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Who
owns the customer?
Fortunately,
we don’t use that expression anymore and, in the
modern idiom, it’s a misconception. As demeaning
as it sounds, the concept of ‘customer ownership’
was originally introduced to identify where, in the
organisation’s value chain, the buck stopped. Customers
also were debating ‘ownership’ issues within
their own organisations and this was all part of accountability
and performance cycle. Straight forward? No, and it
was about to get a whole lot more complicated as businesses
in the b to b to c chain couldn’t agree as to who
principally owned the customer relationship.
Three converging factors impacted the TMC/Customer relationship
and the concept of ‘ownership’. Increased
competition within the supplier groups, the customers’
need to control costs, and disintermediation by suppliers,
the combination started to change how customers saw
themselves. Fuelled by a paradigm shift in technology
and data management, customers were provided with unparalleled
choice and price. As industries changed to meet the
demands of their customers and markets, so they in turn
applied the same standards to their suppliers. Low Cost
Airlines thrived in this climate and the LCA wave moved
swiftly into Europe and then to Australia. Now who owns
the customer?
The concept of ‘Customer Ownership’ now disappears
and customers, enabled through improved database management,
challenge the remuneration model for both supplier and
TMC. Although initially attributed to the US, this new
best practice soon spread through Multinationals into
local markets. A new chapter opened as customers proactively
drove the relationship process and demanded greater
transparency from supplier and TMC. The customer now
owns the customer.
Nearly 5 years have passed and often it’s hard
to determine how far we’ve gone until we actually
look back. Clearly, the corporate travel market in Australia
has changed significantly and matured with customers
experiencing greater levels of transparency than ever
before. The virtual elimination of commissions across
all market segments has resulted in a new compact between
TMC and customers. Transaction fees have broken down
former barriers of mistrust as the TMCs focuses on best
fares and value. ‘Ownership’ moves to ‘Relationship’
and professional customer management based on bespoke
value propositions individually tailored for customers’
now increases in importance. TMCs appreciate that reducing
customers travel spend does not necessarily translate
into reduced profitability and conversations are a lot
more relaxed. Advances in data management and interactive
technology empower Travel Managers and their TMC to
develop a value proposition which departs from the ‘modularised’
mould to a model which is more relevant to individual
customer needs. For large customers, adhering to policy;
reporting; providing data to suppliers; and reducing
overall cost can be the focus of the relationship. Alternatively,
for customers with smaller travel budgets identify cost
reduction and better utilisation of travel itineraries
as being more important.
For the TMC, technical excellence in travel, and all
the associated attributes are non negotiable but not
enough. In addition to being measured by this, their
ability to mange a very matrixed supply chain has increased
in importance to provide the customer with simpler inventories
and pricing schedules. Liquidity issues enticed suppliers
into new ‘direct’ strategies based around
their online reservation systems and processes. But,
as is being experienced in the US, organisations are
moving back to the TMC as the hidden cost of administering
direct relationships becomes apparent. These are complex
issues and can only be addressed through a relationship
forged on trust and integrity between customer and TMC.
Certainly the customer must choose wisely, but a TMC
freed from the need to stake and defend their claim
is more effective and valuable to the Corporate Traveller.
©Gordon
Young 2005. All rights reserved
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