How Big Must Your Relocation Provider Really Be?

edit-Alan Biz Mug Shot 1The Forum recently received a great question via our “Ask the Expert” feature:

“We are a “young” international and domestic relocation management company but our staff has many collective years of experience in the industry. We are having a hard time breaking into the corporate market.  It seems that HR Departments do not want to give us the opportunity to present our services.  How can a small company like ours work itself into the international employee relocation market within a corporation?”

We can truly empathize with this situation, which is one we’ve often seen.  This is especially true in today’s economic environment of slashed budgets and significantly reduced transfer and assignment volume.  Overworked and highly stressed company staff are unlikely to spend precious time, now, to hear about services they’re not currently using.

The reader suggested that the “big” global relocation service firms receive a better reception from prospective clients than do the smaller and newly established firms.  In our experience, this is basically true.  The reader also stated that many of the smaller firms have a stronger service orientation and can be much more responsive and flexible than the big well-established providers.  Indeed, we have seen cases of this too.  It’s possible to demonstrate that smaller firms made up of seasoned experts, but with lower operating overhead and more flexible processes, can be quite cost competitive while providing high quality services as well.

So why are the small firms having difficulty “breaking in”?  What is it that the big firms offer as “competitive advantage”, often successfully, that the small firms do not?

Big firms have a large footprint.

They can point to wholly owned offices and affiliate relationships in a wide array of countries.  This can be a huge issue for corporations that want to have local touch points for their employees and direct knowledge of local environments readily available.  The small firms often don’t have such a geographic footprint and might not be sure how to establish one.

Big firms have globally experienced staff.

Frequently, their staff come from a variety of countries, have lived and worked in multiple countries and speak a number of languages.  They also frequently have individuals with prior international assignment policy development and program management experience on their teams.  This engenders great credibility in the eyes of the corporate buyer.

Big firms leverage their extensive experience.

 They have managed programs covering multitudes of assignees across a variety of countries and industries.  The corporate buyer is far more impressed with stories about “been there, done that” than with honest admissions of “haven’t been there, haven’t done that — yet”.  Corporations tend to be risk adverse and shy away from “being the guinea pig on whose dime the new service provider learns the business”.

Big firms have technology.

They offer sophisticated state-of-the-art, web-enabled capabilities for projecting total assignment costs, managing reimbursements, communicating with clients and their transferees, interacting online with data providers, providing country-specific information, and tracking and reporting expenses.  Many smaller firms do not have such (expensive) technology and, occasionally, cannot demonstrate expertise in managing the complex requirements of expense management and tracking across multiple countries and pay-points.

Big firms have strong relationships with key service providers.

They know and work with a variety of firms providing assignment cost of living and housing data, international tax experts, destination country employment counsel, cultural and language training firms, etc.  These pre-existing working relationships mean single point of contact and seamless service provision that is extremely attractive to corporate clients.

Big firms invest in polished marketing campaigns.

They advertise, host and sponsor conferences, deliver keynote presentations, conduct webinars, host booths at SHRM and ERC conferences, develop highly polished web sites, publish surveys and articles, etc.  This does not, of course, make the big firms better at providing services but, at the end of the day, polished marketing does impress prospective clients and creates name recognition.

Big firms have the advantage of name recognition.

 Finally, there is the cliché that no procurement professional was ever fired for hiring a well-known “big name” even if there was a service breakdown later. Let’s face it, in many corporations there is a built in bias toward hiring only name firms and avoiding the perceived risk (accurate or not) of hiring unknowns.

So what can a small/new firm do?

Emphasize responsiveness, service orientation and flexibility.

Probably the two most critical attributes in which to excel and compete are outstanding service and price.  Responsiveness, flexibility and competence are critical in what, I think we would all agree, is a service industry, after all.

Build internal international expertise.

This should be done via hiring highly experienced, preferably well-known, and globally networked staff and through education such as the SHRM GPHR and ERC GMS programs.  Travel and learn from first-hand experience about assignee destinations around the world.  External consultants also can be quite helpful in this area.

Invest in technology.

The ability to project and track costs, communicate with management, transferees and other services providers, e.g. the client’s international tax firm, and manage data is critically necessary.

Develop and nurture relationships with complimentary service providers.

This must include in-country providers and data, immigration, tax, language training and cultural training firms, among others.

Create name recognition through a well-focused and professional marketing campaign.

Demonstrate how the firm should be perceived as a trusted advisor and capable service provider. Create a public presence in the industry.

Delight your current clients and enlist them as your champions

When courting new business, make use of recommendations and testimonials from satisfied clients.  Ask your clients for leads and to make “warm” introductions.  Word-of-mouth recommendations are priceless.

Direct business development efforts towards smaller firms.

They tend not to have the budget for, and less of a bias toward, the big firms. It’s also relatively well known that the big firms don’t give their best attention to small accounts. Go where there IS business AND less competition.

Implement a “Blue Ocean” strategy.

There are many capable providers of  global mobility services, large and small.  The market, especially in the current economic scene, may actually be over-supplied with providers.  Competition is fierce.  We would suggest that small firms specifically target prospects whose mobility needs – geographically and transfer types – best match the firm’s geographic footprint and operational strengths.  Approach those firms that are not being approached by the multitudes of providers.

Seek out the advice and counsel of those with depth of experience and expertise.

We believe that seeking guidance and mentoring from experts can be quite worthwhile.  Professionals with prior “in-house” corporate experience, as buyers of external global mobility services, across a variety of industries are especially valuable.

We again thank the reader who submitted the question.  Now we invite our readers to share their views.  Please let use know your thoughts via comments on this post.

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10 Responses to How Big Must Your Relocation Provider Really Be?

  1. Great article Alan, and provides food for thought for the clients who are looking for alternatives.

  2. David Strickland

    Alan ,I thought it was a great article also and the same holds true for smaller providers(van lines) such as myself trying to get in with the larger relocation companies.

  3. Alan,

    This is an excellent article with the specifics that can help relocation providers focus on their advantages in building business with their chosen market. Your positive angle and contrast between large and small providers also helps prospective clients see advantages of each.

    One thing the smaller firms might also consider is how to be a one-stop shop for all the relocation services their clients want. So, they must coordinate the complimentary services you mention under their umbrella for clients who don’t like to deal with multiple vendors and billing.

  4. A interesting article and an issue for many of us who are not a “big box ” relocation providers .Some other thoughts :

    If as a client you have under 200 transactions annually ,you will be used as a training ground for the really big clients ,leading to continual staff turnover and retraining your providers new hires.

    None of the big box firms have new technology its at least 5-10 years old and with mergers its often multiple platforms that dont talk to each other .

    Nobody ever got fired for buying IBM and a smaller provider cant fight that ,adapt your market segement to the popultaion that does not get the attention from the big box firms .

    For the right buyer a small company offers the comfort of knowing that your business is important to the provider .

    These comments from the university of life and the school of hard knocks !!

  5. Thank you, Andrea. Indeed, while I’m not criticizing the big relo firms in any way (I’ve worked with several of them quite happily over the years) we have seen many clients with smaller programs receive excellent services from small relo firms.

  6. Nice posting and I would like to add a few comments:

    Global providers are not always as global as it seems. I guess this begs the question of what does global mean? Most “global” providers have their own operations in how many countries? five or six? Of course they are in the most important markets .

    Size – we have also seen that the larger global providers have a growing portion of business that is not of interest or too small. This opens the door for others.
    There is a certain market segment that only the global providers can handle due to financing and sheer size but as they grow there is a growing gap of business that is either too small or too difficult to fit into their systems and in many cases they really do not want this business. Small companies with big aspirations just have to be patient and “not eat the whole elephant at once”. Customers have always and will always be hesitant to make changes especially with companies with limited track record but the massive global disruption that we are in the midst of will cause everyone to look at their supply chain and business structure as never before. Most importantly is technology. In the last few recessions technology has led much of the recoveries and the successful companies continue to invest and embrace the changes, especially during intense restructuring.

    Technology
    There are many developments in technology that are rapidly leveling the playing field. I feel the most important possibility is in Cloud computing.
    Cloud computing allows small companies to move quick , deploy new applications and “punch way above their weight class” .
    In addition, larger customers and competitors have too much “vested” interest in their legacy systems to rapidly embrace changes and could possibly be at a disadvantage to smaller more nimble systems. The larger companies systems are much too complex and often based on cutting edge platforms from 20+ years ago and it takes a brave manager to show that much of what they invested in over the years should be scrapped.

    Of course smaller companies have to take the chance and embrace the technology changes and not be a follower. This is not an easy decision but an important one if you wish to differentiate yourself from the pack. At Move One we completely embraced the changes and have completely “virtualized” our systems and procedures . In addition to the massive financial savings our staff have seen huge increases in productivity and control. In fact, there were no applications available so we built our own and have since spun off unit to a stand alone company – Radix Technologies. In the coming months and years there will be a rapid increase in applications capable of handling your needs on the cloud but you have to have the courage to make the changes.

    A good introduction to cloud computing

  7. Thank you very much for your commentary, Curt. We appreciate your taking time to add to the discussion.

    I agree that technology is a central tool required for service delivery. The large-scale installed systems, whether licensed or “home-grown”, can be quite expensive, cumbersome to maintain, and often inflexible. One might argue that even though most, if not all, are fully web-based, they represent yesterday’s technology.

    One caveat is that we are aware of one or two more nimble and interesting licensed solutions.
    There also are well-developed ASP solutions available that are worthy of consideration by the smaller relocation companies.

    Like you, we also are excited about the possibilities of cloud computing and the concept of leap-frogging one’s competition with respect to technology. We advise approaching “the cloud” carefully, however.

    First, the relocation service provider must absolutely ensure that they’re able to use it effectively and reliably 24/7. Breakdowns in service delivery are simply unacceptable to clients. Failure to meet client service expectations is probably the number one reason relocation companies lose engagements.

    Second, relocation companies routinely manage employees’ personal data and, hence, in the global arena the various and highly stringent data privacy regulations come into play. A provider must be careful to ensure that in using the cloud, they will be in compliance with those regulations. This could be a very interesting challenge and must be addressed successfully.

    Again, we thank you for your input.

  8. Great article Alan and well thought out. Having helped establish a number of new start ups in relocation, and having seen others trying to do the same, new, smaller entrants often want to target the same targets the big boys do. As stated by other respondents that is a mistake. The newcomer must clearly identify: its true USP or service difference, what their unqiue service offer and money offer will be, how that delivers value for money for their type of prospect, and then articulate it simply and powerfully and drive that home relelentlessly.

    The newcomer needs to ask itself: Why did we come into this business, why will we make a difference, what is our exit plan, which types of prospects will help us achieve our exit plan. It should also research market and business trends that are going global (telepresence firms for example) and go and get those smaller, emerging firms, in growth markets or technolgies.

    That way they can sell to them whilst those emerging players are small, will not be up against the big boys, and they can grow their own business as their “smaller” clients grow too. Selling to those types of firms will also help maintain margins.

    They need to make sure they are selling to an organisation that they can “align with”. I have seen many organisations try and “sell” their service but where their own delivery/profile/coverage just does not mirror the clients. That wastes time, soaks up resources and has high, lost opportunity costs in losing focus on business they should be winning elsewhere.

    Having an RFP from a big prospect is always enticing but the newcomer needs to be wary before committing the time and effort: are they a good fit, what relationships do they already have, how deep are they, what are the buying criterion etc.

    It is very important to have experience in their team, especially when the prospects at this level should be experienced too, but they will be better placed by focusing more, not on the experienced team they have, but what that experience delivers for the prospects.

    Define that, define the growth areas of business trends they want, define the emerging players in those sectors and build relationships with them, and create a solid marketing and communications strategy. They should start to carve a niche that will work – and grow.

    Lastly, they need to avoid “selling” to people who do not want to buy. Sales have three phases:
    1. Status Quo – buyer is happy with what they already have. Sees no value in changing. These need nurturuing not selling to.
    Stage 3. Out to bid – the buyer has become fed up with the current solution/being pushed by s0me other driver, to get quotes etc. Yes they can be sold to but by this time they will have others under consideration, competition will be higher, conversion rate lower, client loyalty lower, margin lower.
    There is a middle stage, stage 2 – the “Window Of Dissatisfaction” (TM of ShiftSelling.com), where the buyer has had some form of trigger that pushes them out of stage 1 towards stage 3. Getting prospects before they get to stage 3 means you can win with less competition and gain higher margin. All three stages have specific tactics that need to be applied too. Hope this is helpful?

  9. Sean,

    Thanks very much for your excellent and spot on commentary. It clarifies and expands upon the concept of “Blue Ocean Strategy” and, imho, constitutes great advice for newcomer and small relocation service firms’ business development focus.

    Indeed, the “stage 2″ situation you described is where we believe a lot of opportunity exists for smaller firms. We’re seeing more and more HR and Relocation staff being thrust, for the first time, into the requirement to establish and manage global assignments. Often they have no background nor infrastructure for doing so and their assignee populations too small to attract the interest of the major, well established, global mobility providers.

    Again, thanks very much for your helpful contribution to this discussion.

  10. Excellent article, informative and balanced. Much appreciated.