When it comes time to review your travel management company (TMC) most folks instantly start thinking about an RFP. However there are many factors to consider if the process is going to be done properly. In the following article you’ll find some helpful advice for travel managers, purchasing executives and other travel buyers who may be contemplating a travel program review…
Ask yourself these questions.
Is an RFP for you? While some public authorities are obliged to undertake a formal RFP process for any procurement project worth more than a certain amount, and any company can choose to go that route, a less time-consuming and cumbersome process can often yield superior results. Keep in mind the time and cost involved for You in creating the RFP and evaluating the responses.
Have you considered the scope of your program and your annual travel spend? I’ve seen annual travel budgets range anywhere from $100K to $100M. Conducting a full RFP can be beneficial if your annual airline spend is at least $1M or above, or if you have consolidated global travel requirements with additional complexities to your program. But if your company travel spend is on the lower end of that range, there simply aren’t as many considerations to be covered. Your options regarding vendor negotiation are limited, the benefits from using an online booking tool are less, and with fewer travelers, implementation shouldn’t be as complicated. Sometimes just meeting with a few TMCs to evaluate their services, capabilities and costs can accomplish the same result as a formal RFP process would.
Is your company serious about making a change or are you just testing the market? If you are not really interested in changing TMC partners and all you want is better pricing, don’t put out a formal RFP. You can go directly to your current vendor and request an annual price review. If you feel you’re not getting the best price, you can always conduct a formal RFQ (Request for Quote) and only put out a formal bid for price quotes. Most of the time, TMCs can identify when a company is not serious about making a change and can choose to opt out of participating if they feel it is not worth their time or the organization is not seriously considering them, because they don’t see the value in investing their resources and costs to complete a response.
Do you understand your needs and how to articulate them in your RFP? Too many times, companies are grabbing a previously used RFP template off the internet with hundreds of questions that may not apply to anything they need for their travel program. It is not recommended you regurgitate a formal RFP from someone else that asks questions that have nothing to do with your company’s needs or objectives. You should take some time to evaluate your unique situation prior to writing your formal bid document. Understand your company’s vision and overall objectives: consider the value of cost savings versus traveler satisfaction; factor in whether you have a regional, national or global structure. And of course, if your corporate culture makes it impossible to mandate compliance among executives and road warriors, let your bidders know in advance so they don’t waste time assuming this is a possibility.
Are your primary goals in focus? By understanding what questions will be most relevant to your decision-making process during evaluation you can edit your RFP so it is focused on solutions. Once you identify your current pain points and problem areas, the path to finding the TMC best suited to be your partner will be a lot easier. If needed, discuss your needs internally or put out a traveler survey — you might be surprised to learn about the struggles (or lack thereof) within other departments of your company.
Are you really interested in changing online booking tools or expense programs? If you have high adoption and traveler satisfaction levels with your current online booking tool, does it make sense to change? If your accounting and booking programs are integrated (like Concur Travel & Expense) would you really consider changing one or both of them? If not, don’t waste time with a long list of questions about the online booking tool, instead focus on how the TMC supports the tool, such as do they offer a dedicated support desk, or traveler training. And while we’re on the subject of integrated online booking and expense programs, let me recommend you take a look at that option due to the ease of submitting expense reports for travelers. It can save a lot of employee time over the course of a year.
Are you including all the right stakeholders in your RFP Process? There are many times that the wrong people are invited to participate in this process. Your list of participants might include: HR, IT, Security, Legal, Finance, Operations, Procurement and Travel Managers. You may also involve frequent travelers and their travel arrangers for input, but it’s not always necessary. Keep in mind the more people involved the more complicated the process becomes.
Start narrowing the field from the start.
While there will be no shortage of potential bidders, (just look at your messages and emails from the last year if you need help researching potential TMC partners!) however, it’s helpful to narrow down your list as much as possible before you send out the RFP. Don’t waste your time inviting vendors to bid on your business that you know are not a good fit. But don’t limit your search to just those companies who have been calling on you. Spend a little time looking for new options. Review companies’ websites, call and ask them specific questions, even ask others for referrals.
To make your job easier, you may even want to start with a Request for Information (RFI) before the RFP goes out. From the RFI, you can quickly evaluate the vendors’ capabilities and create a shortlist for who you want or don’t want to include in the actual RFP.
Helpful Reminder: The RFP process may take longer than you anticipate. Be realistic on your timelines and communicate internally and externally. Make sure your timeline to evaluate the proposal is scheduled by all stakeholders, works with your overall business operation and provides enough time for a complete evaluation. Often, companies put a proposal on a tight deadline, only for the organization that distributed the RFP to extend their response timeline by several weeks or months.
Be sure to develop an evaluation structure ensuring reviews are as objective as possible. Quantify the areas of evaluation by some sort of point system and weight areas that are most important to the company. Consider using an objective evaluation structure in the presentations that are made to the company, as well.
Selecting the right TMC partner.
As you start collecting the responses back from potential those TMC partners, make sure you ask them questions if you need clarification on their response. Don’t hesitate to go back to the TMC to clarify what they’re presenting.
Look at the partnership as a whole: service, support, account management, technology, executive buy-in, risk management, security, etc. All these areas should all be evaluated when you are selecting the right partner to manage your travel program. If you have done your homework when creating the RFP, accentuating the areas where you are looking to improve your program should make it easier for you to find the right partner based on their answers to these sections of your review.
As shared in a previous publication by Business Travel News, it’s easier to ‘Narrow the Field’ by following a few of these strategies in your evaluation process: “consider how the bidders balance and measure service and cost avoidance; review their training and turnover rates, especially for front line counselors; understand the TMCs’ ownership structure, board membership and board level decision-making authority; evaluate the TMCs’ automated tools and their ability to integrate with other corporate systems; and seek detailed reference checks, including non-cited references and lost accounts.”
Evaluating Cost Reduction
The path to cost reduction is varied by account and depends on many factors. For small and medium-sized accounts the most important areas are a) getting the lowest fares and b) taking advantage of every single discount. A good match for companies of this size are TMCs who will take the time to enroll your firm in every available airline and hotel loyalty program so that every time an employee travels you are earning credits toward reward tickets and other discounts. Many large TMCs won’t bother to track and redeem these credits. For larger accounts traveler behavior and policy compliance are also an issue, as violations can accumulate to have a serious impact on your bottom line. Vendor negotiation is also a key factor when you have a big spend, so be sure and pick a TMC with a highly-experienced team to secure the best airline deals.
Don’t make the mistake of focusing on a TMC’s management fee as the primary driver of cost savings. Many times, the best TMCs charge higher booking fees but more than make up for those fees by providing substantial value through cost savings and international upgrades. We have often found seven-figure savings at a large account and the portion of those savings comprised of lower fees is always minimal. And, as always, beware of TMCs that charge lower transaction fees but tack on hidden costs or annual fees somewhere else. The only way to get a true side-by-side comparison is to have all the bidders use the same response form and ask them to total your costs on an annual basis.
Let them down Easy
Once’ you’ve chosen your desired TMC partner, be sure to provide feedback to the bidders who were not selected. Bidders have made a considerable effort to put together a proposal and to respond to your RFP (I feel their pain). They deserve honest, insightful feedback. Treat them with respect; although they may not be servicing your account, as business changes they may be able to service you in the future and you may be interested in their services down the road.
Hopefully this information will give you something to think about while preparing your next RFP. And don’t forget to include Teplis Travel on your bid list!