Never before has price been so important in incentive decision-making, according to a panel of industry leaders at the Society of Incentive and Travel Executives' annual meeting, held in Reykjavik, Iceland, in December. “Relationships are no longer enough of a reason for companies to continue to do business with the same supplier,” said Brenda Anderson, SITE's executive director. “It's all about the best bid.”
Panelist Bill Vastine, SITE president and co-owner and executive vice president of Galactic Marketing, Arlington, Texas, said the industry has become so commoditized that even his exclusive clients are getting four to five proposals from his competitors. Loyalty isn't as important as it once was, said Vastine. “Some companies are buying incentives like cans of corn. They are commoditizing everything. To them, a trip is a trip is a trip. They are looking at price and nothing else — not even the quality of the incentive company or the program.”
High-end, higher-priced incentives are the most vulnerable, the panelists agreed, because companies are finding it hard to justify the more luxurious elements of the programs. Creativity and customization are things that most can no longer afford.
What can incentive planners do? For one, develop working relationships with procurement personnel. Trying to maneuver around a company's procurement department is not in your best interest because it could cut you out of the bidding process. Panelists also suggested that incentive firms develop systems to efficiently and quickly create bids. SITE is developing programs to educate its members about creating such systems and dealing with procurement departments.
“The issue of buying incentive travel like a commodity will swing from one extreme to the other, then it will settle somewhere in the middle. Right now we are at the extreme of cost, cost, cost,” Anderson believes. “The best thing to do is buckle up, educate procurement departments, and find some best practice that will stand the test of time. Most of all, don't resist this issue. Anticipate it.”