Why do hotel companies go through an RFP process when selecting a website design vendor or a digital marketing firm? For some, this is due to corporate mandates, for others there is a “We have always done it this way” mentality.
The vendor RFP process is typically long and drawn out. It consists of selecting a list of vendors known to provide the service/product in question (a PMS, a CRS, website design, digital marketing and consulting services, etc.), preparing an RFP (request for proposal) outlining the hotel company’s needs and wants, sending the RFP to an identified list of vendors, conference calls to go over questions about the RFP, sifting through proposals and RFP responses, identifying a short-list of vendors, organizing and sitting through face-to-face or online presentations, going through a round or two of final Q&As, and finally, selecting the winning vendor.
The Current Vendor RFP Process is Intrinsically Flawed
Some believe the vendor RFP process allows a hotel company to pick the most qualified service/product provider through an unbiased decision process. Perhaps this is the case for commoditized supplies or services (housekeeping supplies, linens, laundry, etc.) where the RFP process allows for comparing the proverbial “apples to apples.”
Beyond website design, digital marketing and building a direct online revenue channel encompasses strategy, technology, and marketing expertise. Top digital technology and marketing firms take a robust and comprehensive approach to the digital channel including accommodating user behavior on the three screens (desktop, mobile, tablet), website and campaign analytics, the integration of different technologies, dynamic content personalization, dynamic rate marketing, reservation abandonment tools, social media, SEO, SEM, online display advertising, and more. In addition, there needs to be a core understanding of business needs, budget planning, and industry terminology. Because the digital marketing world is fast-paced, prospective clients oftentimes lack the capacity to prepare an effective vendor RFP.
At a typical hotel, who is equipped with the latest best practices in digital technology and marketing to sufficiently and adequately prepare a vendor RFP? Very few hotel companies have the bandwidth and depth of knowledge to adequately identify the digital needs of the property. Nor can they convey the property’s needs and wants in the digital space and where it needs to be in 6, 12, 24 and 36 months from now. Lastly, who at the property can afford to devote considerable time to research and prepare a vendor RFP that asks the right questions, conveys the right objectives and provides a solid framework for evaluating and comparing one digital technology and marketing firm to the next?
On the hotel side, the typical vendor RFP process easily takes 50+ hours from beginning to end. On the digital technology and marketing vendor side, time to review, respond, and present takes upwards of 25-40 hours. Typically, three vendors compete and with all parties combined the entire RFP process will cost upwards of $15,000-$20,000. Beyond the cost, this process consumes the time and energy of multiple people and departments on an average of every two years for the hotel company.
The traditional vendor RFP process is becoming less and less relevant in this fast moving, highly dynamic, and increasingly complex world of hospitality digital marketing. Other more efficient and relevant options are available to address the increasingly important and high value direct online distribution channel. With so much at stake for hotels, finding the right digital technology and marketing firm that fits your hotel profile and goals is crucial to long term success.
Alternatives to the typical vendor RFP process such as the Trusted Partner, the Digital Marketing Partner Interview or the user-friendly Scorecard model cut to the chase. It is time for us as an industry to modernize the process and start thinking outside the traditional vendor RFP process.
Why is the vendor RFP process in the digital marketing industry becoming obsolete?
Hospitality digital marketing, website design and website revenue optimization consulting services have converged into a single, seamless digital techno-marketing-consulting strategy which requires an out-of-the-box evaluation and selection process that goes beyond the scope of the traditional vendor RFP.
The traditional vendor RFP process is not suited for evaluating and choosing a digital technology and marketing partner who will be entrusted to guide the hotel in maximizing revenues from the most important distribution and marketing channel in hospitality: the direct online channel (i.e. the property website). Such an RFP process is typically riddled with contradictions and self-selecting biases, and also represents an antiquated method unsuitable for a fast-paced digital world.
The traditional vendor RFP process cannot provide answers to crucial questions concerning familiarity with industry’s best practices, strategic approach to digital marketing technology and marketing, digital technology innovativeness, quality and depth of direct online channel consulting services, etc.
Common observations on the RFP experience:
- It serves as a tool to fulfill administrative requirements or to simply “shop around” when in fact the digital marketing/technology firm has already been privately selected.
- On paper, every digital technology and marketing firm can present itself at its best and can creatively diminish any weaknesses or embellish any strength.
- The hotel does not know what questions to ask to get to the heart of what the hotel needs.
- Digital marketing and technology firms can easily make promises and fall short on delivery and meeting expectations. Over-promising and under-delivering has become modus operandi for a number of players in the industry.
- Properties can get carried away and request proprietary information like methodologies, access to code, and design work as part of the vendor RFP.
- Some hotel companies never follow up and leave the evaluated vendors in limbo.
- Oftentimes hotel companies do not give the digital marketing firm adequate time for proposal development, which demands further use of resources or the delay of other key projects.
- When management changes, the hotel company is more likely to go into a vendor RFP without evaluating the results and contributions of their current vendor, which can disrupt existing relationships and potentially impede the successes to date.
- Given the arduous process of the vendor RFP process, there could be a sense of entitlement on both sides that could result in a mutually caustic relationship from the onset.
- Digital agencies may propose lower costs to win the contract and introduce additional fees later only leading to resentment and regret.
- Hotels will often push needs beyond the original scope in the vendor RFP and use the proposal as leverage to get more services without paying.
- Not all digital agencies are the same but as mentioned, any agency can demonstrate on paper its superiority to solve any problem and deliver any service. Behind the scenes an agency can outsource and end up costing the hotel twice what is originally proposed in additional fees.
Now it is time to look at some alternatives. We describe three models that nicely fit with the hotel industry that could reduce or replace the traditional vendor RFP process outright. Note that more than one model can be used in the evaluation and any engagement still requires that the hotel conduct a standard due diligence, which includes an examination of the agency portfolio, recommendations from existing clients, review of the track record with case studies, and industry reputation.
The Scorecard model is the most pragmatic of the three alternatives to the vendor RFP process. The most challenging part of the vendor RFP review process is trying to line up each potential digital technology and marketing firm’s response to compare “apples to apples.” The Scorecard enables the hotel company to list the key areas needed to be addressed in list form and eliminates the need for long and drawn out narratives, unless requested.
Each digital firm is scored in the form of a point system or check box. The hotel company can develop its own uniquely designed scorecard or use the HeBS Digital Scorecard as a starting point to evaluate a potential Digital Marketing Partner. Click here to view a sample Digital Technology & Marketing Firm Score Card.
The second model is the Digital Marketing Partner Interview model. While it may resemble the vendor RFP process, the interview is structured to not focus on specific problems but evaluate based on management philosophy, values, and culture. The marriage analogy is appropriate here. A successful marriage is not based on whether the spouse balances the checkbook or shops for the right brand of soda. A successful marriage comes from the underlying values that each person shares.
No two properties are alike and the same applies to potential Digital Marketing Partners. A digital technology and marketing firm may work well with a certain type of client or offer a discrete set of services that really only fits a certain property profile. For example, full-service hotels, complete with a restaurant and meeting space, have completely different business needs compared to select-service properties. Not all Digital Marketing Partners are the same and each has its strengths, specialties, weaknesses, and vulnerabilities. Hotel companies should learn and understand the philosophy and values of the potential Digital Marketing Partner to find the right fit. Not all digital marketing firms are the same, especially when it comes to being vertically focused. Can any Digital Marketing Partner appropriately take your hotel to the next level in developing a direct online revenue channel?
At HeBS Digital we recently published an article called “The Top Ten Questions to Ask Your Digital Marketing Partner” that can nicely serve as a starting point for the hotel when it comes time to conducting the Digital Marketing Partner Interview.
Sample questions that can be used for the Digital Marketing Partner Interview:
- Do you understand the unique needs of the hospitality industry?
- How does your agency view OTAs in the hotel’s online revenue mix?
- How will you structure the support team for my account?
- Which services will be provided by a third-party?
- How often do you recommend senior management meet to discuss progress?
- What are your procedures for handling conflict with the client agency relationship?
- Do you have clients in the same hotel class as ours? Can I interview a couple of these clients?
The Trusted Partner model is built on trust, mutual investment, and a set of shared principals that define success. Furthermore, the model values each side and agrees that not all digital technology and marketing firms are the same. By taking this approach the property minimizes the need to issue a vendor RFP every few years or remove the mindset that the vendor RFP is the starting point in the relationship. Perhaps the Trusted Partner agency is willing to scale up resources to fit your long term needs. Of course the likelihood of success is higher when you start with the right agency with the right fit.
The Trusted Partner Model makes both the hotel company and digital firm owners in the success of the relationship. A proactive digital firm continually brings new ideas, latest trends, and best practices to the client. The hotel company embraces these new ideas and takes meaningful risks to rise above the norm. At HeBS Digital we often incorporate hotel clients – large and small – in pilots, betas, A/B tests to evaluate avant-garde technologies or innovative digital marketing initiatives and, based on positive results, implement these new solutions to the benefit of our hotel clients.
Characteristics of the Trusted Partner Model:
- Committing to each other
- Addressing problems/concerns upfront
- Respecting lines of communication
- Maintaining realistic turnaround times and expectations
- Treating each other fairly and equally
- Willingness to learn and listen
- Partnering in pilots and taking mutual risks
- Billing transparency and timely payments
It is time to break the vendor RFP mindset and recognize that with modern alternatives, the antiquated vendor RFP process plays little value in meeting the needs of our fast-moving digital marketplace. The process is inefficient, expensive, and sets up a potentially adversarial situation in short order.
Rather than relying on this outdated practice, hotel companies should consider one or more of the following three models: The Scorecard Model which forces the hotel to size up potential digital technology and marketing firms on a set of factors that can compare one firm to the next. If these core prerequisites are not met, then the firm is not the right fit.
The Digital Marketing Partner Interview model can easily streamline the selection process and quickly identify which potential digital marketing partners fit the culture, style, and management of the hotel company as well as address the property’s business and occupancy needs. This in turn maximize revenues from the direct online channel.
With the Trusted Partner model, the hotel company commits to the digital marketing partner and the Partner works hard to keep the hotel company ahead of the competition and continuously push for the greater good. As the name says, it is a trusted long-term partnership between the hotel company and the digital marketing and technology partner.
If you are considering overhauling your entire web strategy we have three methods to consider. I hope you agree that it is time to rethink the RFP.
About Jason Price and HeBS Digital
Jason Price is Executive Vice President at HeBS Digital, an honoree of the HSMAI "Top 25 Most Extraordinary Minds in Sales and Marketing" for 2011.
Founded in 2001, HeBS Digital is the industry’s leading hospitality digital technology, website design, full-service hotel digital marketing and website revenue optimization consulting firm based in New York City (www.HeBSDigital.com). HeBS Digital has pioneered many of the “best practices” in hotel digital marketing, social and mobile marketing, and direct online channel distribution. The firm has won over 260 prestigious industry awards for its digital marketing and website design services, including numerous Adrian Awards, Davey Awards, W3 Awards, WebAwards, Magellan Awards, Summit International Awards, Interactive Media Awards, and IAC Awards.
A diverse client portfolio of top tier major hotel brands, luxury and boutique hotel brands, resorts and casinos, hotel management companies, franchisees and independents, and CVBs are profiting from HeBS Digital’s hospitality digital marketing expertise.
Contact HeBS Digital’s consultants at (212) 752-8186 or firstname.lastname@example.org.
Logos, product and company names mentioned are the property of their respective owners.