Are you underestimating the impact of business travel?

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Are you underestimating the impact of business travel?

Travel Policy

iStock-513986104-croppedWhen businesses are trying to cut costs, business travel is often first on the chopping block.  This is because too often business travel is seen as an expense rather than an investment.  How should you be calculating the ROI of business travel programmes, so you can protect their funding?


In our last blog, we made the case that by considering the impact of business travel on recruitment and retention Travel Managers have an opportunity to optimise the value of corporate travel policies to the organisation still further.

But recruitment and retention aren’t the only areas where business travel impacts business performance and profitability.


The value of business travel

A post-financial-crisis report conducted by Oxford Economics USA tried to measure the relationship between business travel and company performance.  Its econometric modelling looked at the extent to which corporate performance would be adversely affected if a company eliminated business travel for two years.

The study found that the negative impact on profits would be felt almost immediately – peaking in the year after the two-year travel hiatus. 

The report states: “In the first year of a complete shut-down of travel, the company experiences a profit decline of 12% instead of 5% increase”.  It is a bleak picture, but it does make for interesting reading – especially for Travel Managers who are seeking to measure the value travel delivers for their organisation.


Measuring the impact of business travel

Business travel happens for many reasons, which does make measuring its impact more complicated.  For example, drivers for business travel include:

  • Customer visits
  • Sales and marketing
  • Internal meetings
  • Employee training
  • Trade shows, exhibitions and conferences
  • Hosting customers
  • Incentives and rewards

Of course, none of these travel expenses happens in isolation – so it is difficult to measure its impact.  For example, how can we be sure that the sale would not have been made if we didn’t visit the customer? 


Business Travel for sales

The Oxford Economics report highlights some important findings about the relationship between business travel and sales performance, as reported by the business travellers questioned. 

Some of the most interesting statistics include:

  • More than half said between 5% and 20% of new customers were the result of trade show participation
  • One third of business travellers said external conferences significantly impact customer retention
  • Prospects are more than twice as likely to become customers following an in-person meeting
  • More than half said reducing business travel will give their competition an advantage

It seems clear that as well as working closely with HR to measure the value of business travel, Travel Managers need to be working closely with Sales to measure the impact of their business travel programmes on sales results.

Perhaps most tellingly for Travel Managers, Oxford Economics reported that 81% of corporate executives said: “a slow economy requires more contact with clients, not less”. 

Sales Managers and Executives clearly have a strong advocacy role to play in conjunction with the Travel Manager for the need to maintain travel spend in times of cuts.  The report suggests that, in a recession, the value of business travel increases rather than decreases.

Oxford Economics reported that “three quarters of businesses believe that increasing travel while competitors are reducing it can build market share and customer relationships”.


Business Travel as sales incentive

As well as having a direct impact on sales performance, business travel also has an important role to play regarding morale and performance rewards in the sales department.

Rewarding top performers with away days and high-performers’ weekends away can be a huge boost to both morale and in inspiring performance boosts.  Sales competitions where a certain level of sales target has to be achieved before the sales person can be entered into the competition is a good way to ensure that travel costs don’t exceed the profits from the uplift in sales while also building hunger for new sales and rewarding high-performing staff.

Here, again, it is incumbent on Travel Managers to work closely with Sales Managers so that the real benefits of business travel are not only achieved but measured.

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