SMEs don’t have to be disadvantaged when it comes to purchasing travel, says Gillian Upton
WHEN you don’t have the volumes to negotiate directly, getting deals with airlines, rail companies and hotels can be a little tricky, to say the least. One way to circumvent the issue and benefit with better deals is to pull your volumes and work collectively.
Many TMCs offer such a service to SMEs and one such is FCm. “Our whole business model is biased towards SMEs,” says sales director UK David Thomas. FCm offers ‘cluster agreements’ with airlines predominantly, over 12-month periods, and the deal is yours until you move TMCs. Not all suppliers want to play ball, though, and, on the whole, your TMC will do better deals with new entrants or those suppliers on a certain route or looking to build a business route. BA would never do them but Etihad and VLM would, for example. Read on for a step-by-step guide to better buying as an SME.
STEP 1: You need data, and plenty of it. Arrange a ‘bedding in’ period with your TMC so they can start collecting data from anything that’s transacted through them. Three months down the line they’ll be able to 'annualise' the data they’ve captured “and it won’t be too far out“ says Thomas. Month by month, then quarter by quarter, the data will become a very powerful tool.
STEP 2: Data analysis. Analyse by top destinations for an instant win by supporting ‘soft’ hotel and airline schemes that allow you to accrue points each time your travellers fly or stay. Schemes such as BA's On Business, Virgin’s Flying Company, Lufthansa’s Miles&More. Points – which are generated on restricted fares too – are then redeemed against services. “Generally, it’s a very lucrative return,” says Thomas.
STEP 3: Supplier mix. If suppliers are putting a deal in they will want to have preferred supplier status, but this has to be appropriate according to customer profile.
The smaller suppliers or start-up companies, such as Silverjet, can often offer more attractive deals. One caveat is to check total journey time. Says Thomas: “Is Luton a serious alternative to someone who operates out of Slough? It may save £75 on the airfare but it could cost more than that in man hours to get to the airport.”
It’s best to meet any new suppliers. “Companies need to understand the commitment they’re making,” says Thomas. “They shouldn’t waste anyone’s time.”
STEP 4: The price. “Negotiated is the most you should pay,” says Thomas. “Then you should go out and try and better it.” Because SMEs are comfortable with spot buying – as historically that’s what they’ve done because they haven’t had the volumes – it will be easy to compare.
FCm recommends that the traveller, rather than the booker, do this, as they will know better if they can take the cheaper option. “That’s when a self-booking tool (SBT) comes into its own,” says Thomas. “Best fare on the day is, I think, one of the best ways to buy travel,” says Graeme Milne, head of sales UK at FCm.
STEP 5: Advance book. This can save even more money if you can educate travellers to organise their travel earlier. Hand in hand with this goes a brisk authorisation process, otherwise you will lose the deal and the travel will cost more.
According to statistics from CWT, for example, the reward for advance booking a flight by up to two weeks before departure, is savings of up to 25 per cent.
STEP 6: Travel policy. This will evolve through discussion and shouldn’t be set in stone over the first 12 months, while the customer profile is being understood. It will also allow you to respond to customer resistance before writing a firm policy.
Ideally, it should be mandated, but not within the first 12 months. As a minimum it should list booking procedure, who to book through, class of travel and any preferred suppliers. Your TMC will have policy templates. The content of the policy will be very dependent on what the drivers of the business are and this will also shape the SLA (service level agreements) with your travel management company.
STEP 7: Technology. Put any thoughts aside of implementing an SBT until the customer profile is recognised. The status quo should be kept until then. “Only if a client has regular trips on regular routes at regular times is an SBT suitable,” says Milne. “Otherwise, it’s difficult to get a return as there are costs involved that have to be weighed up against reduced cost of booking online.”
STEP 8: Travel bookers. Support them with training seminars, roadshows, open day surgeries, forums – whatever suits the culture of your company.
STEP 9: Account management. Expect a dedicated travel consultant to manage your account on a daily basis. They will issue invoices, refunds and make bookings. Expect quarterly review updates in addition.
Once a customer profile is established, a benchmarking exercise would be beneficial, during which your company can be compared with one of a similar size or one with similar travel patterns, volumes, or company objectives to see if you’re on track.
STEP 10: Year Two. “This can be challenging,” says Thomas, “as suppliers are looking for increased market share and may put pressure on you.” If you don’t make the agreed volumes in year one, the deal could be in danger, though it’s unusual for it to fail in the first 12 months as a rule.
STEP 11: Paying your travel management company. Opt for transaction fees – rather than a manangement fee – so you can see just what you’re paying for.
