by Pádraic Gilligan, Co-founder, SoolNua | Research & Consultancy, SITE

In his famous play Lady Windemere’s Fan, Irish playwright Oscar Wilde defines a cynic as a man who “knows the price of everything and the value of nothing”. Wilde’s pithy phrase offers a key insight into marketplace competition and has great application along the incentive travel supply chain.

In general terms, companies compete with each other for revenues and market share across three categories: price (“I am cheaper”), quality (“I am better”) and speed (“I am faster”). Of the 3, the easiest to compete on, for the simple reason that it is immediately apparent and measurable, is price.

Competing on price may be effective if you’re a low cost “transactional” airline like Ryanair or AirAsia but it’s rarely effective if you’re a high touch service company on the agency or intermediary side involved in planning or delivering incentive travel experiences.

Price wars amongst suppliers take place for a variety of reasons. Sometimes companies focus on short term revenues and so they slash prices to get an immediate bump in sales. Sometimes they take a mid to long term view and reduce prices to become the dominant player in a given market. Whatever the reason, there are always casualties and these need to be balanced against the other desired outcomes.

The first casualty, obviously, is profitability so before engaging in a price war a company needs to be sure it has the financial stability to trade through the battle and emerge unscathed on the other side. The second casualty, arguably, is even more important and certainly has a more enduring impact. That’s brand reputation. If you’re an incentive agency, a DMC, PCO or other key supplier, do you really want to be seen as a company that competes on price?

The Incentive travel sector, of course, is no stranger to price wars, particularly in destinations with plentiful supplies of incentive quality hotels and excellent DMCs. When a large incentive programme is coming to town and needs to select its destination partners then price will certainly be a factor in selecting those destination partners.

During my 20 years as a DMC I frequently received communications informing me that the client liked my proposal but unfortunately other DMC were offering the same thing at a cheaper price. I always used this as an opportunity to elevate the conversation beyond price to value. I’d often ask – and humour is a great weapon in any negotiation – whether the client would take the cheapest price if they were going for open heart surgery? Successful delivery of an incentive is clearly not a matter of life or death but it is often mission critical within the working environment of the end user client or, indeed, for the incentive house contracting on the end user’s behalf. And, as a once-off, live event, you get one chance to get it right …

So using humour to suggest that I was the better, more qualified open-heart surgeon (with the reassuringly higher price) was always my first foray in this war on price. After that, I’d talk about the value of experience (demonstrating how extensively I had worked across similar high level projects), the value of reputation (offering to connect the client with previous satisfied clients) and the value of efficiency and expertise (highlighting the IT platform we had etc). In other words I’d try to shift the conversation from price alone to price + quality + speed.

So did it work?

Not always as some clients are determined to limit discussions to price. But it did work more times than not as incentive travel professionals are in the business of delivering extraordinary travel experiences that are, ultimately, “priceless”.

If you’re interested in connecting with a global community of incentive travel professionals who genuinely emphasise value over price, then be sure to join the Society for Incentive Travel Excellence (SITE). With over 3500 members across the world, SITE is the go-to association for everything to do with “incentive travel”.