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Model Behaviour

On the surface, the moving component of a relocation appears universal. A mover packs an employee’s belongings, loads the boxes onto a truck, delivers the shipment and unloads them.

But while the act of moving is generally the same from carrier to carrier, the way companies engage a mover—primarily the pricing and service models involved—can vary. 

There are four pricing and service models in the moving industry, each sharing similarities and differences. These models can have a significant impact on a company’s relocation costs, access to capacity, ability to track data and employee satisfaction, so it’s important to understand the nuances that set these models apart from one another. 

Direct Model

In a direct moving model the corporate client works directly with an agent to secure household goods moving services through the agent’s carrier. There is no middleman involved, and every aspect of the move is handled between the company and the agent. 

Because of this direct relationship, companies can easily research and select an agent that best suits their needs, culture and relocation program goals. Companies can communicate directly with the moving agent, which improves service response times, expedites exception requests and enables better quality control. And because there are only two entities involved, it is easy for companies to understand the exact costs of their moving services. 

One drawback of the direct model is it does not guarantee capacity, which, given the current truck driver shortage, could compromise a company’s ability to successfully relocate its employees. Another drawback is that the corporate client must commit the resources to manage the moving agent and their performance.

Another consideration with the direct model is that corporate clients must maintain two agreements, one with the relocation management company (RMC) and one with the local agent. This creates extra administrative layers and means the corporate client must manage relocation data from two different entities.

Blended Model

In a blended model, the corporate client initiates all moves with the RMC and the RMC then directs the move to an agent chosen by the client. 

In this model, the management of the household goods portion of the relocation is handed off to the agent for management. The agent communicates directly with the corporate client and relocating employee which can help maintain response times and quality.

Corporate clients also only have to manage one contract, so there is less of an administrative burden. And, since the RMC manages the relationship with the agent, it is the RMC who compiles relocation and moving data.

Like the direct model, can also be more transparent and cost effective, because the client negotiates the moving costs directly with the agent. However, many RMCs charge a file management fee for their administrative effort.

Bundled Model

In the bundled model, the RMC procures the agent to facilitate the moving portion of the move. The key difference, however, is that here, it is the RMC, and not the agent, that works directly with the corporate client and the transferee to manage the move. 

The corporate client receives the same benefits it would with the blended model, including access to capacity, a single contract, consolidated data and better performing carriers. However, corporate clients can experience cost markups and slower response times. 

In a bundled model, the carrier’s costs are included in the total cost of relocation, which often can include so many relocation components that it is difficult to understand the true costs of the moving component.

Since the RMC acts as the middleman between the corporate client and the agent, communication is slower than in a direct or blended model. This layered approach means slower response times to special requests and issue resolution. 

On the downside, in a bundled model, it is not uncommon for the agent or carrier to view the RMC as the client, since it is the RMC directing the mover’s services. Since the emphasis is on satisfying the RMC, carriers might not be as attuned to the corporate client’s unique culture, relocation program, goals or needs.

Corporate clients also have little choice in the agent selection, as this is all handled by the RMC, and while RMCs explain they base carrier decisions on quality and performance, this may not always be the case. RMCs may also select carriers based on reciprocity, agreements not to sell against them, friendships and existing relationships.

Vertically Integrated Bundled Model

The vertically integrated bundled model is similar to the bundled model with one key distinction. In this model the RMC owns the carrier, and the moving and relocation capabilities are integrated into one “product.”

This ownership means the RMC can provide employees and clients with more cost control and quality governance compared to other models. RMC-owned van lines do not pass on financial incentives or booking commissions to agents or other partners, so the RMC does not mark up costs for clients. As a result, customers get the best rates and greatest value—and savings of $500 to $1,200 per move—without compromising agent quality.

No “Right” Model

While multiple billing and service models exist, there is no right or wrong model. It is important, however, to understand the complexities of each moving model to ensure there are no surprises during or after the relocation.

To reduce the likelihood of any surprises, companies should first identify their requirements and evaluate each moving model to determine which will best meet those needs. Factors such as how many moves they’ll require, whether they’re willing to pay a mark-up fee for moving services, or if they want direct contact with the carrier can help companies determine the most effective model for their mobility program. 

By Deborah L. Balli , President, Global Relocation Services, SIRVA Worldwide Relocation & Moving

(Originally published in Canadian ERC's Perspectives Magazine.)