"I could find that much cheaper…"
Show me one person who doesn't find that phrase irritating and I will show you a liar. It irritates all of us but none more so than travel managers and procurement professionals, I would imagine. In every business there is a self-appointed procurement specialist who insists that they could have found that new stationery supplier, caterer or travel supplier for a much better price, usually basking in blissful ignorance of the fact that your team has to manage a lot more than budgets alone.
After all, procurement professionals are problem solvers; if a department needs to reduce spend, time, noise or even all three then it's procurement that fixes things by finding the right supplier. It is procurement that must collate and manage the opinions of key stakeholders across the business and it is procurement that must find a fix-all solution whilst adhering to strict budgets.
Understandably, procurement departments are always looking to maximise their time and to streamline the process of finding a new supplier. Time being at a premium is something that gets mentioned frequently in pre-tender meetings.
So reverting to tried and tested practices like benchmarking seems logical when time is precious and teams are juggling multiple projects.
However, as always, there's a twist in the tale when it comes to procuring the services of a travel management company (TMC), as this is one instance in which using traditional benchmarking methods will rarely present you with accurate results on which you should base a decision. It could also waste a significant amount of time should it go wrong.
Don't benchmark on price
Benchmarking prospective TMCs should demonstrate supplier buying power, as well as the rates and fares that they have access to, essentially allowing you to try before you buy. Unfortunately, not all TMCs operate the same levels of transparency that others do. They often choose to hide behind the fact that prices and availability within the travel industry are constantly changing, quoting prices that will never be made available to buyers once that contract has been signed.
If a buyer is relying too heavily on benchmarking in terms of price then some TMCs will take advantage of this, knowing that all they have to do is provide a quote that's lower than the competitors', even if they have to make it up. They're under absolutely no obligation to provide that price in the future, remember.
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It can be too easy for TMCs to hide true fares, if you let them ©baona/iStock
These kinds of tactics lead procurement departments to feel like they've been led up the garden path only to find a pretty ugly garden once they're there. Fudging prices eventually leads to soured relationships and, when the time comes to another tender process, resulting in a lot of frustration and wasted time.
In order to avoid this, procurement departments would be better off to break away from more traditional approaches to benchmarking and instead look at alternative, more accurate ways to successfully rank TMCs in terms of their performance, rather than solely in terms of their prices.
Research customer case studies
Reading through customer case studies (which should be made easily available by any TMC worth its salt) is the best place to start if you're looking to get a comprehensive overview of the kinds of service that a TMC offers, whether that's in terms of the savings they can achieve or the behavioural change that they can drive.
Customer case studies can tell you so much more than a list of 'available' rates. They can tell you how much experience your prospective TMC has of working with clients from your industry sector or how they go about driving online adoption as well as the kinds of rates that they can achieve. It all depends on what your organisation's goals for the future are. Will a TMC with the lowest rates, but little else, help you to achieve them?
Find out where they source their content
Where suppliers source their content from makes a huge difference, particularly with the introduction of New Distribution Capability (NDC), as significant reductions in core travel spend can be made by buying through channels such as Booking.com and Laterooms.com, rather than buying through traditional global distribution systems (GDSs).
It's worth asking prospective TMCs to confirm which travel distribution channels are providing its content and, if you want them, to make sure that the big online travel discounters and low cost carriers are on the list. It will give you much more confidence in the kinds of rates that will be available later down the line should you decide to proceed with the contract.
Consider your organisation's approach to booking travel offline
Evaluating the offline fees offered up by prospective TMCs really depends on the current culture within your organisation and whether you're happy with it or whether you would like it to change.
To put it simply, you get what you pay for when it comes to offline assistance. Offline fees that appear to be significantly cheaper than industry averages would suggest that the prospective TMC in question either doesn't operate a 24/7 help service or that they outsource their offline service to somewhere outside of the UK - possibly both.
If your organisation currently has an above average online adoption rate and so rarely books travel offline then you might be willing to take the hit on service in favour of cheaper prices. However, if you often have to book more complicated trips and are looking to receive a great level of customer service from knowledgeable, experienced, engaged and skilled professionals when you do then it might be worth overlooking those suspiciously cheap fees.
If you absolutely must benchmark prices then do it yourself
This might feel like you're unnecessarily adding items to your to do list but you really will thank yourself in the future. In an ideal world all TMCs would be transparent with their rates but accessing prices directly is the only way to ensure that you're basing decisions on accurate information.
Insist that every potential TMC provides you with a login to their online booking tool and conduct the price benchmark using your own staff in your own time. It's the only way to really level the playing field.