Managing the Total Cost of Travel
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Transcript of Managing the Total Cost of Travel
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Managing The Total Cost of Travel
A New Paradigm
Scott Gillespie
CEO
tClara
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About Scott Gillespie
Leading expert in corporate travel analytics, travel procurement and Managed Travel 2.0
CEO of tClara, a travel data consultancy
Speaker and trainer at worldwide travel industry events
Former Founder and CEO of Travel Analytics (now SAP)
Former AT Kearney principal and travel sourcing leader
MBA, University of Chicago
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Setting the Human Resource Scene
The European and U.S. workforces are getting older
Is voluntary turnover on the rise here? (It is in the U.S.)
Replacing key talent is really expensive
High performers deliver ~40-70% more profits, productivity
and revenue than average performers
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High performers need plenty of freedom
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Source: McKinsey War on Talent survey of 6,000 executives from the Top 200 in 77 large U.S. firms from a variety of industries. 1998
58% 56%
51%
19%
8%
1. Values and culture2. Freedom and autonomy3. Job has great challenges
16. Geographic location
18 Job security (next to last)
Share of Top 200 executives rating a factor as absolutely essential
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Where were headed today
The Path Forward for Travel Managers
Quantifying Traveler Wear and Tear
The Total Cost Paradigm
The Need for a New Travel Paradigm
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Four Major Travel Management Paradigms
Transaction Cost
1995>
Total Cost
2015>
Total Impact
2030?
Profit Center
Pre-1995
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After 20 years of professional travel category management, best practices are well known:
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Consolidate TMCs
Consolidate T&E card programs
Consolidate travel data and reporting
Apply strategic sourcing principles
Comply with duty of care
Use KPIs and benchmarking
80+ % online adoption
90+ % travel policy compliance
Focus on negotiated savings
Procurement
principles
have led the
way
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Transaction Costs, e.g., airfare, hotel
Trip Quality (Travel Policy)
5 Star 1 Star
High
Trip Costs
Trip costs from suppliers depend highly
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5 Star 1 Star
The simplistic
procurement view
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Transaction Costs
Trip Quality (Travel Policy)
5 Star 1 Star
High
Trip Costs
Good
Best!
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The result?
Success is seen as constantly
This is the trap of
the Transaction
Cost paradigm
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Human Cost, or Traveler Friction
Lost productivity Reluctance to travel Negative impacts on recruiting & retention Traveler health, safety issues
Why? Tougher travel policies make
travelers take on more wear and tear
Transaction Costs
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5 Star 1 Star 5 Star 1 Star Trip Quality (Travel Policy)
High
Trip Costs
Source: Scott Gillespie
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Companies want the lowest total trip cost,
which is a truly optimized travel program
Total Trip Cost
5 Star 1 Star Optimal
Human Cost, or Traveler Friction
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Trip Quality (Travel Policy)
5 Star 1 Star
High
Trip Costs
Transaction Costs
Source: Scott Gillespie
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The transaction cost paradigm has served the industry well, but now
Returns are small and diminishing and not sustainable
Suppliers chafe at heavy focus on price rather than value
Transaction cost model offers no strategic value, and
It offers travel managers a limited career path
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The transaction
cost paradigm
locks travel
management in a
low-value future
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The corporate travel industry needs a new paradigm one that:
Delivers quantifiable value to buyers
Gains significant support from suppliers
Brings important stakeholders into play
Elevates the role of travel managers
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The Total Cost of Travel paradigm
meets all these criteria
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The key
strategic goal is reducing the
Total Cost of Ownership
We must do the
same in travel
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Quantifying Traveler Wear and Tear
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tClara quantifies Trip Friction
6-hour red-eye flight, with a 4-hour layover, connecting on a regional jet, both legs in Coach, arriving home on Saturday morning, after 5 nights away
Trip B
6-hour non-stop in Business Class, arriving home on Friday afternoon, after 2 nights away
Trip A
300 Trip Friction Points
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Joe Road Warriors Last Year
10 weeks away from
home
Over 200 hours in flight, 65% done on personal time
More flight hours on own time than
annual vacation time
Crossed 80+ time zones
Source: tClaras Trip Friction database
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37%
20%
17%
15%
13%
9%
7%
43%
42%
43%
44%
41%
34%
25%
I sleep much better at home than I do when traveling
I find it hard to have a healthy lifestyle when traveling
I worry about the impact of traveling for work on my personallife
Travel often causes me to be less effective during or right aftermy trips
I find it hard to keep up with my workload while traveling
I occassionally get sick or need time off because I travel somuch
I get afraid during some of my trips
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Survey results: Road warriors show strong indicators of travel friction
32%
43%
54%
59%
60%
62%
80%
tClaras survey of 100 random business travelers who travel at least 3 nights a month, ages 25-65, full-time employment, minimum $50K income per year. Conducted November 5th, 2015
Strongly agree
Agree
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10%
36 10 I am or have recently been close to
being burned out on travel 46%
The eye-opener:
Are half of your road warriors at risk?
tClaras survey of 100 random business travelers who travel at least 3 nights a month, ages 25-65, full-time employment, minimum $50K income per year. Conducted November 5th, 2015
Strongly agree Agree
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Trip Friction is clearly correlated with
higher road warrior turnover
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3% 3% 6%
10%
16%
Low TripFriction
ModerateTrip Friction
Fairly HighTrip Friction
High TripFriction
Very HighFriction
Illustrative Traveler Attrition Rates
Source: tClara studies covering ~3,900 travelers from multiple clients over a multi-year period
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Replacing executive talent is very expensive
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50% to
200% of the
annual
salary
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The Path Forward for Travel Managers
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http://www.flickr.com/photos/nicolawhitaker/111009156/
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1. Get the HR Facts
Identify your road warriors in each of the last 3-4 years
Ask HR how many have left, and when
Ask HR to estimate the cost of replacing these folks
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2. Line managements interest?
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3. Focus on business goals
Recruiting Reduce time to fill open jobs by two weeks
Retention Reduce turnover from 12% per year to 4%
Productivity Less wasted time, more and better sleep
Health & Safety Reduce work days lost by 10%
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Among Road Warriors
Increase Sales by 5%
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Less or
Shared Travel
Easier,
Safer,
Healthier Travel
Hard
Trip Bonuses
Recognition,
Rewards
Recruiting,
Retention
Analytics
Tiered Policies Travel Culture
4. Develop traveler -focused strategies
Traveler-specific
allowances
Traveler-focused
Strategies
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Meanwhile, lets talk about which of your road warriors are about to quit.
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0
10
20
30
40
50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Number of Travelers Who Quit Forecast Actual Goal
Traveler Risk
Score
Risk
Trend
D. Okamoto 10
Z. Pinkston 10
A. Eagan 10
B. Haapala 10
R. Lunn 9
J. Toon 9
R. Rollman 9
K. Maier 8
D. Kephart 8
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The Wrap-up
Our current travel management model is a dead end
Senior management wants the lowest total cost
Travel friction is costly and quantifiable
Travel managers must now focus on business goals
Its time for the Total Cost of Travel model
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Thank you! Scott Gillespie
[email protected] glad to connect on LinkedIn