Why TMCs Need a Dramatically Different Sales Approach

An uphill struggleEver notice how Travel Management Companies (TMCs) have a hard time selling their value?

It’s not a complicated value proposition.  “We’ll help you book travel at low prices and help your travelers on the road, so you’ll save money and sleep better.”

That’s a pretty easy benefit statement to grasp, right?  So that’s not really the problem.

Two Big Problems

TMCs compete on the wrong metric, and they sell to the wrong people.

First, the metric they compete on is price, namely the transaction fee.  Price may be the metric of choice for the procurement crowd, but it is the worst metric for those TMCs who add real value.

On to the second problem.  TMCs sell to travel managers and procurement managers.  Is it traditional? Safe? Expected? Sure, but still wrong – in this way:

Travel managers are very important stakeholders, and they need to have a clear understanding of how one TMC differs from another.  Same goes for the procurement managers – these folks are charged with negotiating contracts that deliver real value to their organization.

And yes, it’s hard to imagine how a TMC could win much business by ignoring either of these VIP stakeholders. So it’s not about ignoring or minimizing these key parties.

Find the VVIPs

Instead, it’s all about selling to the VVIP stakeholders – the men and women who manage big travel budgets – the folks who are fully accountable for making the tough decisions about whether or not to trade down to a harsher travel policy, knowing they’ll lose good people by doing so.

These are the people TMCs need to sell to – the guys and gals who own the travel budgets.  It’s their necks on the line for making good decisions about sending Sally to Sydney in Coach or in Business.  They wrestle with the tradeoffs of higher airfares and hotel bills in return for more loyal road warriors.

Which brings us back to the first problem.  Instead of price, TMCs must sell the value of their expertise.  But not in the current/classic/me-too way that passes today’s RFP 101 test.

Sell the Bigger Picture

Instead, TMCs must sell their ability to deliver broader business value.  Value that goes way beyond that measured by traditional travel metrics.

TMCs must learn to sell the kind of business value that P&L owners care about.  Hint – it’s not about your best in class online adoption rate.

TMC execs, you gotta think and then sell in terms of travel impact on metrics that P&L owners care about.  Of course they worry about their travel budgets.  So showing how to conserve them is necessary – but it’s not sufficient.

Focus on the Total Cost of Travel

The other part of the equation is that of the impact of travel on road warriors.  All that wear and tear has a cost – a real, quantifiable and significant cost.

So it’s simple – TMCs need to show travel budget owners how good their TMC is at helping them to minimize the total cost of travel.  Not just the supplier costs, but also the real, quantifiable and significant costs of traveler wear and tear.

Getting a company to minimize the combination of these two costs is true travel program optimization.  Any other claim about “We’ll optimize your travel program!” is typical TMC marketing hooey.

The Better Approach

Let’s make this easy.  If you’re a TMC sales exec, and you have a prospective account in mind, find out who manages the biggest number of their road warriors.  Say it’s Joe, their EVP of Sales. Here we go:

You get into Joe’s business.  “So, Joe, which of these issues regarding your road warriors are you having any trouble:  Retention?  Recruiting? Productivity? Health? Safety?”

The beauty is there is no dead-end answer.  If Joe calls out one of these issues, off you go down the trail of explaining the options for improving that part of the traveler’s experience.

If Joe says “Nope, we’re good on all that”, then you’ve got license to ask about old-school ways of controlling travel costs, and hopefully bring up a few new-school ways to keep things fresh.

The point is you, the TMC sales exec, get to – need to –  have a much more relevant discussion about how travel is impacting the guy’s business.

This is a much better way of framing the value of a TMC. You’ll be talking to, and quietly selling, to the real decision makers, and I’ll bet dollars to donuts that they never ask about your price….at least not in that initial conversation.

If you like this way of thinking,  see this deck on the Total Cost of Travel Pradigm. It’s a condensed version of the 90-minute presentation I’m giving around the country.  It’s aimed mainly at travel managers who want to advance their careers by adding a strategic dimension to their job…but all you bright TMC sales and account management folks will make quick sense of it.

I welcome invitations to speak and train on this topic.  Meanwhile, I’ll be writing more about this new paradigm in the future.  For related articles, see “A Brighter Way to Measure Travel’s Impact” and “Why Data Predicting Trumps Data Reporting“.

Want articles like these delivered to you by e-mail?  Sign up here.  It’s free, and you can unsubscribe at any time.

This entry was posted in Travel Management, Travel Procurement, Traveler Friction and tagged , , , . Bookmark the permalink.

7 Responses to Why TMCs Need a Dramatically Different Sales Approach

  1. Great article Scott. I think you’re spot on. I wrote an article recently about dynamic travel policies, which are much more flexible than the controls typically implemented in companies today. It’s about really understanding the organisation you work with and building a solution and travel policy that tackles the issues they’re facing. By creating a business travel solution that delivers a great traveller experience, you can have a positive impact on the organisation’s employees whilst controlling and reducing costs at the same time.

  2. Cathy Katynski says:

    This completely makes sense and I agree that the TMC needs to prove their total value to Corporations, beyond the transaction fee in very tangible ways. Having been on both the supplier and buyer sides, and now a Buyer in Procurement, I can see how it is difficult to get to Salary Budget Manager stakeholders. It is time to break the old paradigm if TMCs really want to differentiate. They must have substance behind exactly how they will bring value to the overall travel spend.

  3. Michael says:

    Nice talk but you miss one big part of the game. The TMC to day can not help you with the total travel cost or help you to identify the spend per Business Unit inside the company. Building up full reporting visibility and full value to the company is the big challenge today, so the TMC has to focus on total different areas in order to bring the new value to the company. Which by the way is not so new already, mega companies have already started with this approach.

  4. I agree with everything you are saying. That said, it’s hard to talk to who you want to talk to some times so knowing the persona of who you have to get through can help get to the next step. There is an even bigger impact and that is to train non travel managers on what to look for in a TMC and how they deliver value. At a presentation this past week some of the items we were asked about were ticket delivery and travel insurance. Surely they must have used an rfp sample from the eighties because they asked about these items yet already had concur expense and didn’t ask much about adding concur travel. What we do is very strategic yet many times the focus of our conversations are very transactional.

  5. Absolutely spot on Scott. Procurement have a lot to answer for and so do the TMC sales people. The key driver should be ‘value’ – and has always been my clear focus when working with clients on the TMC bids. Too often procurement focuses on price and savings because they earn their bonus that way. And the TMC transaction fees are an easy target. That sort of focus drives the wrong behaviour. There are three key elements for evaluation – the three C’s as I call them – Capability (can the prospective supplier deliver the client’s objectives and requirements); Cultural fit (can the client’s stakeholders live with the people and the way they operate for 5 or more years); Cost (can we afford it). Delivering ‘value’ should be the primary driver for the client and the equation is simple – Value = Benefit minus Cost. It is well to remember these realities – ‘buy cheap spend twice’ and ‘only the rich can afford to buy cheap’.

  6. Bill La Peer says:

    I think this article in on target. TMC’s provide a value to organizations and as a result should be able to agree to a fee structure that is fair to both parties. This is challenging to accomplish when you are selling to the wrong person and have not created a value proposition that is meaningful to the buyer. In this scenario they are forced to compete only on price – this is a no win situation for either partner in the long run.

    Buying behaviors have changed in the B2B space over the past several years, and TMC’s need to be able to change their sales approach to compete in this new environment. If TMC’s REALLY understand their prospects they can create a value proposition tied to the total cost of travel vs. tied to TMC fees. In this scenario TMC’s earn a fair fee and organizations get the value they expect from the partnership.

  7. Pingback: Top 5 Posts in 2015; What should I write about in 2016? | Gillespie's Guide to Travel+Procurement

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s