Travel is in my blood. While I love a combination of home working and regular business trips, I accept that travel takes me away from my wife and soulmate (yes that’s you darling!). Being home recently has given us an amazing chance to grow our relationship even after 10 happy years of marriage.
But being grounded may have placed stress on some partnerships. Relationships change. Marriage counsellors may be about to see a resurgence in demand!
In business travel, the relationship between the corporate and TMC is also under focus, its balance disturbed, as a result of the pandemic. I’ve heard travel managers and TMC executives say that those critical partnerships were tested to the extreme by the shutdown of travel. For some it has exposed gaps that clearly need to be addressed, for others it has reinforced a deep value.
The industry is at an important crossroads in how client and TMC partnerships are shaped. Both the demand and supply sides of the business travel industry have inherently changed.
So, I thought I’d share a 3C’s approach to help travel buyers and TMCs consider how to reinvent their partnerships.
3C #1 - The Internal Shift in Emphasis From Cost To Care
For many years, buyers have believed that travel management is all about the balance of 3C’s:
- Cost – the total cost of ownership of the managed travel program
- Customer – traveller experience and company needs being met
- Care – safety and security, wellness, sustainability
In pre-pandemic times, many travel buyers believed TMC services were commoditised. They told us differentiation between TMC’s was low and that too often one TMC looked like another. As a result, Cost became the critical selection criteria.
Due to the pandemic, Care (aka traveller safety and well-being) is now the pre-eminent focus. This is driving demand for a range of new or enhanced TMC services to enable the effective return to travel.
The balance between Cost, Customer and Care has changed dramatically in just a few weeks.
3C #2 - External Supply: TMC Value Proposition Reinvention
TMCs are going through their most fundamental change at any point in the evolution of the business travel industry, categorised by;
- Competitiveness – TMCs are rapidly developing new capabilities to meet the demands of clients and travellers. One example is the inclusion of hygiene and safety information in booking and approval tools. Other examples are improvements in real-time reporting tools as well as traveller communication platforms. This is leading to greater product differentiation and competition and less ‘look-a-like’ TMCs
- Compensation – Transaction fees have been the most popular TMC compensation model for over a decade, but change is in the air. Much discussion is now on changing the model to options such as subscription fees, cost plus, management fees, performance-based commercials and other models. Underlying this, is the need for TMCs to invest in new services despite their income being under strain from subdued travel volumes, perhaps for the long-term
- Customisation – Buyers have opportunities to select and integrate travel service partners like never before. APIs and other technologies enable unparalleled program customisation options. A buyer can, for example, choose a unique combination of TMC, reporting platform, safety solution and traveller messaging tool. These customisation options require thoughtful management. See what our managing partner Caroline Strachan had to say about reviewing your strategy.
But how well will legacy client and TMC partnerships support the changes happening on all sides of the industry?
I am not advocating for an avalanche of TMC RFPs. But it is important for travel buyers and TMCs to have proactive conversations to agree the terms of their renewed partnerships.
3C #3 - The Approach to Rewiring the Client & TMC Partnership
FESTIVE ROAD previously published insights from an exercise we ran across the industry. We asked for views on the ‘traditional’, industry standard TMC assessment process. We found that both clients and TMCs find the process time consuming and lacking in value. Both sides told us too much focus was placed on commercials.
We advocate that the partnership should be based on a balance between 3 critical components;
- Capability – the service capabilities of the chosen TMC to meet the demand needs of the client
- Culture – aligned company values, strategy, engagement model and ways of working
- Commercials – a contract that drives value for both partners
When we work with clients to refresh or build their new TMC partnerships, we focus on the balance and intersection of these 3 components. We’ve also seen success in reinventing the process of the assessment to be more agile and outcome focused (and less reliant on 200+ question RFP documents!)
In a post pandemic world, we recommend a balance in focus across the 3C’s and a fresh approach to re-partnering. We recommend travel buyers:
- Consider how you prioritise Culture, Capabilities and Commercials in your TMC partnership. Which of these were most important to you in the past? Which will be most important in an uncertain future? How do you measure these components?
- Use the Permissible Travel Framework to help understand the new and changed needs for TMC services from within your organisation. Thousands of companies are currently working through the framework and we hear the changes in travel needs are significant for many
- Invite your TMC (and competitors if you have the appetite) to virtual sessions to share 1). your insights around your changing travel program needs and 2). ask their insights around the changes to their businesses. Ask questions to assess the Culture of the TMCs to help you understand how they think:
- How they see the market and their role changing?
- How they are pre-empting the needs of clients?
- How they are driving change through their organisations, while increasing engagement?
- Who they see as responsible for delivering safe post-pandemic travel?
- Ask the TMCs for critical only information about new services being offered. Ask the same questions to a group of TMCs so you can compare. Example questions can be found in the Permissible Travel Framework. The aim is to establish how the supply Capabilities are changing
- Host virtual workshops with the TMCs and ask detailed questions about how the new services will be delivered in context to your travel program. Avoid sales presentations. Use a scenario-based approach to get into the necessary detail, for example:
- If we had to change our travel policy daily due to changing government travel permissions, how will this be delivered in your OBT and travel approval tools?
- By now you should be able to clearly articulate the value the TMC new services will provide to your organisation and how well you align culturally.
- It may then be time to look at the Commercial model, to ensure that it will continue drive value for both sides of the partnership. It is important to ensure the agreed commercials help drive behaviours that strengthen your travel program. The best model will differ by situation but focus on managing your total cost of travel program ownership rather than purely the TMC fee
3C3 – The Opportunity Ahead for Travel Buyers
With the changes on both sides of the industry, it will soon be the right time to re-examine the client and TMC partnership model.
The 3C3 framework outlined helps buyers to identify the changes across their demand and supply base. With the suggested approach to renewing the TMC partnership I hope to hear of a future with more successful, outcome and future focused client and TMC partnerships and less need for “marriage guidance counselling”.
After all, now is the time we all need these partnerships to flourish.
Written by Mike Orchard, FESTIVE ROAD, APAC