trip friction and managed travel 2.0
DESCRIPTION
Desribes two frameworks for managing corporate travel. Trip Friction is tClara's way of measuring traveler wear and tear, such that a travel manager or HR leader can pre-empt travel-related burnout risks. Open Booking shifts much more responsibility to the traveler and the travel budget owner, while requiring travelers to book in ways that provide their booking data to their employers quickly.TRANSCRIPT
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
3/14/2014 7 Gillespie’s Guide to Travel+Procurement
1995 2015
High
>
Incremental
Value
Low
The
castles
have been
built
Solid, safe, enduring – a valuable base
Immobile,
inflexible
value
3/14/2014 9 Gillespie’s Guide to Travel+Procurement
it’s time
new sources
to find
of
3/14/2014 10
not
Castles
Ships
We need
Where are the new frontiers?
3/14/2014 11 Gillespie’s Guide to Travel+Procurement
Open Booking Traveler Friction
Open Booking’s Four Principles
3/14/2014 12 Gillespie’s Guide to Travel+Procurement
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
3/14/2014 15 Gillespie’s Guide to Travel+Procurement
Edit Rights will be essential
3/14/2014 16 Gillespie’s Guide to Travel+Procurement
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?
3/14/2014 20 Gillespie’s Guide to Travel+Procurement
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
Travel Policy None Harsh
High
Costs
Supplier Cost
Traveler Friction Is The Hidden Cost of Travel. It’s an HR Issue
Source: Scott Gillespie
Human Cost, or Traveler Friction
• Lost productivity • Reluctance to travel • Negative impacts on recruiting & retention •Traveler health issues
Travel Policy None Harsh
High
Costs
Supplier Cost
The Total Trip Cost Is What Matters
Source: Scott Gillespie
• Lost productivity • Reluctance to travel • Negative impacts on recruiting & retention •Traveler health issues
Total Trip
Cost
Supplier Cost + Human Cost = Total Trip Cost
Human Cost, or Traveler Friction
Travel Policy None Harsh
High
Costs
Supplier Cost
So We Must Measure Human Costs To Find The Lowest Total Cost and Optimal Policy
Source: Scott Gillespie
• Essential • Not well understood
Total Trip
Cost
Human Cost, or Traveler Friction
Listening for
Traveler Friction
Is this the best we can do?
Traveler Complaints Business Leaders’ Complaints
Travel Policy None Harsh
High
Costs
Supplier Cost
If Human Costs are high, then the optimal travel policy is lighter
Source: Scott Gillespie
Total
Trip
Cost
Human Cost, or Traveler Friction
Travel Policy None Harsh
High
Costs
Supplier Cost
If Human Costs are low, then the optimal policy is harsher
Source: Scott Gillespie
Total Trip
Cost
Human Cost, or Traveler Friction
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?
Travel Policy None Harsh
High
Costs
Supplier Cost
Goal: Predictable Impact of Travel Management
Source: Scott Gillespie
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
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