For many companies, T&E costs represent the second highest controllable annual expense, so how can you measure the effectiveness of a trip compared to budget? Eliminating or reducing travel to keep compliant may work well for the operational side of the business, but let’s examine the impact it has on top and bottom line revenues. The question becomes about drawing correlations between the benefits, including increased profits, weighed against rigid standards that are being enforced.
According to a business traveler survey by Oxford Economics, 3 out of 4 customers prefer face-to-face contact, regardless of how far technology has evolved. Ramifications are shown to be as high as losing 25% of existing clients and 28% of revenues to the competition by not scheduling regular personal visits. The study also found that every dollar invested in business travel results in $12.50 in added revenues and $3.80 in new profits.
A leading expert in the field of travel analysis Scott Gillespie, CEO Managing Partner of Clara, coined the term Trip Friction® for scoring traveler wear and tear during a business trip. This travel fatigue and frustrations are often the result of a restrictive travel policy inhibiting the ability to optimize a business trip which can translate into lost incomes. If your organization is working with a Travel Management Company (TMC), they will have access to the data and costs associated with each trip. While it is good to set standards for travel expenses such as using negotiated rates with hotels, flying coach during domestic flights and calculating the difference between ground transportation and renting a car – the reason and rationale behind each trip differs.
Guild of Travel Management Companies chief executive Paul Wait believes we should review how we view business travel. “Rather than just looking at reducing costs, we should be thinking about building businesses,” he says. “If we start seeing travel in this way, he says, it will be easier to connect the investment with the return.”
Besides analyzing the numbers, considering the goal and purpose of a particular trip are essential. In some cases, calculating the ROI is easier if a project has a travel budget incorporated into the fees the company collects. Travel Management Companies can provide the data insights behind the trip and help you determine if the metrics fall within the agreed upon policy parameters. However, it is ultimately the responsibility of the business or traveler to tie those expenses into the actual value obtained from an in-person meeting.
Cornerstone prides itself on not only providing accurate data to the TMC and their corporate clients – but also in helping them understand the value and potential upside of traveling to meet in person with existing and potential customers. The real winners in the marketplace will be those TMC’s and enterprises willing to partner with innovative technology companies to leverage better information from their data sets. Joining sales data with traveler data to measure how productive a trip is should be something that is easy to obtain, however, with a myriad of data sets that need to be harvested in order to garner the right actionable information, technology is the key.