partners need to optimize the economic
value of the relationship. Like most other relationships, the key is to start
off on the right foot when you are selecting your TMC partner. Here's how:
Strategic Sourcing
Start by focusing on your strategic objectives, and don't
lose that focus as you move through the process. It's amazing how many
byzantine issues can be resolved quickly by staying focused.
What is strategic travel management? Strategy varies by
company, but generally boils down to safety, service and savings. Partners and
partnerships must advance each of these objectives. If you find yourself or
your committee getting lost in the details of proposals, take a step back and
assess how specific issues affect these strategic goals. If the answer is "not
much," then move on.
Know Your Company
It's hard to select the best partner for your company if you
don't know what your stakeholders really need and expect from a TMC. Most TMCs
can provide most services that most companies need, but it's a lot easier when
they understand the requirements at the start of the relationship.
Needs vary based on travel volume and whether your company
has multiple locations or operates in multiple countries. They also depend a
lot on culture: Some companies are more comfortable with automation, others
need more (expensive) personal services. Some buyers need only basic travel
services, while others need strategic support.
A TMC partner also needs to work within your cultural and
political reality. Travel managers often are painfully aware of how hard it can
be to balance the competing demands of travelers, arrangers, preferred vendors
and C-level executives. You need to be comfortable that your partner can fit
into your organization and packs the gear in terms of experience and
communications skills.
Don't assume you know your requirements and culture even if
you have worked in your company for a long time. Talk to your stakeholders or
conduct a survey before you move forward. One of the fastest ways to undermine
your TMC partnership is by expecting them to provide services you never asked
for.
Know Your Market
By market, I mean the suppliers and technology, and where
your company fits in the travel management ecosystem, as much as competitive
pricing.
Take at least some sales calls from suppliers and meet with
a few TMC and automation reps. Go to your local business travel association
meetings and network. You are guaranteed to learn, and you might meet some
potential partners. You want to be an educated consumer, because you can't ask
for something if you don't know it exists.
Be Open With
Prospective Partners
The more TMCs understand about your company and its travel
management requirements, the more effectively and aggressively they will bid.
It doesn't help anybody if you pull a generic RFP from a website and simply add
your company's name.
TMCs won't offer you the latest technical nuance if they can't
see that you need it. They will hesitate to offer you the absolute lowest
pricing if they aren't confident that there are no major and undisclosed land
mines. Demonstrating your own knowledge of your requirements will create
greater confidence that underlies a successful partnership.
RFP Vs. RFI
Travel is complex and has many aspects, so you need to
define your requirements, and have TMCs describe their capabilities, in
writing. It doesn't really matter what you call the document you use to manage
your requests, as long as it addresses your situation specifically enough to
allow helpful answers and proposals.
Get To Know Your
Partners
If you are looking at several possible TMC partners, take
time to get to know them. If you know the market, you should have decent idea
of which TMCs are likely to be a good fit.
I recommend an initial meeting with everyone on your bid
list before proposals are due. Prospective partners will learn more about your
company and requirements, and you will get insight that will help you evaluate
proposals more effectively. These meetings take time, but make it easier to
read the bids.
Take more time during the process for meetings and site
visits. Make sure your questions are answered and that you really understand
the details of proposals. I've never seen a TMC that will outright lie, but
most vendors have aspects of their proposals that they'd rather not focus on.
Nothing is perfect, but it's better for customers to know where the wrinkles
are before an agreement is signed.
Since you need to spend more time exploring the details of
TMC deals than you would for many other types of purchasing, it makes sense to
focus on a smaller number of candidates from the start. If you have done your
homework and know the market, it should be easy to narrow down your search.
Follow The Money
Understand how much the services you need are really going
to cost.
Make it as easy as possible to understand and compare
financial proposals. I don't think TMCs deliberately try to confuse buyers with
their financial offers, but if they did, their financial offers probably wouldn't
change much. To combat that, develop your own format for financial offers and
insist that the vendors use your format.
And read the footnotes. Among multi-page comments that don't
have material impact, you are likely to find some real land mines.
Agreement
Finally! True partnerships take time to develop. After
spending all this time, you need to make sure that both partners' understanding
is fully recorded in a contract. Just like other relationships, true
partnerships depend on shared expectations about the future.