VALUE In many areas the profession is already effecting savings for its clients, e.g. during negotiation of the rental price and other conditions in the area of housing. We often take them for granted and fail to document and communicate them. We must get better at that!
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Budgeting/Planning is walking a tightrope What is a low fee? What is an appropriate fee? There is no clear answer. A fee is appropriate whenever it allows a contribution margin which in the total of all revenue, allows for a profit. Each product has a different share for gross margin. And since we do not know in what quantities and in which ratio we have to deliver the different products, planning in this business is not easy. Clients should assume that fees are quoted to allow the service provider a profit. This is a necessity. If it is assumed by the client that fee proposals can be reduced by 20 to 30 per cent, this suggests that the provider has not taken the client seriously in the first place. A provider who can give a 20-30 per cent rebate in the negotiation, either risks his business or has tried to start the negotiations by taking advantage of the client. It is no surprise that the client wants to spend as little money as possible. But what does they compare it to? Do the client’s savings have to be realised at the expense of our fees? There are many other areas where savings can be realised ¬– housing allowances, home leaves etc. All cost cuts are at the expense of the respective providers and, in the end, also at the expense of the transferees who are receiving less service bit by bit.
We should constantly consider what innovations will help us move forward.
The fundamental question is: Can the entire assignment process be made significantly less costly if the relocation provider’s fees are reduced? Are there not other areas that require less input of time, heart and performance that offer more room for cost cuts? The driver for corporate cost reduction has a name: Procurement. We have to get used to this. Purchasing departments have a very different approach from traditional HR departments, which very rarely make decisions on their own these days. The profession needs to study the mindset and decision making parameters of procurement
departments and adjust to them. What does an assignment cost as a whole? What is effectively saved, if the costs are reduced at our end? The price discussion is beginning to make DSP’s doubt themselves and they are now beginning to question if they “deserve” higher fees. Look forward. You are great! The relocation industry is divided into different types of providers. All providers in the industry - especially RMC’s and DSP’s – should act as a community and develop strategies to counter the pressure that both are facing. Do we know enough about each other? Do we respect each other? What innovations are there – for clients and for us? How we can help clients to reduce costs without harming ourselves? We should work together and not be divided. We should constantly consider what innovations will help us move forward. We should not be complaining, but take responsibility. And we should, in turn, expect appropriate treatment from our clients. We have to make our clients understand the significance of our performance. We are important. We can be confident, based on wise use of time, heart and performance. In our book, value will always beat price. n Helmut Berg is CEO of RSB Deutschland GmbH
International corporate and relocation housing solutions just got easier… We can provide a bespoke extranet with your preferred apartment providers and travel policy. Please ask for your copy of the 2010 Global Serviced Apartments Industry Report on our website. Established 1981
The Apartment Service is the largest European agent for extended stay and corporate housing worldwide. We offer Relocation companies and HR management complete temporary accommodation solutions with cost savings in convenient locations to suit your individual business needs. The Apartment Service is also your gateway to nearly 524,000 apartments worldwide – many with real time, online booking on our website. Why not contact our business development team to discuss your particular accommodation requirements and to see how we can facilitate your procurement process? Telephone 0870 080 2303 or email us at res@apartment.co.uk
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Autumn 2010
0870 080 2303
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