Download - Trip Friction and Managed Travel 2.0

Trip Friction and Managed Travel 2.0

Scott Gillespie

30.10.2013 Helsinki

Scott Gillespie

• Co-founder of tClara, a travel data analytics

firm focusing on Trip Friction

• Founder and former CEO of Travel

Analytics, a pioneer in airline sourcing

• Author of a U.S. Patent on airline contract

analysis

• Speaker and writer on innovation and best

practices in managed travel

14.3.2014 2

Managing Partner, tClara

Author, Gillespie’s Guide to Travel+Procurement

Pushes the corporate travel industry to think

new thoughts and create more value

Little change in

100 years

3/14/2014 3 Gillespie’s Guide to Travel+Procurement

Where we’re headed

Discuss and Debate

Traveler Friction

Open Booking

We Need New Frontiers

Managed Travel (MT) 1.0 has Peaked

• 1994: Delta Air Lines caps commissions,

triggers TMC transaction fees and cost center

mentality

• Late 90’s: Strategic sourcing, corporate online

booking tools and Prism put travel management

in spotlight

• 2007: UK’s Corporate Manslaughter Act makes

duty of care a high priority

Key Drivers of Managed Travel 1.0

Consolidate TMCs

Consolidate T&E card programs

Consolidate travel data and reporting

Comply with duty of care

Use KPIs and benchmarking

80+ % online adoption

90+ % travel policy compliance

Optimize air, hotel and car programs

After 20 years, best practices for Managed Travel 1.0 are well known

Managed Travel 1.0 has reached

diminishing returns


1995 2015

High

>

Incremental

Value

Low

The

castles

have been

built

Solid, safe, enduring – a valuable base

Immobile,

inflexible

value


it’s time

new sources

to find

of

3/14/2014 10

not

Castles

Ships

We need

Where are the new frontiers?


Open Booking Traveler Friction

Open Booking’s Four Principles


1. Shop anywhere – period.

2. Book anywhere – so long as data is captured quickly

3. Book anybody – so long as suppliers are safe

4. Book anything – so long as it is in budget

• “I have had open booking for several years. It can and does work but it was

a lonely trail until recently. Conversations with TMCs, airlines, expense

tools, hotel chains and other partners have exploded in the last 12

months though.

• There is a realisation amongst all of these groups that they need to get a

handle on the drift away from traditional policies in many corporates and

find new value propositions - ones that focus more on the traveller than

the travel manager in many respects.

• There is a need for TMCs and travel managers to move from enforcement

to empowerment... you can only fight a tide for so long and the question "I

can get it cheaper on XYZ.com" still remains unanswered by most

companies and travel 2.0 is searching for a way forward pulling the

customer and the data into a virtuous environment.”

Mike Tangney at Google says: (emphasis added)

Published on “Managed Travel 2.0” discussion group, LinkedIn, 12 Jul ‘13

Evidence supports Open Booking

GBTA’s “Global Business Traveler 2012” study of

840 U.S. managed and unmanaged travelers:

1. Unmanaged travelers were happier with their

trips

1. For traveler comfort and convenience

2. For interesting and enjoyable trips

3. For getting the best prices

2. Unmanaged trips cost 3% less than managed

trips

Open Booking is NOT Unmanaged

Brand.com

or OTA

Corporate

Traveler

Corporate

Booking

Data

Traveler’s

Expense

Report

Net of

Discounts

Duty of Care

Provider


Edit Rights will be essential


Corporate

TMC

Trip

Changes

Right to edit or

cancel the

booking

Everybody is

happy!

Corporate

Booking

Data

Corporate

Traveler

Brand.com

or OTAs

Net of

Discounts

The data channel trumps the booking channel

Data Channels

over Booking Channels

Payment Providers

become

essential

data suppliers

morph into

Traveler

Subscription fees

TMC Booking

fees

Security and Service

Where are the new frontiers?


Open Booking Traveler Friction

How do we optimize a travel program?

Travel Program KPIs

Spend Savings Prices Variances

Finance,

Procurement

Policy Compliance Traveler Satisfaction.

Travelers Operations

Agent Productivity Call Service Quality

Travel Policy None Harsh

High

Costs

Supplier Cost

Travel Supplier Costs Are Controlled by Travel Policy and Procurement

Source: Scott Gillespie


High

Costs

Supplier Cost

Traveler Friction Is The Hidden Cost of Travel. It’s an HR Issue


Human Cost, or Traveler Friction

• Lost productivity • Reluctance to travel • Negative impacts on recruiting & retention •Traveler health issues


High

Costs

Supplier Cost

The Total Trip Cost Is What Matters


• Lost productivity • Reluctance to travel • Negative impacts on recruiting & retention •Traveler health issues

Total Trip

Cost

Supplier Cost + Human Cost = Total Trip Cost



High

Costs

Supplier Cost

So We Must Measure Human Costs To Find The Lowest Total Cost and Optimal Policy


• Essential • Not well understood

Total Trip

Cost


Listening for

Traveler Friction

Is this the best we can do?

Traveler Complaints Business Leaders’ Complaints


High

Costs

Supplier Cost

If Human Costs are high, then the optimal travel policy is lighter


Total

Trip

Cost



High

Costs

Supplier Cost

If Human Costs are low, then the optimal policy is harsher


Total Trip

Cost


Companies

spend about

the same on

travel as

they do on

turnover:

1-3% of revenues

Source: “Retention of Key Talent and the Role of Rewards”, Scott, Hay Group, June 2012. tClara analysis

Human Resource KPIs Turnover Rate

Cost per Hire

Sick Days

Healthcare Costs

Productivity Metrics

Engagement Scores

Performance Ratings

Employee Potential Ratings

Measuring

human costs

travel-related

is a

New Frontier

Trip Friction™ - a measure of the traveler’s experience

6-hour non-stop in Business Class, arriving home on Friday afternoon, after 2 nights away

Trip A 6-hour red-eye flight, with a 4-hour layover, connecting on a regional jet, both legs in Coach, arriving home on Saturday afternoon, after 5 nights away

Trip B

300 Trip

Friction

Points

900

Points

10 Firms in tClara’s 2013 Trip Friction

Benchmark Study

By Industry

High Tech 5 firms

Consulting 3 firms

Financial 1 firm

Manufacture 1 firm

By Annual Air Spend (USD)

$1<10MM 2 firms

$10<25MM 5 firms

$25<50MM 1 firms

$50+MM 2 firms

Avg. Annual Air Spend, USA POS $36MM

35

44%

27%

10%

19%

Work Time 8a-6p, M-F

Home Time 6p-10p, 6a-8a M-F

Sleep Time 10p-6a, M-F

Weekend Time Sa-Su

When Do Travelers Fly? Share of Total Flight Hours

56% on Personal Time

Source: tClara’s 2013 Trip Friction Benchmark study

Distribution of Trip Scores

42% are Harder Trips

27% 31%

20%

11%

4% 3% 2% 3%

Easy Moderate Fairly Hard

Hard Very Hard Fairly Extreme

Extreme Very Extreme

Source: tClara’s 2013 Trip Friction Benchmark study

Next Step: Calculate scores for each

traveler, and benchmark entire programs

A high score indicates a higher travel-

related retention risk, and perhaps the

need for a softer travel policy.

Our Firm’s

Trip

Friction

score is in

the 87th

percentile.

That’s not

great.

Should you treat high-friction travelers differently?

Illustrative

Should traveler friction be a

basis for tiered travel policies?

14.3.2014 40

Rank by Trip

Friction

Points

Traveler

Traveler's

Trip

Friction

Points for

2013

Traveler's

Percentile

Among All

Firms in

2013

1 Veera 22,560 96%

2 Riku 21,730 95%

3 Johanna 21,690 95%

4 Juho 20,370 95%

5 Lida 18,650 92%

6 Sami 18,120 92%

7 Jenni 17,600 88%

8 Teemu 17,360 88%

9 Sonja 16,920 84%

10 Oskar 16,840 84%

“18,000 points,

or the 85th

percentile”

Use industry-wide

percentiles

Should managers understand

each traveler’s recent travel

workload and trends?

41

High

Very High

Extreme

Can firms avoid losing their most

valued travelers?

Trip Friction Level

Very High

High – Med. High

Medium or Low

Circles represent employees High Value

Talent

at Risk?


High

Costs

Supplier Cost

Goal: Predictable Impact of Travel Management


Traveler Friction

Retention Rates Health, Safety Costs Productivity Levels Engagement Scores

Ticket Prices Room Rates Travel Spend

Summary, then Debate

• Managed Travel 1.0 has peaked

• We need ships, not castles

• Open Booking and Traveler Friction

are new frontiers

• Open Booking’s first challenges are

about technology

– Will change the role of TMCs

• Traveler Friction’s first challenges are

about HR costs

– Will change the role of Travel Managers

44

Kiitos / Thank you

Scott Gillespie

[email protected]

Glad to connect on LinkedIn

Traditional travel metrics don’t work

6 trips between

San Francisco

and Seattle

6 trips between

Phoenix and

Frankfurt

$24,000 buys 12

round trips between

L.A. and San

Francisco in coach

$24,000 buys one

first class ticket,

NYC to Sydney

6,000 miles flown

between D.C. and

NYC in a quarter

(30 one-way trips)

6,000 miles flown

between D.C. and

Seattle, a one-week

trip

Trips?

Spend?

Miles?

Higher Trip Friction

or

or

or

Download - Trip Friction and Managed Travel 2.0

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