Firstly, I would like to point out that this is not a rant nor a verbal assassination attempt on TMC account management but rather a balanced viewpoint upon the validity of the current offering, along with a gentle suggestion that perhaps there is an opportunity to re-think the value proposition of this service provision.
Nowadays, the label given to the function of account management can vary from TMC to TMC – using the monikers of programme managers or business managers etc. However for the purposes of this piece, the generic term account management is used for purposes of uniformity. There are excellent examples of TMC account managers in the industry and I have had the pleasure of working with some of them. I do genuinely believe however that in today's marketplace there is an argument to review the relevance of this function, and for the TMCs to provide greater and more visible value through this role – value which their clients would be happy to pay for.
The evolution of TMC account management
Back in the day, before the advent of the attempted commoditisation of travel management, the role of TMC account manager was primarily focused upon external relationship management; conducted in an open and mostly relaxed working environment. The TMC account manager's role was to keep the client happy, with marginal focus upon the profitability of the account for the TMC. In general, a review meeting would include a discussion on operational and service matters, deal with any complaints along with a review of performance against negotiated supplier deals, followed or preceded by a rather nice long lunch.
As we all know, the business world has changed and the pace of life is increasingly brisker. Corporate procurement's involvement in the sourcing of travel management services led to a price war between the TMCs, which obviously had a negative effect on their margins and profitability. The flexible and less-risky (for the TMCs) open-book management fee financial agreements were mostly replaced by a closed-book transaction fee. Standardisation of financial pricing was demanded and transaction fees were expected to be fixed for the term of the contract which put the financial risk firmly on the side of the TMCs. It was corporate procurement's job to deliver savings to their business' bottom line; and so the new negotiated TMC deals were closed, fixed and financially challenging for the suppliers.
Are buyers' measuring TMC performance appropriately? ©Violka08/iStock
As a direct impact of these new financial agreements, the role of the TMC account manager changed with a greater internal focus on the profitability of each client for their organisation. In the new competitive landscape, transaction fees were slashed during the RFP process, and the emphasis of the account manager's role became to transform each client's account into profitability as quickly as possible.
Corporate procurement's commoditisation of this category meant that each pricing element of the TMC services were scrutinised and negotiated downwards, and unsurprisingly the TMCs could not achieve these expected cut-price transaction fee levels without reducing and fixing their scope of services. The result was that the TMCs offered a 'headline' base transaction fee, accompanied by a myriad of restrictive rules as to what was/was not included in that fee, affixed by reams of financial notes as an appendix to the contract.
In reality, corporate procurement did not care how many rules and restrictions the TMCs tried to put in place to cover their financial position, because the headline savings had been achieved in their business case and a contractually binding service 
level agreement was put in place to cover any under-performance issues. It therefore became the role of the TMC account manager to take a more combative role with their clients, to control the service level expectations versus the financial deal agreed, and prevent scope creep. It also became a specific personal objective/target within the account manager's role to sell in additional services, such as consultancy engagements, to increase the TMC's profitability margins. This is a completely justifiable position and has transformed the landscape of TMC account management.
Account management proposition
During a TMC RFP process, it is general practice for the TMCs to include a number of account management days within their financial proposal. For SMEs to mid-sized corporates the offer would be for a specified number of account management days per year (on average 10) by an account manager who has a portfolio of different clients to manage. Larger, multinational corporates could be offered up to full-time and 100% dedicated roles. Obviously this depends upon the size and geographic scope of the travel programme with the largest multinational programmes having a multi-level team of account managers allocated. In general there are three different types of account management: local, regional and global. A large multinational programme would normally incorporate all three and could be structured as follows.
Dedicated account management usually delivers the greatest value but obviously comes at a higher cost. It is more standard practice that a TMC account manager has a portfolio of clients. This can have the benefit of bringing a range of diverse experience to each client; however, on the flip-side, the amount of time and focus given to any one client is dependent upon the demands of the others. The less demanding clients therefore potentially lose out because their account manager is focusing more time and effort on other, more challenging and time-consuming clients in their portfolio.
The cost and value of TMC account management
In the case of local account management, a certain number of days (included in the transaction fees) are allocated to each client per year, with an additional daily fee charged for extra time consumed. On average this additional daily fee ranges from £800 to £1,000 per day.
However, seeing as the client does not receive a timesheet showing the amount of time expended by their account manager, how can the charging of additional days be justified? This then begs the further question: has anyone ever received a refund because an account manager has not spent the time which was allocated in the financial agreement?
As mentioned previously, there are some excellent TMC account managers out there, but the quality of service received is dependent upon the individual, so the standards can be hit and miss. A consistent proposition is necessary.
The TMCs provide standard key deliverables for the function of account management. From a recent TMC RFP which I was leading on behalf of a client, here are the specific key deliverables included in a TMC's response.
- Implementation
- Primary contact with TMC
- Review meetings
- Budgeting and financial reporting
- Management information reporting – savings, benchmarking, etc
- Negotiation with suppliers
- Savings suggestions – direct and indirect
- Satisfaction survey
In my opinion, these key deliverables are neither specific nor measurable and this leads to the nub of my point – how can the value of account management be measured?
For TMC account management to be a chargeable service, detailed key performance indicators (KPIs) along with specific delivery criteria and deadlines must be included in the proposition. Expecting corporate clients to measure the value of TMC account management by the number of days consumed is not fit for purpose in today's market conditions.
Menu pricing of each KPI could be offered and the client should be able to select which services they require. The cost and value of TMC account management then becomes justifiable, and the travel manager is able to measure the performance.
No charge should be able to be made for non-delivery of any KPI, but equally there could be a bonus for over-performance. I wholeheartedly support a measurable SLA (service level agreement) and firmly believe that the value of TMC account management should be measured by the same principle.
TMC account management should be accountable.