Anyone who has been in the meetings management business for any length of time has a cadre of service suppliers they prefer—vendors who understand what they want and offer them a fair price for their business.
Relationships drive the process, and cost savings and worry-free service are byproducts for buyers. Providers often enjoy a smoother road to more business, because they often don’t have to climb the courting, bidding and presentation ladder to snare event contracts.
In a large organization, however, many individuals may be doing business with their own “preferreds,” adding up to a big unknown and no leverage spend.
Now, with meetings management being shared among meetings experts, travel managers, and procurement and accounting departments, formalized preferred vendor programs for meetings are gaining acceptance.
In the same way procurement and travel managers have operated them for the purchase of equipment, transient travel services and other needs, preferred vendor programs for meetings are shifting disorganized and decentralized service buys into vetted formal partnership agreements.
Behind these programs are exhaustive assessments of vendor services, capabilities, core values, and the ability to offer value-added features that set them apart from competitors.
Corporations and other organizations seek meetings services partners who will reward them with cost savings in exchange for channeling business their way. They also look for vendors that understand their culture and meet their standards for service delivery.
Commitment terms often include a specific time frame in which the partnership will function. Some reward valued vendors on a regular basis with recognition awards, as well as business, to grease the relationship wheels.
Meetings veterans who function under preferred vendor agreements say there are few drawbacks to the programs, as these partnerships are a major component in today’s world of strategic meetings management.
Preferred vendor programs also offer a career advantage to savvy planners. Those who get behind such programs, or even provide a catalyst for their creation, often elevate their own value within the organization they serve. While these movers and shakers work to organize and promote the vendor program—and the best interests of their employer or client—they watch their own stars rise.
Win-Wins
“There are many pros to a preferred vendor program,” says Daphne Meyers, CMM, managing partner of Red Barn Group, a meetings consultancy based in Durbin, N.D. “Yes, it’s the cost savings and buying power organizations get from consolidating spend, but the more subtle advantages become the real value. Someone understands you and your company, your events, and how you, the individual planner, work. It’s the relationships that vendor programs set up. I can look at a vendor and they know what I need. Everyone is headed in the same direction.”
Michele Snock, CMM, global manager for meetings solutions with San Jose, Calif.-based Cisco Systems, agrees. She believes getting the best value for meetings spend requires a preferred vendor program.
“If you are trying to maximize the value for your meetings, there is really no way to do it without preferred suppliers,” Snock says.
Cisco’s program has been evolving for a couple of years, she notes, and it is expected to gradually take on a global reach. Contracts with several categories of vendors still being identified will create a high-level relationship, with “umbrella” provisions that cover multiple events. Contract provisions require the vendor to have a specific level of liability insurance, for example, and provide price breaks on an expected volume of business.
A Cisco agreement with a DMC company may require that a vendor not set up certain kinds of employee activities—the kind that might increase corporate liability exposure, for instance. No alcohol on sailing trips, for example. The idea is that the vendor will act as an agent with Cisco’s interests well in mind.
Claire Stroope, senior manager with Oracle Corporation’s global meeting services in Rockland, Calif., says there are many win-wins in her company’s global programs, which number about 8,000 meetings and events annually.
“Corporate compliance, formalized governances and relationship management are all part of the program,” Stroope says. “Our main objective is to make the program a good fit for both us and them. We are a demanding client, but we do drive market share to those who fulfill their commitments to us.”
Regular quarterly meetings with Oracle’s tier-one suppliers, such as airlines and hotels, are key to maintaining the relationships, she says. Other vendors, like site selection companies and meetings logistics people, meet with Oracle associates regularly, if less often.
Preferred vendor programs are not just a corporate domain, says Lise Puckorius, senior vice president for convention and trade show services with Smith Bucklin, a major Chicago-based association management company. Best-management practices require associations to justify their meetings spend, Puckorius says, and that encourages preferred vendor programs.
“Long-term relationships with vendors become a vital part of the meetings process,” she maintains. “They know your history, and become a vital part of your team, seeing things you might miss. When an association moves from city to city, it is often helpful to have the same vendor—say, an AV or production company—for events.”
For client associations that do not have their own programs, Smith Bucklin maintains preferred contracts with hotels and others for their benefit.
Supplier Side
From the viewpoint of Frank McVeigh, president and CEO of Amityville, N.Y.-based meeting and incentive management company McVeigh Associates, agreements his company has with several major pharmaceutical companies streamline business and enable his people to concentrate on being creative.
“One of the great things about these partnerships is that you don’t have to negotiate every time you are doing a project,” McVeigh says. “The homework has been done. You are qualified, large enough, and have the resources the client requires. For us—a midsize company of 80 employees—the preferred vendor process levels the playing field, so we can compete with larger companies and not waste our time competing and bidding.”
Though front-end vetting concerning items such as financial status and client references was a long process for Destination Nashville to become a preferred DMC vendor at Nashville, Tenn.’s, 2,800-room Gaylord Opryland Resort, the rewards have been substantial.
Carol Norfleet, CMP, DMCP, vice president of Destination Nashville, says her company has tripled its revenues since signing the agreement in 2004, and the volume of new business from Gaylord required a large staff increase to handle the volume.
“The rewards of such a program certainly causes you to want to keep the client happy and be the best you can be,” she says.
Lisa Palmeri, vice president, strategic initiatives and planning for Caledonia, Wis.-based Meetings & Incentives, also sees value in preferred vendor agreements. There’s not only standardized pricing to be enjoyed in well-crafted contracts, she says, but also time and money savings for clients who don’t have to worry about their programs being compliant with SOX (the Sarbanes-Oxley Act) and their own organizational guidelines.
“Say a corporation goes to Rome 10 times a year with the same program,” Palmeri says. “Unless they have a multiyear agreement with vendors, they must exercise a lot of due diligence. Vendor agreements, on the other hand, may lock in rates for all meetings in three- to five-year master agreements. Obviously, this saves a lot of time and money.”
Some Caveats
Palmeri is among industry practitioners who warn that difficulties can be inherent in vendor programs that aren’t executed with concentration and deliberation.
“If you don’t set pricing in the master agreement for a preferred vendor, then the supplier can become complacent and costs could escalate,” she says. “In the best agreements, there is a standard pricing component [for a set term] the vendor will provide in the way of set fees, discounts, concessions, or something else for your organization. In today’s sellers’ market, hotels are often not willing to give hard and fast pricing unless you are willing to move market share to them. The best time to negotiate vendor agreements is during a buyers’ market. In a sellers’ market, make them for a shorter term; longer in a buyer’s market.”
Vendor agreements can sometimes encourage complacency on the part of a vendor who gets too comfortable in their status, however, especially if the organization selects only one vendor in a service category.
“There is danger in becoming too familiar,” Meyers says. “The vendor with a contract doesn’t have that ‘I gotta be hungry for this business’ [attitude], so service may slide. The best vendor programs operate with key metrics and evaluation programs.”
Getting the vendor program up and running can be a complicated and painful process, say many who live with them. Some relationships may have to go away as preferreds are put into place, and for this reason, it may be difficult to get buy-in from all of the stakeholders.
In companies like Cisco, for example, the corporate culture will not allow for mandates. Service-users within the company can deviate from the supplier program as they exercise their own powers of decision-making, according to Snock.
“Some companies are heavily centralized, others are free-for-all. Cisco is somewhere in the middle,” Snock says. “We are what’s called ‘center led,’ and that means we don’t mandate, but instead try to influence and lead people. In this kind of environment, if you are getting 60 percent buy-in, you are doing really well.”
In a more centralized environment, installing preferreds for service categories that require creative expertise can be tricky.
“If you’ve limited yourself to one or two vendors, you may be limiting the possibilities for good partners,” Norfleet says.
Planner Advantage
Even with the caveats, preferred vendor programs are gaining acceptance because of the business-to-business advantages they offer, and a planner with upwardly mobile career aspirations can focus on starting such a program for the organization he or she serves.
“Having preferred vendors is a key to strategic meetings management,” Snock says, “and a very good place to start for the individual who wants to leverage the spend of an organization’s meetings. Whether you have your own company, or work for someone else, you will contribute to the organization’s basic needs by mounting such a program, and be perceived as having more value yourself.”
