Business Travel iQ
If I want to cook fish for supper, I have the choice of going to the supermarket (low price, adequate quality, limited service) or a local fishmonger (pricey, superb quality and service). Both are distributors — intermediaries between the suppliers (fishermen, wholesalers) and the consumers — and both ostensiblyprice by the kilo. But the long queue outside the fishmonger demonstrates that customers are willing to pay its higher prices in exchange for its higher levels of quality and service.
Of course, TMCs will charge extra for special services but, according to TMCs and consultants, the focus in every RFP is always on transaction fee. Frustrated TMC bid writers tell us that RFPs are long and it take lots of time to provide the input required but despite this, corporates tend just to turn to the page on which the unit cost per transaction is quoted. And, they say, it is that number that will drive decision-making more than anything else.
This is fascinating because that fee is not for core knowledge or service but for an automated process. TMCs do have specialist knowledge and yet they're competing on the assembly line aspect of their business. Why do TMCs want to race to the bottom and lure business by offering ever lower fees for automated processes when there is so much knowledge within most of these companies? To earn an income on the basis of a transaction fee means that income will be directly related to the volume of transactions rather than the service levels which most who engage TMCs claim they want.
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And is it really only the transaction that the client wants? To go back to the fish analogy . . . I can purchase squid from either distributor but only the staff at the fishmonger will give me advice on how to cook it. A ticket can be booked through channels other than the TMC but the broader knowledge which comes into the decision-making is probably absent if business travel bookers go elsewhere. So why undersell the knowledge by making the fee for booking the headline price when fighting for business?
An old adage of the travel business is that travel management contracts are won on price but lost on service.
TMCs, please have the confidence to charge the premium price that good service should command. These buyers might be the same people who are happy to sidestep the supermarket and pay for the fishmonger's quality and service.