5 Questions to Help You Create a Cost-Effective Travel Programme

5 Questions to Help You Create a Cost-Effective Travel Programme

by Patrick Post July 05, 2017

Travel programmes have a variety of goals, but if yours is focused entirely on “Spend and Savings”, it’s missing the point of an employee-facing service function.

Instead, you need to follow the principles of a balanced scorecard by setting KPIs that are relevant to specific areas of creating a cost-effective travel programme.

KPIs are like dials; when changed by proactive behaviour, they result in desired outcomes. For example, the dial relating to corporate credit cards can be swung to the right if travellers understand why their use is more cost-effective for the business.

To set those KPIs, you need to ask the following questions:

1. What percentage of the travel spend is under contract?

You probably have contracts with a number of TMCs, suppliers and corporate credit card acquirers. If you can find out how much (or little) of the travel spend is covered under those contracts, you’ll understand how effectively they’re being used.

Such contracts usually come with preferential terms, and if a KPI is formed around your desire to direct more of the budget under contract, the overall program should become more cost-effective.

Desired Outcome: Higher is generally better (however, there may be times when travel spend cannot come under contract)

Sources of the Data: Contracts with suppliers, TMCs, corporate credit cards 

2. What share of travel is booked via approved TMCs and the self-booking tool?

If you combine an open booking policy with approved TMCs, it’s vital you understand the degree to which travellers and their managers use the right booking channels.

If a high percentage of travellers are straying too far from the policy it may signal a need for stronger KPIs and targets.

The impact of such behaviour on the travel budget can be significant, which is why travel managers should be empowered to set KPI goals and have a clear understanding of how the KPI can be influenced, as well as the benefits of doing so.

Desired Outcome: The higher the better – ideally 100%

Sources of the Data: TMC, self-booking tool, expenses system 

3. What share of travel spend is placed on corporate credit cards?

One of the key challenges travel buyers say they face is data consolidation. With travellers booking out of policy and in different places, piecing together the data is key for reporting spend back to management but also knowing where to make budgetary decisions.

Corporate Credit Card data can add value because the data they capture is actual spend data; not only the spend related to the room, but also food & drinks, parking and other services used at the hotel.

Encouraging travellers to spend on their corporate credit card can be beneficial to you as it provides visibility on exactly how much is being spent with the volume of miscellaneous travel expense included.

Desired Outcome: The higher the better

Sources of the Data: Corporate credit cards, expenses system 

4. How much have we saved through negotiated rates?

Negotiating rates through TMCs is time-consuming, but this metric will help you quantify the value (or otherwise) of negotiated rates to see if the time securing them is well spent.

Consider the manager who focuses their effort entirely on securing a low rate. While this may on the surface result in a favourable Key Program Metric (KPM) for the average ticket price, if they were instead given a KPI that encourages them to regularly compare negotiated rates online, they may find additional savings.

Desired Outcome: Higher is generally better

Sources of the Data: Contracts, TMC, self-booking tools 

5. What percentage of travel spend goes on measuring it?

A KPI needs to be significant and actionable, but you need to know how it can be influenced.

Understanding how much of the travel budget goes towards measuring travel spend will enable you to analyse its cost-effectiveness. After all, if something isn’t being measured properly, it can’t be influenced and additional savings will remain undiscovered.

Desired Outcome: Lower is generally better, but too low and it can impact on the effectiveness of the travel programme

Sources of the Data: Expense system, travel programme expenses details

Takeaway

The cost-effectiveness of your travel programme is driven by the KPIs and targets you set. These should be actionable and you should know how to influence the KPIs. If you can measure the impact of each KPI on the budget, you’ll quickly find out where the inefficiencies lie and can work on optimising them.

Take the next steps – read our latest guide: How to Improve Travel Management Cost-Savings. Discover how you can provide value to the business without breaking the bank or being too restrictive.

 

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