why trip friction matters, and how to use it

Travel Data Made Brighter A Gillespie+Diio Venture

Why Trip Friction™ Matters And How To Use It

March, 2014

tClara and Trip Friction are trademarks of tClara LLC © tClara 2014

Scott Gillespie

• Co-founder of tClara, a travel data analytics firm focusing on Trip FrictionTM

• Speaker and writer on innovation and best practices in managed travel

• Founder and former CEO of Travel Analytics, a pioneer in airline sourcing

• Author of a U.S. patent on airline contract analysis

• MBA, University of Chicago

30.3.2014 2

Managing Partner, tClara Author, Gillespie’s Guide to Travel+Procurement

Pushing the corporate travel industry to think new thoughts and create more value

Little change in 100 years

3/30/2014 3 Gillespie’s Guide to Travel+Procurement

Where we’re headed

Discuss and Debate

Engaging the Business

Traveler Friction

We Need New Frontiers

Managed Travel 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

3/30/2014 10

not

Castles

Ships We need

Where are the new frontiers?

3/30/2014 11

Gillespie’s Guide to Travel+Procurement

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



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


Listening for

Traveler Friction

Is this the best we can do?

Traveler Complaints Business Leaders’ Complaints

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

HR has lots of good metrics Turnover Rate Cost per Hire Sick Days Healthcare Costs Productivity Metrics Engagement Scores Performance Ratings Employee Potential Ratings

Measuring

HR costs

travel-related

is a

New Frontier

Traditional travel metrics don’t work

6 trips between San Francisco and Seattle

Higher Trip Friction

$24,000 buys 12 round trips between L.A. and San Francisco in coach

6 trips between Phoenix and Frankfurt

$24,000 buys one first class ticket, NYC to Sydney

6,000 miles flown between D.C. and NYC in a quarter (15 trips)

6,000 miles flown between D.C. and Seattle, one trip

Trips?

Spend?

Miles?

or

or

or

Trip Friction™ measures what matters

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

27

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

28

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


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


Companies should understand their travel requirements from the traveler’s perspective

Does your program have too much traveler friction? Some is controllable, much is not

Our Firm’s Trip Friction

score is in

the 87th percentile. That’s not

great.


High

Costs

Supplier Cost

Goal: Reduce High-cost, Controllable Traveler Friction


Traveler Friction

Trip Friction™ shows which travelers truly travel the hardest

Illustrative

Trip Friction can be a basis for tiered travel policies

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

[email protected] Glad to connect on LinkedIn

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Identify those travelers who are clearly “high friction”

Illustrative

A: Build a Trip Friction Fact Base

Metrics

Turnover

Engagement Scores

Health Costs

Sales

Productivity

Customer Satisfaction

High Friction Travelers

+9%

-11%

+7%

-12%

-8%

+15%

Q: Does High Trip Friction Matter to Your Business?

HR

Business

A: Build a Trip Friction Fact Base

Metrics

Turnover

Engagement Scores

Health Costs

Sales

Productivity



+9%

-11%

+7%

-12%

-8%

+15%


HR

Business

Then test for differences

30.3.2014 39

Metrics

Turnover

Engagement Scores

Health Costs

Sales

Productivity



+9%

-11%

+7%

-12%

-8%

+15%


Develop Mitigation Strategies

Quarterly Monitoring

Example: Trip Friction Demand Management Strategy

Top Travelers

By

Spend

Top Travelers

By

Friction

High

Spend

High

Friction

Trip Friction Demand Management Strategy

Set a goal of reducing Spend

and Friction among this

group

• These high-value employees are likely at some risk

of burnout or attrition

• Easy to identify and engage – Some will not want or need help – Some will not be able to reduce their travel – Some will be grateful for the support

• Use benchmarks to help set goals

• Easy to measure results

• Helps build valuable relationships with HR and

Business Leaders

High

Spend

High

Friction

Tailor interventions for this key group of travelers

Less

Travel

Easier

Travel $$ Recognition

Support,

Counseling

Trip Friction Demand Management Strategy

Traveler's

Rank

Traveler

Name or ID

Trip Friction

Points, 12

Month Total

Percentile

Rank, Our

Firm

Percentile

Rank, All

Firms Q1 Q2 Q3 Q4

Trend,

Last 6

Months

1 Jori 22,560 96% 89%

2 Jana 21,730 95% 88%

3 Jamie 21,690 95% 88%

4 Jon 20,370 95% 88%

5 Jerry 18,650 92% 85%

6 Jayesh 18,120 92% 85%

7 Jules 17,600 88% 81%

8 Jhana 17,360 88% 81%

9 Jim 16,920 84% 77%

10 Jesper 16,840 84% 77%

Traveler's Trip Friction Points

Annual Traveler Ranking and Quarterly Friction

Track traveler progress internally and against benchmarks

8.1

10.9

6

7

8

9

10

11

12

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Tri

p F

rict

ion

Inte

nsi

ty S

core

Trip Friction Intensity Trends

Benchmark Our Firm

Monitor your entire program’s friction footprint against the benchmark

Metrics

Turnover

Engagement Scores

Health Costs

Sales

Productivity



+9%

-11%

+7%

-12%

-8%

+15%

Add these metrics to your travel program’s KPIs

Use Trip Friction to deliver new value to your business

2.6%

Lower Turnover

High Scores Low Scores

Stronger Engagement

Lower Total Cost of Travel

In Summary • Managed Travel 1.0 has peaked • We need ships, not castles • Traveler friction is a new frontier • Find out if traveler friction matters in your firm • Add new business metrics to travel program KPIs • Use Trip Friction™ to deliver new value to your firm

Thank you! Scott Gillespie

[email protected]

Follow “Gillespie’s Guide to Travel+Procurement”

Glad to connect on LinkedIn