TMCs – The gap between what you’re sold and what you get

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Author: Tony O’Connor

It can be frustrating. You run a thorough and detailed TMC tender. Better process. Better pricing. Better systems. Better service. Better TMC.

Senior management is watching and reputations are on the line. You confidently sell the new deal internally. But six months in or even sooner there are problems. Travellers are unhappy and the procurement team is held responsible. You can’t flip flop. You’re stuck trying to rescue the situation, but you don’t have the time. The TMC is not overly concerned.

Why do service shortfalls occur too often with a new TMC? What are some examples? And what can you do to prevent them?

Great Expectations
Firstly, not everything that happens with travel is the TMC’s fault. Bags get lost. Flights get cancelled. Hotels get full. Rooms get noisy. There can be unrealistic expectations placed on a new TMC. They should certainly help to minimise and prevent travelling difficulties, but flight, room and car snafus are going to happen.

Secondly, there are a lot of specifications to contend with. If things are missed in the sales or tendering process and then arise as issues later on, well, it’s not really the TMC’s fault.

Some things, however, are squarely in the TMC’s court.

The Selling
Suppliers tend to respond to RFTs with rose coloured ink. Few salespeople in any industry can resist saying some version of “yes”, because a “no” might lose them the business. The art is to say a lot and imply much without making firm commitments; the tendering equivalent of the politician’s promise.

Salesmanship is particularly heavy in this supply area. It’s because, despite the complexity of their systems and services, TMCs can appear to all be quite similar unless you dig. The real differences, the things that do change service levels, ethics and travel costs, are two or three layers down. They are too fussy for a sales pitch, sensitive and even too arcane for many simpler tenders. And so the temptation is to push, shove, exaggerate, smudge and sell.

It also makes commercial sense for them to be sales-heavy. If you can more or less lock the business in for three or four years because it’s difficult to remove you, you should then concentrate your resources and efforts on getting the business in the first place. It is not profitable to then smother your clients with care and attention. And if there are a few disappointments once the sales veil is dropped, well, they can be managed.

This “win and fire-fight” approach is quite common. But most TMCs do a good job or better of delivering as promised most of the time. Naturally, they vary, and there are a few that are outside the pack. In my opinion, these are the danger signs for TMCs, and in fact for most types of supplier. Be wary of:

Companies that have higher than usual ratios of salespeople to account managers. “Win at all cost” staffing is the surest sign of tears to come in the years ahead.

Companies that pay high sales bonuses compared to base pay in salespeople’s remuneration. When the person selling the service has to win to pay the mortgage, they will do and say anything to win.

Companies that have too rapid a rate of growth. Frankly, it’s unlikely to be due to value and substance in a supply area that is superficially commoditized.  High flying growth is probably a function of heavy sales and marketing.

Companies that are particularly active and successful with smaller buyers. Suppliers that feed on the under-informed small fry in a marketplace are likely to be the selling machines of their industry (aka a certain type of larger toothy fish).

Companies that offer you very low fees. TMCs have three other revenue streams in addition to visible fees. If their offered fees are too low, it means (1) they’re not wanting or able to win your business with good systems and services, and (2) they’ll be pushing down hard on the hidden revenue pedals and your real service costs will probably in fact be high.

Similarly, companies that entice you with gimmicks, such as no-pain guarantees, no-fee periods and free credit. Pedal pedal push down hard.

Companies that try to embed themselves into your organization, or fuzz the line between buyer and seller. This is an old trick. It is why I don’t like implants.

Why the Gap?
Salespeople are of course in charge of the selling and tendering processes. But once the business is secured, it’s over to their operational colleagues. Communication between sales and operations staff can be lacking. And the operational detail that is provided to them can be discounted or misunderstood by sales staff, especially when it puts limits on what they can say.

Here is my top ten list of problems:
The online booking tool doesn’t have all the capabilities you expected.

The booking consultants and account manager that you carefully selected become other people.

It turns out that not quite as many booking consultants are needed on the job as promised.

After implementation, you only hear from the account manager twice a month, despite having bought 20% or 40% of their time.

The detailed monthly accounting and reconciliation of commission revenue is just an unexplained monthly cheque.

The ongoing training and assistance for online booking turns out to be a once only affair.

The “best-fare-of-the-day” guarantee is being tested by outbreaks of “I can do better” claims from your travellers.

VIP services are a little too similar to standard services.

The after-hours service turns out to be an emergency-only facility, whoever and wherever you are.

There are some definitional changes, new terms or new interpretations regarding the financial arrangement, not entirely in your favour.
This is not to suggest that these things happen with most TMCs most of the time. But happen they do.

 

What To Do
The best way to prevent this is for the buyer to have the ability to ask the right questions and conduct in-depth checks of the TMC’s true capabilities during the tender process.

A well informed tender and selection process will help you select the best TMC for you, and give them a clear understanding of the high standards to expect from you as a client. Know your stuff beforehand – you can’t beat Brazil if you can’t play futbal. Make sure you deal with senior operations, IT, finance and HR people at the TMC, and not only the sales staff. And don’t rush into a final decision.

The transition to a new TMC should be handled in a consultative manner with good ongoing communication.  Don’t underestimate the task and don’t expect the TMC to do all of the work.

Travel management is not a service where you can just select the supplier, do the contract and leave it to run on autopilot. It requires some on-going monitoring and management.

For any supplier there are soft clients and hard clients; those that are more informed, more demanding and not to be messed with, whatever their size. Make sure you don’t get messed with.

 

About Author

Procurement and Supply Australasia (PASA) is the leading provider of information and education to procurement and supply professionals throughout Australia and New Zealand. PASA supports the largest community of engaged procurement stakeholders in the region, through its renowned series of events, publications, awards, plus various community and network building activities. PASA is a trading name of BTTB Marketing, for many years recognised as the leading producer of conferences and events for the procurement profession in Australia and New Zealand. Whether producing under the BTTB, CIPSA Conferences or now PASA brands over the last ten years, our events have consistently led the market in terms of both educational and networking opportunities.

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