SAVE the pennies

SMES needn't play second fiddle to multinationals when it comes to supplier negotiations, writes Gillian Upton

It’s ironic how a global financial meltdown can change the course of a company’s sales strategy but that’s exactly what happened after the Stock Market crash in 2008.

TMCS previously ignoring the rich seam of SME business turned their attention to these entrepreneurs with potentially growing businesses. It means that for the last decade or so small and medium-sized companies have been taken far more seriously by the wider TMC community.

The penny has dropped for some that SMES may be small but gathered in large numbers are a far less risky strategy than relying totally on a smaller number of larger clients. “They had holes to fill in revenues,” suggests Gary Mcleod, MD of Traveleads.

The opportunity is huge as The Federation of Small Businesses says that SMES account for 99.9% of all private sector companies in the UK, and over 5.7 million companies fall into the SME definition.

Those SMES employing between 10 and 250 staff make up a group of 250,000 companies, compared with approximately 7,500 in the private sector's large employer category, employing over 250 staff.

Once an SME of 10-15 staff grows to 30-50 staff, a lot of travel and meetings begin as they seek to expand and open offices further afield. Annual travel spend of between £100,000 and £500,000 is the benchmark for SMES but very often that can quickly rise to £5million.

Scott Davies, CEO of the Institute of Travel Management, highlights other attractions of the SME market: “The business is generally less volatile [than larger corporates] so there's lower risk and higher margin, since the buying power of multinational companies drive fees downwards.

“In addition, SMES usually have simpler requirements and so can be serviced via off the shelf propositions,” he adds.

A product embracing an online booking tool has been the core provision for SMES from the larger TMCS, with just telephone account management, which is fine if travel is largely point-to-point. However, American Express GBT has an offering called Business Travel Made Simple (BTMS) which offers online and offline servicing, based on a per transaction cost model and designed for quick deployment. It offers discounts with suppliers, streamlined booking, robust reporting and 24/7 support, plus personalised service before, during and post-trip.

“SMES naturally gravitate towards small and mid-size TMCS,“believes Adrian Parkes, of the Business Travel Association, many of which are part of global buying groups such as Advantage and Uniglobe and can pass on deals and perks.

“We use leisure fares and IT fares too,” says Kevin Harrison, Managing Director of Good Travel Management, who thinks that SMES can buy as well as the big boys.

facing up to the challenges

TMCS can aggregate spend and arrange cluster deals with airlines and hotels and offer best value solutions.

However, it’s not all plain sailing as Raj Sachdave of Black Box warns that some suppliers will not accept aggregation as they want to know client names rather than receive consolidated volume made of

We are keen to work directly with SMES, but the challenge is that it is a very fragmented sector and many SMES book in the same way as leisure customers, such as through OTAS”

anonymous multiple SME spend. Traveleads is typical of the TMC approach, spending time in the discovery and educational process with clients as many of them have no travel policy, approvals process or have considered data needs.

“Often it’s a case of spending time showing them how sophisticated a programme we can create for them, which is often an eye opener if they’ve been used to the experience of ‘give us your credit card and go away’ online booking,” says Mcleod of Traveleads, one of the smaller TMCS which has long focussed on this market.

The availability of technology has helped level the playing field as SMES can benefit from mobile solutions and data analysis software for very little outlay.

Suppliers raise their game Simiiarly, suppliers are waking up to the SME opportunity. “Suppliers certainly recognise the critical mass which the SME market generates in terms of travellers and combined spend,” says Mcleod. And ITM’S Davies adds: “Suppliers need a lot of SMES to match or replace revenue generated by large corporates. For this reason, the sales support tends to be virtual or delivered online through web portals.”

Accor Hotels, for example, has a team looking after SMES and has developed products and services for them, most recently Business Offer which offers a discount off BAR (see panel for details). Its Leclub Member Offer (for those booking leisure travel) includes perks.

“We are keen to work directly with SMES, but the challenge is that it is a very fragmented sector, and many SMES book in the same way as leisure customers, such as through OTAS, perhaps unaware of the advantages of corporate accounts and booking direct,” says Jonathan Pettifer, Director of Corporate Sales and TMC partners, Accor UK & Ireland.

TMCS can offer consortia rates from independent hotels says Mark Bevan,

Head of Strategic Partnerships at Business Travel Direct, where SMES are a core part of the client portfolio.

“Consortia rates from independent hotels discount the rate by 5%-15% and more like 10%-15% regionally, both on transient and day delegate business,” he says. Forwardthinking suppliers are targetting SMES, says Bevan, citing Best Western as an example.

Perks aside, SMES need help managing the travel spend. “Collecting Nectar points from a train company might not be meaningful but a hotel billback facility that gives you 14 days credit to help cashflow is much more valuable,” says Black Box’s Sachdave. “A TMC will give an SME resource and cashflow so that’s the real saving.”

The spending power of smaller corporates should never be underestimated, which is why we offer our loyalty progamme Onbusiness, so they can benefit from free flights”

Airlines move in

On the airline front, despite it being a more challenging spend category, SMES can benefit from nett fares and discounted fares. “We use rate analysing tools from time of booking to time of departure and the same flight can be reduced by 20-30%, particularly on long-haul,” says Bevan.

Airline loyalty schemes can be of benefit too, providing discounts, extra points or value-added items. Fortunately, they have moved away from perks and towards more tangible benefits such as discounted rates and flights in response to buyer feedback.

“Most airlines offer fares targeted towards SMES,” says Brett Gerrett, General Manager, Isleworth Travel Management. “British Airways offers discounted and increased flexibility on Business Bespoke fares