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Streamlining Business Travel? Don't Cut Too Deeply
May 06, 2008
Focus on efficiency and effectiveness, not ways you can cut corners
By Izabella Iizuka
One quick look at any recent newspaper's headlines will tell you all that you need to know about travel today. Airlines are going out of business or curtailing their schedules, suffering mightily as the cost of fuel continues to spiral upward. Meanwhile, airplanes are being grounded for unscheduled safety inspections, stranding passengers at the same time they're raising ticket prices.
In the best of times, keeping your sales teams productive on the road is a challenge, but in today's belt-tightening world, it's practically a full-time job in itself. For the most part, the problems managers face today are the same as in previous years. But when combined with the general economic malaise plaguing the U.S. (and thus the global) economy, the ever-increasing pressure on reducing expenses has some managers thinking of scaling back on their teams' travel.
"The global economy is a major concern right now, but the issue directly impacting the corporate traveler is the ever-rising cost of fuel," says Suzanne Fletcher, director of travel management for Redmond, Wash.-based Concur, a provider of on-demand business services that automate employee spend management. "When the economy gets tight, some companies seem to immediately target travel as the place to reduce costs. You have heard it a million times: 'If you need to reduce travel costs, reduce the number of trips.'But that's not necessarily the wisest course for companies to take. Conventional wisdom dictates that when sales are down, sales travel should be going up!"
Expense aside, even if a company wants to send salespeople on the road more often, they might find it increasingly difficult because the direct result of higher fuel costs might be reduced capacity. It's an especially difficult problem because cutbacks in capacity might result in several hurdles for business travelers to navigate: greater cost, fewer choices of times and routes, and in some cases, longer trips. "With these new restrictions in place, not only are options reduced but layovers are extended," Fletcher says. "That could mean an additional overnight—which is a cost to the company as well as the traveler and his or her family—and an increase in unproductive time."
Susan Gurley, executive director for the Alexandria, Va.-based Association of Corporate Travel Executives and the ACTE Global Centre for Research and Education, agrees that cutting back on business travel can have a negative impact on revenue and shouldn't be the default solution.
"The greatest challenge for travel managers is maintaining traveler productivity and program effectiveness at a time when recession typically calls for making cutbacks," she says. "Indiscriminately traveling less may simply undercut corporate objectives. Improving the booking and back office systems is a traditional approach to cost containment, but often requires an investment in new hardware or software. The time has come to look for a new paradigm. ACTE advocates traveling smarter, not necessarily more often."
One of the first places to look at when stretching those travel dollars is meetings between internal employees. Companies report that as much as 40% of their budget is reserved for internal meetings. Eliminating some of that expense through laptop teleconferencing is enabling many executives to meet with each other without ever leaving their desks, with some companies reporting millions of dollars saved without a drop in productivity. Using virtual meetings for internal staff leaves more of the budget intact for revenue-generating travel.
Tech to the Rescue, Again
There are a number of ways companies can use tech to trim costs, the most obvious being online travel booking tools. On average, companies can cut their transaction fees by 50% compared with bookings via phone. And while many people are aware that using online sites can cut airfare and hotel costs, they also help road warriors become more efficient. For example, by plugging in the address of a meeting, travelers can pick the closest hotel to save time and avoid congested streets and highways.
Sometimes tech's benefits aren't even directly related to the travel itself, but rather to the "busy work" it makes necessary, such as filling out expense reports. "One thing companies can do in any economic climate is to streamline and automate the tedious processes that cost them money and cost their travelers productivity," says Fletcher, who is the former CEO and president of NBTA. "This accomplishes two things: First, it drives down the cost of travel to the company by ensuring that all travel spend is within policy, and provides visibility into all of the travel spend.
"Second, companies can save hard dollars by making the process of tracking and managing spend much more efficient. Imagine booking a trip online, taking the trip, then returning to your office to find your expense report already completed, with accurate data from your booked travel and actual spend, plus e-receipts sent directly to your electronic expense report by hotel, car rental companies and other travel suppliers. Spend is accurately reconciled, employees are happy because their work is done for them, and the company has complete visibility and control over travel spend.
"Technology is an extension of a gifted travel manager's abilities," Gurley says, "freeing an executive from travel-related busy work so they can focus on higher corporate strategies that boost growth, contain costs and increase traveler productivity.
"What technology costs the industry in reducing the number of events that require a physical presence [via Webinars, virtual trade shows, etc.], it pays back tenfold in reducing time out of the office, increasing productivity, and allowing resources to be redirected for revenue-generating programs," Gurley says.
Do More with Less Overseas
There's a new trend that's going to have an increasing impact on business travelers: the aforementioned global market. While troubles here in the States might be hindering economies all over the world, few businesses can meet their long-term growth goals without doing business in other countries.
International travel does indeed cost more, especially given the dwindling power of the U.S. dollar in foreign exchange markets, but the toll it takes on salespeople is even greater. Travel fatigue hurts salespeople during their meetings, potentially decreasing the chances of making the sale, while job dissatisfaction due to the rigors of long, continent-hopping flights can hurt a company's employee retention.
Drawbacks notwithstanding, international travel is on the rise, even though there's little room in most travel budgets for the types of creature comforts that make the trips easier, Fletcher says. Not many of those road-weary salespeople have the option of flying first class.
"I can tell you the industry is predicting a downgrading of corporate policies, but that is a tough request when you are asking travelers to do more international travel with quicker turns than in the past," Fletcher says. "Many a corporate traveler find themselves landing in the early morning and are asked to go directly to meetings after an overnight flight. Are they ready to perform after being in economy class? That is an answer for each company to decide.
"One way some corporations are dealing with it is the use of upgraded economy. Carriers such as United (Economy Plus) and British Airways Premium Business have offered an enhanced coach that has become very popular with corporate travelers that choose, or are required, to fly less than business class.
"I think you will also see many approved first class travelers downgrading to business, again, making it even less available for upgrades and even purchases," Fletcher concludes.
Sales & Marketing Management Magazine
This article is brought to you by Sales & Marketing Management, the leading authority for executives in the sales and marketing field.
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