The stormy economy is throwing meeting management into chaos. If you're not canceling a meeting, you're probably planning one with next to no lead time. While your sales force struggles to meet its goals, you're still charged with delivering incentive conferences as impressive as previous trips. Of course, no one's handing you a bigger budget to make that happen. In fact, you've probably got less to work with, since you're handing over a bigger chunk of your budget to the airlines. It's tough out there.
But when the going gets tough, Mark Mosley gets going. As division manager for Allstate in Irving, Texas, Mosley manages two major incentive conferences and up to 80 business meetings annually. When he gets news like “You can't have a budget of $57,000 for those 12 meetings; you have to deliver them for $35,000,” he gathers his team and starts thinking. That means questioning everything and remaining open to big ideas. Here are seven of his.
- Rethink, Reuse
Mosley's big idea for bringing in those 12 meetings 37 percent under budget? His staff would stay home.
The meetings were to be held across the region, with local managers having candid discussions with agents. Ordinarily, Mosley or a member of his staff would be on site. Then it hit him: The meetings were important, but their primary goal was to get people talking together, not to reward or impress them. So Mosley determined that he would appoint an Allstate leader at each site, send along what he came to call “the meeting in a box,” hold their hands throughout the process, but keep his staff in Irving working on other meetings.
All the meeting materials — from backup copies of presentations on flash drives to tent cards with presenters' names — went into a box that was shipped out to the on-site leader. “Then we would have a conference call where we would cover everything,” he explains, including the finer points of meeting costs. “We would say, ‘Here's your budget. This is for pitchers of water, not bottles. If somebody asks for an extension cord and that's not in the BEO, that's a cost. If somebody wants wireless, that's $500.’ We were able to educate them on what is needed to run a meeting and help them see what it costs to do a meeting.”
One meeting leader said 100 people would show up. Mosley pointed out that only 75 had shown up to a similar event. The on-site leader would not be swayed and ordered more food, resulting in spoilage. “It showed the value of our team, what we really do, and why it's so important to give an accurate head count.”
Operationally, they left nothing to chance. “During conference calls prior to the meeting we walked them through the presentations so they knew how the AV was supposed to work. Then they would know if it wasn't working right on the day of the meeting,” Mosley says. On meeting day, someone in Mosley's department called the on-site leader at 7 a.m. to ask if the setup was done as expected. They called again before lunch and again when the meeting adjourned. As Mosley describes it, “We had our fingerprints all over it even though we weren't there.”
Mosley says they probably will use that method of meeting management again. And now, with two years of history for the meetings, Mosley notes, “we can tighten our budget because we'll spend the right amount of money on F&B and in some cases might be able to use a smaller venue.”
That big cost-saving idea went along with a few smaller ideas, too. For example, Mosley reused binders, taking old information out and putting the new material in. In one nonhotel meeting location they even purchased plastic tablecloths rather than rent linen tablecloths, bringing that line item down from $1,800 to $75.
- Keep Leadership in the Loop
Here's a tip Mosley picked up at a recent Financial & Insurance Conference Planners educational session: Set up a process so that when a meeting budget item increases, it triggers an appointment with executives.
“We need to keep leadership in the loop because pricing is so chaotic now,” Mosley says. For example, more than a year ago, Mosley booked a program into San Francisco for June 2009. This was before the dramatic rise in the price of oil and the consequent airfare hikes and route shifting. When he booked, he had the option of flying his people into Oakland, San Jose, or San Francisco. Now, however, American has stopped its service into Oakland, reducing his choices and therefore his ability to find good fares. The last time he did an airfare study, flights into San Francisco were running at $50 more per ticket than what he had originally budgeted. So he called a meeting with company leaders to let them know. “They decided to wait and see where the fares will go, but now they've been alerted,” he says. “It brings them to the table and educates them on costs.” That way, when Mosley goes back and asks them what they want to eliminate (an activity? a room amenity?) to make up the budget shortfall, they won't be taken by surprise. “It used to be they only cared about the overall budget. But now there are so many variables. Practically the only thing set in stone is the room rate.”
Now Mosley can go to them with a question about spending on something like décor. “I'll tell them, ‘You loved this look last year, but this year it will cost more. Is that where you want to put your dollars?’ It takes the pressure away from us.”
The meetings with leadership will continue: “We'll have to do more air studies just to get a handle on prices,” Mosley says. “It becomes an education for all of us.”
- Go All-Inclusive
Last summer, for the first time, Mosley held an incentive program at an all-inclusive resort — Moon Palace Cancun. He's now a believer. “We had a good experience, he says. “All-inclusives will now be strong contenders for all future incentive site decisions.
“Not only were the rooms and the service five-star, but the food is also four- or five-star” — something he didn't originally expect. “We got outstanding feedback. From leadership's standpoint, they enjoyed everything but they were very pleased to know that our financial exposure on hotel expenditures was capped because we were at an all-inclusive. ”
- Find Perks Without a Price
“With the expense pressure out there, how do I still build the wow factor?” Mosley asks. “If attendees work 52 weeks to get to our conference, then for the few days they're here we have to make each of them feel like the No. 1 guest. Their arrival and departure must be flawless.”
So when the room rate is firm, Mosley pushes concessions that don't cost him — or the hotel — more to provide. For example: club-level access for his guests or airport transfers with hotel vans. “Hotels are competing for our business, so I keep pushing,” he says. “I keep asking, ‘What are you already doing that can reduce my expenses or increase my experience?’”
Mosley also looks at how far a resort is from the airport. “If we can find a location 10 minutes from the airport, our cost goes down because there's not as much fuel being used,” he says. And he suggests finding a resort with a compelling reception venue, allowing you to skip the elaborate décor and let the location speak for itself.
- Keep Negotiating
“I've been more aggressive with DMCs,” Mosley says, “especially with ground transportation costs. We interview three or four DMCs, ask for referrals, and keep working with the final two to try to drive down costs. In some cases I'll do that by leveraging hotel concessions. If the resort has a sedan, I might use that for VIP transfers [instead of the].”
Mosley says he's also spending more time with the airlines. “We've had to push a whole lot harder,” he says. “We have to keep asking questions: ‘Why can't I have these seats at this price at this time? Can we do it at a slightly different time or change our flight mixture to meet our expense challenge and your revenue challenge?’ There is just a lot more back-and-forth now.”
- Due Diligence and Do It Yourself
Every meeting planner knows there is no detail too small to worry about. And in this economic climate, Mosley is finding there is also no detail too small to question. How about that budget line item for luggage tags? Make them yourself and pay a few cents instead of $4.
The DIY luggage tags had a side benefit, too. In cases where the attendee and his or her guest or guests have different last names, bell staff have trouble with delivery to rooms. “So we created luggage tags with the qualifier's name only, and directed everyone in the qualifier's party to use those tags,” Mosley explains. “We eliminated a potential lost-luggage issue, and saved money.”
To build excitement for that mundane task among his team, Mosley created an internal competition. Everyone on the team submits a design for the tag, and the winner gets recognition and a gift card.
Mosley also is increasing his due diligence with room blocks, so as not to be hit withcharges. “We've always designed our incentive conferences expecting that 20 percent of our salespeople would qualify,” he says. “We've adjusted that down to 17 percent because of the business climate. That helps me be accurate when I'm blocking hotel space.”
- What's Next
Mosley's division is one of 14 Allstate field offices nationwide, each with a planning team.
The planners have a monthly conference call and are creating an online library of best practices. But working together even more may be the next big idea for Allstate's meeting management. Multi-meeting RFPs that give them more leverage with suppliers or back-to-back meetings that make executive travel more efficient and save on production and entertainment costs could be the way of the future. “We've explored those possibilities, but it has not worked out yet,” Mosley says. “I can see that as we continue to experience cost pressure, that might become a reality for us.”
Make It Work
If you're like most meeting planners, you enjoy networking with your peers and sharing ideas, whether in person at industry events or by phone or e-mail.
But if you haven't had time to check in lately, keep reading. We called a few financial and insurance meeting professionals, and here we share their experiences and their tips for making things work in a time of uncertainty.
On Airline Turmoil
Brett Barrowman: The air travel component weighs very heavily now in site selection. The airlines right now have more control over what planners do and how we think. We are planning some two years out, but we don't know what the lift will be, so we don't want to get too exotic. We also have corporate travel restrictions that allow us to put only a certain number of people on a single plane. If the number of flights to a certain destination gets reduced, and we have limits we need to adhere to, we then have some tough decisions to make. Do you send some attendees out the day before? That costs more. We have lost 1,100 daily seats in and out of Oklahoma City — where our headquarters are located. We've had one 400-person meeting in Oklahoma City forever, but because of the air situation we moved it for next year to a city with more lift. There are a number of downsides — for example, attendees will lose the interaction with people at the corporate office — but we were forced to make that decision.
It's really a dilemma. The challenge becomes, can we pick a destination that is less risky but that qualifiers want to go to? We just did a value survey and the destination and the property came out as the two most important elements of an incentive program. But when you're looking at destinations with a lot of lift, it's not going to be islands where you'd really be hamstrung. We're now looking at Canada and Mexico, and in the U.S., places where the airports are larger and you have more lift and more options if flights get canceled or dropped.
It's a challenge, but a fun challenge. We get to be more creative, really think through things, and maybe break out of the mold. For example, for incentive meetings, our pattern is always the same: Arrivals and welcome reception on Sunday followed by a business session Monday morning. Well, we might have flights canceled and some people will miss the business session. So maybe we need to move that session to Tuesday morning to be sure that everyone can get there. With some smaller programs, we are overnighting people in a hub city in case flights from their secondary cities are canceled.
Leanne Acton: Primary attendees of our conferences have the option to book their flights with Maritz Travel or get a check from us and book flights on their own. If, for example, the attendee were flying New York to San Francisco, the amount of the check would be the average fare for that route. We know that Maritz can do better than the average fare as long as flights are booked well enough in advance, so it saves me money if the attendee books through Maritz. So we have put some incentives in place. For the primary attendee, we will pay up to $25 for premium seating if they book through Maritz. If they call by a certain date, we will take $25 off each guest ticket. By our calculations, we get discounted airfare, they get better seating options, and we spread out the call volume to our travel consultants. This also allows me to better manage arrival and departure transfers and lets me capture accurate information that I use for many things, such as name badges.
Tawny Herron: One thing we've done to help with rising airfares is to use our company's online travel registration system. Any corporate travel agency should be able to set this up for you. They take their online booking technology, such as GetThere, and customize it with your logo. If we can get people to book online, transaction fees are very low — closer to $5 instead of $45 and up. We pitch it to attendees as a way for them to be in control of their booking. I get the back-end reports so I know the arrival and departure schedules and who hasn't booked yet. The system works with our online housing registration, so attendees get reminder e-mails if they haven't booked.
Paul Eder: At this point the primary concern with air travel is the big increase in airfares. We will try to pick destinations where there is good competitive service. South Florida, for example, is a good competitive market because you can fly into West Palm Beach, Fort Lauderdale, or Miami. And wherever Southwest flies tends to hold airfares down on all carriers. So even though we might not use Southwest, we would look at destinations it serves. If one destination is less expensive to get into, it gives that destination an edge.
Sandy Monkemeyer: We do a lot of meetings in the Caribbean, a lot of places with flights on only one carrier. Now we are holding off on some destinations where getting there used to be difficult but now is virtually impossible.
Tawny Herron: We are all cutting back on our budgets while being asked to pre-sent the same or even better quality and experiences. For our 300-person annual sales conference, food is a real centerpiece. This meeting is meant to be a reward. We are not cutting back on food and beverage, so I leverage our F&B spending to get lower room rates and other concessions. We just did this with a large hotel and it really worked. I try to cut back on things that are less noticeable, not on those that are. Food and beverage is always noticeable! So I've begun to share my F&B budget from past years, which is often pretty impressive, to influence lower room rates and upgrades.
Paul Eder: People are a lot slower to make commitments on things so that our lead time for planning programs has shortened and that's a challenge for negotiation. We are not canceling meetings, but we are starting to consolidate our divisional meetings to try to keep expenses down. That way senior executives do not have to travel to several different locations. For our business meetings, we are allotting less time for recreation. We'll get people in and get them out. So, where we might have had a three-day meeting we'll now have a one-and-a-half-day meeting. Previously we might have had an afternoon of golf, but that's just gone. Now we are suggesting that if they want to golf, they come in early or stay after the program, at their own expense.
Leanne Acton: In talking with my account executives for 2010 sites, we've found that our arrival/departure pattern is not affecting cost at all. But nobody's throwing me any deals. In fact, we recently had a meeting grow by 40 rooms and the hotel would not give us our negotiated rate for those extra rooms. We ended up paying about $40 more. This is a chain with which we do significant volume. We are working with our national sales contact to see what we can do about it. But it seems that hotels are much more individually focused now.
On Keeping the Wow and Minding the Budget
Tawny Herron: Some dinners are blow-outs and need to be produced to the nines by a DMC or production team. Others are not. When that's the case, I often use the hotel's in-house design and décor teams for events. As long as it looks beautiful, exciting, and different, attendees don't know what's more expensive and what's less expensive. I always ask the hotel what kind of chairs, linens, and tables they have. More often than not they have lovely décor that works great without hiring it from an outside company. If you don't like banquet chairs, many hotels have white or dark wooden chairs for outdoor use. Or use the hotel's tables and chairs and just rent linens. Also, many hotels now have an in-house design studio with their own selection of décor and linens. This is much less expensive than bringing it all in through a DMC.
Brett Barrowman: My budget isn't going up. So if airfare was 30 percent of the budget but now it's 40 percent of the budget, where do I make up that 10 percent? With the hotel? By cutting out an activity? We'll probably cut back on F&B and activities. But vendors need to make a profit too and they are smart. It will not take long before the cost for steak will end up being close to that for steak and lobster because people are no longer doing steak and lobster. I look at it as cost shifting: If a vendor begins to lose revenue in one area it will be shifted. So trimming a budget is like going after a moving target. We can try to do things smarter. For example, instead of hiring a third party we could use the hotel linens, or compromise and go with no chair covers. But in the back of your mind you're wondering, will I exceed the expectations of the people who earned the trip?
Sandy Monkemeyer: We find that destinations such as Walt Disney World become an asset because they have different levels of hotels. We can use one hotel for the mid-level managers and one for the lower-level. Disney also has self-made entertainment, from theme parks to fireworks. They are very good at flexibility and working within our budget. Las Vegas is another destination with a variety of hotel levels and built-in entertainment. There you might be able to just do a reception, then let attendees go off on their own. So you save money by not doing a full dinner.
Paul Eder: This summer we had a program in Barcelona and we had a dramatic increase in airfare that we didn't expect. When that happens and you're already contracted into a destination, how do you cut costs without diminishing the program? We were able to cut one of our planned evenings without penalty, so we had one less dinner function and gave attendees an extra free night. It saved us a big chunk of money, because we were far enough ahead — about six months out — so that we hadn't yet paid a deposit.
On International Meetings
Leanne Acton: We sometimes have a high dropout rate for meals. For our trip to Madrid this year, we've planned several plated dinners and I'm afraid people won't come. Every night we'll put three postcards in their rooms, already stamped for mailing to the U.S., with a photo promo of the next day. For example, we've booked an amazing venue for a dinner. They don't know it's amazing. But a picture is worth a thousand words. So our hope is that they see the postcard and think, “Wow, I'm having dinner in that room.”
Sandy Monkemeyer: We hold 65 offshore meetings every year and the U.S. dollar slippage has really affected us. A handful of hotels in Monaco and in Ireland will guarantee rates in U.S. dollars, but I'm booking now for 2014. I might finalize a rate in U.S. dollars today and find I made a bad deal because the dollar could get stronger. It's a guessing game.
Our attendees are owners and presidents of their companies and they all pay their own air and hotel bills. (Activities and meals are taken care of by the group.) But even when I've negotiated a great hotel rate for the group, they may not attend because of the perception issue: Their own companies might be struggling and they might have just laid off employees. Attendance numbers have been lower, especially in Europe. I had to cancel four post-trips this past summer. In September, in Barcelona, I expected 80 people on a post-trip but only 12 signed up.
On The Economy and Incentives
Brett Barrowman: The industry won't do away with incentive meetings but they may be toned down. Maybe you will have a three-day program instead of four days or use a less upscale property. Another factor is that salespeople earn these trips based on attaining sales goals but when no one is trading or they're afraid to trade, what do you do with your quotas if no one can make them? Do you relax your goals? Then you have less revenue, so do you book a four-star property instead of a five-star? For my budgets, so far so good. There have been no reductions in programs. But we are at the tail end of a wild year. 2009 will be a telling time, when we will see the psychological impact [of the Wall Street crash] and the reality — what's happened to your bottom line.
Paul Eder: We are not seeing all-out cancellations because of the way the market is. Everyone is struggling for sales. It's a Catch-22. Our salespeople are independent contractors, so we need to earn their business. We still need to get out in front of them and show we support them. It's necessary to keep our company out there in the market.
Sidebar: View From Suppliers: The Waiting Game
“Across the board, clients are waiting as long as possible to sign,” says Chris Gilbert, national sales manager, Charleston Place in Charleston, S.C. “They're just not quite sure what the future holds. There can be good and bad in that. They run the risk of losing the space, rates, and dates that they want.”
At The Broadmoor in Colorado Springs, Colo., Jack Gage, CMP, director, insurance and incentive sales, has seen the same trend. “People are sitting on the fence,” he says. “So it's taking more time to get contracts signed.” For both, though, the current turmoil is simply history repeating. “I am treating this as one of the four downturns I've seen in my career,” says Gage, who has been at The Broadmoor for 31 years. “Is my year going to be stellar? No. But I'm planting seeds for next year. And I think there will be pent-up demand.”
Gilbert takes the long view, too. “This too shall pass. The industry will come back,” he says. “And this is the time to really work with your clients and strengthen those relationships.”
But as for meetings from the financial industry in the Northeast: “That tap has been turned off,” Gilbert says.
And yet some insurance and financial services companies may find that high-end meetings can send a message of solvency and confidence to customers and salespeople, Gage believes. One conservative insurance client wrapped up a customer meeting at The Broadmoor just as the crashing markets sparked panic in late September. Gage says his client remarked, “That meeting was the best thing we could have done. With everyone else scrambling, we made a big statement.”
Doris Dallow, vice president, Krisam Group/Global Events Partners in Chicago, has also seen the waiting game take hold, along with some cancellations, particularly internationally. “Planners and management are being extra cautious,” she says. “They are delaying decision-making but they are still rewarding their people.” She has seen a few meetings being pulled from overseas locations and placed domestically, a trend she attributes to the “perception” issue. Nevertheless, when these meetings come back onshore, they are being booked into luxury hotels. “For incentives coming closer to home, some higher level properties are getting more play,” Dallow notes.
The Broadmoor's Gage is a case in point. He recently booked a high-end financial services meeting for 2010 that traditionally would have been planned overseas. “They'd always gone to Europe,” he says. “Now they can't afford it. We are a great domestic alternative.”
But that's not happening every day. Gage, like Dallow and Gilbert, says he's having to work a lot harder now. “I've got a far more aggressive travel schedule next year,” he says. “I've got to go out there and talk to customers. But I feel good about it.”
Sidebar: Incentive Travel: A Waste of Money or More Important Than Ever?
“I believe that the level and depth of this downturn is more dramatic than people yet realize,” says Lynn Randall, strategic meetings consultant, Maritz Travel in Fenton, Mo. And it's not just the money. It's the perception. Sensational headlines abound regarding lavish financial-industry conferences.
But this is no time to abandon the incentive model, Randall says. Rather, meeting managers must dig deeper into the return on incentive programs, showing their value especially in a tumultuous business climate. That value goes beyond boosting sales. An incentive conference can reinforce employee commitment, retention, and loyalty. And it's those returns that will have to be measured and considered in the future, Randall believes.
Especially, she says, since “poaching” gets more intense in an economic downturn. “Your closest competitors will remain relentless in maintaining or growing their business in a shrinking environment. With fewer options, one fast way to do this to try to take your best performers,” she warns. “The message you send by holding your incentive program is that you support your sales force and you are committed to them.”
Of course, you need a program designed to give employees what they value. For Randall, that means turning your focus to the business component. How? Build in meaningful interaction with the CEO and invite spouses to business sessions. “Seventy-six percent of households with income of $100,000 or above are dual-income households,” she points out. “As a spouse I'm part of the success of that family partnership. Include me in a session that might boost my own success, because I'm contributing to that stable home environment.”
The Wall Street crisis and the public outrage directed toward the financial services industry demand new ways of designing and measuring incentive programs so that companies can hold them up as critical business and communication tools, not boondoggles. “This is a positive change,” says Randall. “It's an opportunity for us to become a more sophisticated industry.”