#9: Measuring YOUR value

Metric Type                                                      Level
     SAVINGS: Yes                                              MASTER
     SERVICE: No                                                 ADVANCED
     SAFETY: No                                                   BASIC
     SUSTAINABILITY: No

Description
So you're a travel manager. Are you worth it? What is your ROI?

What I mean is that do you, and your corporate travel management program, create more value for your company than your cost? 

If your company takes a strictly spend-and-savings approach to corporate travel management, then the numbers better add up in your favor. 

According to Business Travel News, the average travel manager made about $98,000 in total compensation in 2012. That means at the most basic level, in order to have a positive ROI, that travel manager should have created at least $98,001 in savings for the company. (Coming up short? Read the other entries in this blog to find additional ways of capturing savings that you may not be recognizing). 

But wait...to get the true picture of whether your program is worth its cost, you need to add in the total cost of program management. Here's your list:

• Internal Cost: This includes not only your salary, but the other costs to the company related to you and any other employees supporting the corporate travel program. This means your T&E costs, equipment, phone charges, space allocation, training, etc. It may be hard to get the exact cost of these items, so I would suggest asking Finance for a suitable percentage based on the total employment and total costs to the company for supporting employees ("overhead costs"). Let's just say here that this figure is 10%, meaning you must add another $9,800 to the average salary to come up with the loaded costs. Do the same for each FTE that supports the program...so if there is another person who splits his/her time between travel management and facilities for example, add half of that person's costs to your program management costs.
• TMC Cost: This should be simple to calculate. Just get a statement from the travel agency(ies) that support your program that shows how much your company paid them for services in a given time period. This typically includes transactions fees, account management fees, maybe licensing or reporting fees, services fees for RFPs or benchmarking.  Just the total amount paid to them. 
• Other Cost: If you engaged a third-party to help support your program--like consultants (a wise investment), safety/security services, audit firms, RFP assistance, data aggregators, benchmarkers, etc.--then total up how much you spent on these services.

Now you have all the components of your program management costs. I assume you also have your spending and savings totals for the same period. That's all you need.

Formula
Program Savings / (Internal Cost + TMC Cost + Other Cost) = Program Management ROI

Let's do an example with the following data points:

• Internal Cost = 1.5 employees with a total compensation of $115,000 plus a 10% overhead cost for a total Internal Cost of $126,500
• TMC Cost = 10,000 transactions at an average of $20 per transaction, plus $10,000 in account management, plus $10,000 in hotel RFP fees. Total TMC Cost = $220,000
• Other Cost = $10,000 for safety/security program, $25,000 for airline RFP help. Total TMC Cost = $35,000
• Savings = total for airline, hotel, car rental, TMC, and behavioral savings = $500,000

So, the formula is:
      $500,000 / ($126,500+$220,000+$35,000) = $1.31

This means in this example, for every $1 spent on travel management, the company saves $1.31. 
     
Usage
Okay...now you have a number...what do you do with it?

First, if the number is less than $1.00, that means that your cost is higher than the savings you are generating/capturing for the company. You need to read this blog to find other ways of capturing savings that your program may be generating. Some of these metrics are a bit challenging to calculate, but let's face it, you need all the help you can get. 

Next, if your program seems to be saving less than it costs to administer, start benchmarking with peers to see where and why your program is falling short. Maybe your airline discount levels are too low compared to what your volume can typically justify. Maybe you need to expand your hotel program. Maybe you need to look into promoting travel alternatives like videoconferencing. 

Let's say your figure is over $1.00. That means you're saving more than  you cost. Congratulations. Your next step is to benchmark this result with other peer companies to see how you stack up. This is a safe metric to compare because it doesn't reveal your actual total spend, costs, or savings. It's just a benchmark number that can be easily compared with other companies' benchmarks.

If your number is higher than others, then you can point that out internally. Maybe use it to show that you are under-staffed compared to others and that your savings supports hiring more help. 

If your number is lower than others, then see the first couple paragraphs of this section.

Caveat
Relying strictly on spend-and-savings metrics can be a dangerous game. A well-managed corporate travel program creates value that can't be easily distilled into dollars. 

A strong safety program with processes and protocols helps the travelers and the company by minimizing risk. The value is real, but difficult to quantify.

Ensuring that the level of customer service delivered by the TMC and suppliers saves travelers time and grief. I suppose you could quantify some time-savings created by eliminating the traveler need to search for the lowest fares from multiple sources, or to measure the impact on employee morale of having a TMC available to help when events necessitate a change in plans, but those are hard to calculate and some people seem them as dubious measurements. 

Tracking and mitigating environmental impact supports many companies' green initiatives, but quantifying the dollar value that a supportive travel program creates is challenging as well.

So...it's good to have a positive ROI. It's also good to make sure that everyone at your company recognizes the other values your program creates. Be proactive in managing this, or someone else might do it for you.

#7: Travel Agency Transaction Fees

Metric Type                                                      Level
     SAVINGS: Yes                                              MASTER
     SERVICE: No                                                 ADVANCED
     SAFETY: No                                                   BASIC
     SUSTAINABILITY: No

Description
When it comes to metrics, I've always embraced the "Trust But Verify" approach. Your travel agency (or travel management company or TMC) should be your trusted partner in managing your company's travel program. You pay it a fee in exchange for its assistance in reservations and service.

But let's face it, sometimes wires get crossed. Sometimes you are paying more than your agreement outlines, but because no one is paying close enough attention, you never find this out. I'm not saying a TMC would do this purposefully (and hope to remain in business), but I have found that doing a quick and easy measurement of fees is worth your time and effort. 

This metric works if you are paying your TMC a transaction fee for each reservation. You simply measure the number of charges you receive compared against a benchmark like airline tickets issued. We know that the number of TMC fees should exceed the number of airline tickets issued because of changes and refunds, and the like. It's the change in the ratio between TMC fees and Airline Tickets that is the key here.


Formula
Total Number of Transaction Fees Charged / Total Number of Airline Tickets = Travel Agency Fee Ratio

For example, one of my clients began its partnership with a TMC with a ratio of 120 transaction fees for every 100 airline tickets issued (a ratio of 1.20). This metric slowly increased over the span of two years to 151 transaction fees for every 100 tickets (1.51). 


Usage
As you can imagine, this metric sent off some warning bells once we started measuring it. The funny thing is that we never would have noticed it in the normal course of business, but we were looking for the total we paid the TMC for a year and simply applied historical measurements to it. 

Turns out that both the TMC and the company were "at fault." The TMC was double-counting certain online transactions that were 'touched' by an agent (instead of simply reverting to a 'touched' fee, the TMC was charging both the initial fee and a touched fee). Because the company was pushing online adoption hard, but hadn't given enough training to the travelers on what information was required for billing, a larger number of transactions were transitioning from no-touch to touched.  The agency corrected its transaction billing, and the company increased training to streamline the booking process.

The Purpose of this Blog - Introducing the Four Ss

First off, let's be clear...if you are a corporate travel manager, or an account manager for a travel agency, or a travel supplier representative, you are not reporting all the value you are creating for the company you are servicing.  And by not doing so, you are at least hindering, if not outright hurting, your program and potentially your own career prospects.

Traditionally, the metrics reported by corporate travel programs are limited to the amount the company spends on travel, some level of savings generated by the program (although typically far-from-comprehensive totals), and, in some cases, periodic traveler satisfaction scores. A well-managed travel program, however, creates value far beyond these basic metrics. Unfortunately, not many take the effort to quantify this expanded value proposition, and in not doing so, they expose their programs to some significant challenges that can be easily avoided.

If you're a corporate travel manager, is your department simply seen as a cost center? Has your firm ever imposed a "travel freeze"?  Do you spend too much time addressing anecdotal service issues? If so, you haven't communicated the total value of your program.

If you work for a travel agency that supplies corporate travel services, have you ever lost a client because a competitor offered a transaction price a couple of dollars cheaper than yours? Has a departing client ever justified leaving by saying "it is just time for a change"? If so, you haven't communicated the total value you can create for a company's travel program.

If you work for an airline, hotel, car rental firm or other travel provider, have you lost business to competitors based solely on small price variations? Are you seen as a commodity by your clients, easily replaced?  If so, you haven't communicate the total value you can create for a company's travel program. 

The purpose of this blog is identify how to identify and track all the value created by and for well-managed corporate travel programs. Most entries will focus on one metric at a time. However, they will be categorized using a more-expansive view of value creation than is typically used in corporate travel today. We have four primary categories of value:

1. SAVINGS: these metrics compare your program's performance to a) what the cost would be with no program in place, and b) the changes in your program's performance over time.
2. SERVICE: these metrics track the quality of the experience various stakeholders have with the travel program. Typically thought of through a traveler-centric lens (e.g. traveler satisfaction, SLAs, phone performance); we expand the focus to include line manager, senior management, supplier, and other stakeholder interactions with the program.
3. SAFETY: these metrics track how safe and productive travelers are when on the road for the company. Individual-level, corporate-level, and global-level risk-exposure and management are all considered. These measurements are critical to meeting Duty of Care requirements, and for ensuring that travelers are treated and cared for appropriately.
4. SUSTAINABILITY: a growing concern for many companies, these metrics measure the environmental impact of travel programs. 

These are the four primary categories of value. In later posts we will discuss HOW to use the results of these metrics to enhance the value of your program to the company and how to use them to change behavior to meet your program objectives. But for now...just start tracking. 

And remember...if you don't measure it, you can't manage it. 

# 3: Travelers Alert Index

Metric Type                                                      Level
     SAVINGS: Possible                                        MASTER
     SERVICE: No                                                 ADVANCED
     SAFETY: Yes                                                BASIC
     SUSTAINABILITY: No

Description
Tracking and reaching travelers in potentially dangerous situations is key to addressing a company's Duty of Care responsibilities. 

While many companies have these components in place, and do in fact reach out to and assist travelers as events warrant, not many have metrics in place to measure the ongoing effectiveness of these efforts. Without tracking, companies a) have no idea how well they are servicing travelers in need and meeting Duty of Care requirements--either for a singular event or over time, and b) get little-to-no credit (outside the immediate parties involved in the situation) for delivering this valuable service. 

Establishing a basic metric here only requires two components: a capable and willing travel agency, and a tool/system that tracks global events that could negatively affect travelers.

Formula

Travelers Alert Index (TAI) = Total number of travelers in high-alert regions / Total number of travelers

• In Q3, we had 80 travelers in areas where a Level 4 or 5 safety alert was issued. Globally in Q3 we had 425 total travelers. The formula for TAI is 80/425 = 19%.
  Last year for the same quarter, our TAI was 30/415 = 7%.
  This significant increase is primarily a result of increased travel to County X.    

Usage
This metric is used to evaluate, over time, changes in the percentage of travelers operating in potentially dangerous areas. As this percentage increases, it may require further actions on the firm's part to put in place further processes (ex: pre-approval of these types of trips), services (ex: repatriation services), and tools (ex: enhanced insurance coverage) to address changing needs. 

This type of metric is easily understood by non-travel professionals.