Pharmaceutical companies allocate up to two percent of gross revenue for events, making it one of the top four controllable expenses in most corporations. Companies have traditionally targeted air and hotel costs as low-hanging fruit for savings by procurement departments. But there are many other components to a meeting.
Consolidating data across all meetings can result in significant cost savings, and also can provide powerful strategic information for sales and marketing, compliance and other departments. In particular, consolidated data allows planners to affect four key areas:
However, a meetings consolidation program centralizes corporate-wide information, standardizing operational procedures for tracking meeting activity. That information can then be used to measure services and negotiate preferred contract terms with vendors.
Bargaining power In a consolidation program, a tracking system rolls all meeting budgets into a single database. The data provided is often surprising: Most companies discover that they significantly underestimate their spending. For example, one global pharmaceutical company estimated that just one of its divisions spent $40 million a year on meetings. After one year of using a consolidation data collection program, the company tracked almost $50 million and expected final costs to be even higher. This gave them an incentive to extend the program to several divisions, and then globally. As the company continues to track its spend at hotel chains, it is well-positioned to negotiate greater room discounts, free meeting space, and food and beverage discounts.
In a decentralized environment, the individuals responsible for planning meetings select vendors, and costs are typically invisible to the company's procurement department. One pharma company used more than 100 vendors to manage its meeting planning functions, completely diluting its ability to successfully negotiate vendor offerings. In a consolidation program, companies can implement a preferred vendor program that limits the number of vendors it uses. In most cases, 100-plus vendors are reduced to 10 or less. And preferred vendors are more willing to provide aggressive rates for a guaranteed volume of work. In the end, this allows companies to more effectively manage vendor relationships, improve service, and save costs.
For example, a preferred hotel program (as opposed to booking property-by-property) greatly improves discussions at the national hotel chain level. Hotel chains are very motivated to offer standard concessions and preferred terms when working with pharma clients, which book hundreds of meetings a year.
Risk aversion One of the biggest challenges related to meetings is controlling financial risk when changes of plans occur. A centralized data system can help effectively manage—or avoid—risks in the areas of attrition and re-booking cancelled space. Attrition penalties accrue when a hotel or caterer is not notified by an established deadline that attendance will be lower than the initial count. And if your meeting is canceled after a contracted date, your company is liable for a percentage of the cost, unless you can re-book the meeting at a later date.