The list of things rendered obsolete by the digital age, from memorising a telephone number to using cassette tapes to create mixtapes, grows longer every year. Yet here we are in 2019 with one thing that can't seem to kill off fast enough - the TMC RFP. The process that we variously call RFP, RFQ or RFI was developed in the late 18th century to create a cost-effective methodology for businesses to acquire manufacturing components; very clever and useful. Enhanced by certain steps and criteria, it has served its purpose quite a long time.
Today, when applied to complex goods and services like TMCs, it drives a process of buying and selling that is fundamentally flawed. In an age of constant iteration, co-creation, change and technological progress it feels wildly inefficient for both the buyer and the supplier side. The RFP process consumes valuable resources and generates significant frustration.
We have somewhat paved the way to commoditise a category down to the point where sometimes the only way to win a contract is to be the lowest cost provider. As a result, buyers who pick suppliers like this very often get what they have asked for: low cost operations, cheap work, no aligned goals, no cultural fit. Not a partner, a vendor or supplier.
At the same time, I truly believe that as an industry we are holding back from innovation, new ideas, new models and new solutions. Our current RFP set-up supports template-based, fill-in-the-blank and off-the-shelf recommendations and solutions; they are not inspiring us to think in new directions or even give new entrants a chance or room to grow and the establish their business.
While it was created to enable a fair environment and to foster innovation, it is now at a stage where we lose ourselves in unnecessary bureaucracy, hour-long sales pitches or even process steps that don't make sense anymore. The greatest issue, however, is that it prevents the analysis of the problems to be solved that is required for wise buying and selling. We are concentrating more on the process and as buyers forget the core. Is this supplier sharing the vision? Is it a match to corporate culture and are they able to grow with the company? What do you expect from a partner; does their offering fit your needs, what else is in store and above the pure core of issuing a ticket? As a supplier are you able to deliver and cover the buyer's expectations? Is there a cultural and strategic fit of the two companies or is a clash predictable? Do you want to work with this buyer or is it just another name on the strategic client list?
Do we still need to document things and be auditable during a sourcing process? Create a fair and unbiased environment for all participants and allow suppliers to show us their best? Absolutely yes. But when I think about the many overselling, marketing driven 86-pages long PowerPoint presentations or ring-around-the-rosy conversations that characterise the standard RFP process, I literally want to cry. Ideally, both sides don't want to waste time on proposals that will never go anywhere. Likewise, no one wants to read and devote resources to sifting through cookie-cutter submissions.
Instead, time and talent can be invested where it matters: in identifying breakthrough experiences and solutions that are good for everyone and that make an impact to the travellers, the corporate and to the supplier. And isn't this the only metric that really matters in the end?
Here are a couple things I was lucky enough to explore with some of the most forward-thinking corporates during the past year that have created bespoke ideas and set-ups, overall faster sourcing cycles and new solutions.
Step one: Starting with the man in the mirror
Buyers
- What do you really want and need? What is your strategy, your vision, your dream? What does it take to get there and what are you expecting from a partner to support your journey? If you don't know this, don't go to RFP.
- Do you have an existing partner and there is only one thing that is not working out? Think about your relationship. Maybe the only thing going wrong is easily resolved and if not fundamental, work on this rather than launching a huge RFP exercise. Experience has shown that a relationship audit has led to fantastic renewals once everyone was clear on what to give and what to take.
- Do your homework. Invest in conversations with suppliers, ask some colleagues, do research who is doing work you admire and talk to your travellers. Come up with a short list of two or three partners you believe would be a good match then add a challenger. Call them or email them; ask questions about how they work, be explicit on your very own challenges, the stuff that keeps you awake at night and explain your vision. Is there a cultural fit and a match? See it as speed dating.
Suppliers:
- Perform a cost/benefit analysis of participating in any RFP plus be honest: can you deliver on the expectations? Do you want to have this client in your portfolio because of the name or can you really deliver value?
- There's probably pressure to participate from your own business and maybe even from your customer. However, if you are clear, upfront and honest about why you don't think it is a fit, everyone will understand.
- If you are an incumbent in an upcoming RFP or bid situation, be ready to analyse your current relationship. What goes well? What does not? Is there one thing you could change and that would bring the relationship forward? Do you know the strategy of your client or what has changed in their mind since you first signed a contract?
Step two: Back to basics
Buyers:
- Don't waste your time with outdated questions. Concentrate on what really matters to you in the categories of culture, capabilities and commercials as this is what will drive results and a future partnership. Do you want to ask questions? Of course, do it! But don't issue documents with hundreds of unnecessary questions that won´t drive results and bring you further.
- There are better ways to find out if a partner is the right fit: think about new ways and set up workshops to get to know your suppliers. Create scenario-based exercises and you will very soon find out who is a fit. Ask your suppliers what keeps them up at night and which macro trends in the business travel industry they see that are forcing them to evolve; what does this mean to you?
- Prepare well. The more you standardise and simplify the better for you and also the supplier. Of course, there will be comparisons and evaluations, but issuing simple, ideally one-page business canvas style documents will help you speed up the process.
Suppliers:
- Repurpose your selling process and listen to what your customer wants. Every buyer wants to make the best possible decision for their company, so support them solving problems, show your value beyond commercials and create a tailor-made solution. Even if this means you have to skip traditional models and your approach to sales pitches. If a client does not want to see a presentation, please don't do one.
- Stand out from the others. What makes you different? Don't come with marketing answers. Go into the process fully aware of its limitations but be equally open to create new ways and solutions.
Step three: It´s a match
Buyers:
- Again, do your homework. Create a simple evaluation matrix, standard rate cards (if at all) and be ready to translate the results into a clear and simple business case. Match the benefits to your strategy and you will have all the support you need.
- Skip the old "offer, best offer, best and final offer" and all the negotiation rounds. If you concentrate on commercials only, you will not find a partner that is a fit. Think about what you'll really save if you implement the wrong partner that does not share your values or beliefs or is not able to deliver the innovation you are looking for.
- Be transparent with your supplier and potential partner for the future: what is your expected pricing level and what do you expect as a service? If everything is clear from the beginning, you don't need four rounds of negotiations.
Suppliers:
- Flexibility is critical. Rigid, prescriptive and heavily scripted sales processes might work in some high-volume transactional environments but they have a negative impact on performance in complex, creative and innovative approaches.
- Be prepared: your sales people will inevitably encounter new approaches and will have to cope with an increasingly well-informed customer community who is requesting more than standard answers. And maybe some don't even want sales people in meetings.
- Base your sales process not only around your average customer's typical need. Look at the full buying journey. This simple change in mind-set will generate a stream of positive consequences that will enable you to dramatically improve the effectiveness of your sales process
- Give it all you've got and skip the price game. If you have something good to offer, say it. If you want to offer something better, do it.
Is it harder to run an RFP in a different way? Yes and no. It still takes time and effort but it's time well spent and effort worthwhile. And it still takes a corporate who is willing to start with the very own needs and the own strategy first to then finally be able to find a partner who can help achieve all the goals.
Working without a classic RFP is still uncharted territory and some corporates and TMCs are uncomfortable with co-inventing new rules. But it also opens the door to deeper, more dynamic partnerships between all parties. Delivering the best work or solution has come from forging and creating relationships with management, account managers and front-line talent, not just sales teams. Let's rethink the traditional way, expand our skillsets and test entrenched mindsets.
Ideally, I want buyers to label every issued RFP with a sign that says, "we are looking only for creative and innovative partners, who know who they are and what they have in store, no sales proposals, please" and encourage them to think alongside culture, capabilities and commercials and how they can start to re-wire the RFP.
Suppliers, equally, do your homework and support those approaches by not falling back to your standard sales approaches. Listen to your clients, challenge them on what they really want and be prepared to walk away. Know what you can offer or what you can't. Know who you are. Simple, but not easy.
Having seen this new approach work for completely different buyers, from small to medium-size businesses/multinationals up to large global players, across all industries, I really want everyone to think about how we can change those old processes and habits. It takes change on both sides.
- Yvonne is hosting a Business Travel Show session on finding new opportunities to make the most of your policy with Ben Park, PAREXEL. Find out more