KPI Toolkit for Travel Managers

Updated Feb 2017

hierarchy-of-needs-kpis

Travel KPIs and benchmarks have not evolved much in the last 20 years.

Here’s a fresh, much more strategic look at what travel managers should be using to measure the success of their programs.

Start with an understanding of what business travelers need to do their jobs well.  That’s the Hierarchy of Needs, shown in blue.

Hard to argue that the ultimate goal of any business trip is to have a positive business impact, right?  So if that outcome depends on getting the road warrior through each level of needs, then travel managers should be working hard to ensure those needs are well met.

And that means measuring proxies for these levels to show how well said management is going.  Measure these KPIs, mange them well, and your travel program will achieve much greater impact for your business.  I’ll write about these travel benchmarks in more detail soon; for now, the basic ideas:

Risk Score combines the program’s overall readiness for managing travel risks, and the destination risk associated with the program’s travel footprint. Scale the results where high risk and poor readiness result in a high number.  Management will want to see this travel KPI driven down.

Trip Quality combines the quality scores for the flights taken and hotels booked by road warriors. Assign high quality scores to non-stop flights booked in first class, and low quality scores to flights with multiple stops and booked in economy class.  Same direction for hotels – the more stars, the higher the hotel quality score.

Road Warrior Attrition measures the annual rate at which the road warrior workforce loses its people.  Attrition is a very common HR metric…just need to tell HR who your road warriors are. Management probably wants to see this rate decline over time.

Trip Scrap Rate is the opposite of Travel ROI.  Here, we’re measuring the percentage of road warrior trips that in hindsight, the road warriors believe were not worthwhile.  The average is about 12%…clearly worth managing this number downward, right?

The most important of these four KPIs is Trip Quality, because it is a choice, a dial, that management can turn up or down.  Changing trip quality will affect travel prices in one direction, and will drive the other three KPIs in the other direction.

lets-manage-the-bigger-picture

Airfare Benchmarks Grow Up

Please don’t believe that having an old-school airfare benchmark from a peer set is going to tell you anything meaningful. Comparing your $555 average ticket price (ATP) to a benchmark’s $500 ATP is worthless…unless it’s been created from exactly your markets.

The Air Clarity airfare benchmark solves this problem, and goes two steps farther. Not only does it build a truly market-matched airfare benchmark at the overall program level, it breaks down the program’s percentage gap into two critical pieces:

The Product Mix gap measures the difference in airfare product features your program bought, versus those product features bought by the benchmark’s travelers. Product features include cabin, number of stops, days advance purchase, Saturday night stays, etc. Essentially, the Product Mix gap reveals how your travel policies and culture compares to your market-matched peers…an essential insight for policy-based savings estimation.

The Price gap measures the overall weighted difference in airfare prices, measured at the smallest practical level – same city pair, same airline, same booking class, e.g., Y, B, M, H, etc.  This single metric instantly reveals the potential for sourcing-based savings.

Air Clarity's 3 Most Important Airfare Benchmarks.png

Airfare Benchmarks in Price per Hour

For a much more executive-friendly way to discuss the cost of air travel, forget price per mile…really, what does 25 cents a mile mean to anyone not in the aviation industry?

See this post for a range of price per hour benchmarks in short haul (mostly domestic) markets and long haul (international) markets. The Air Clarity Price per Hour benchmarks also come by cabin…great context for those executive briefings.

KPI Toolkit for Travel Managers, as of 2012

Back in 2012, four of us took up Paul Tilstone‘s challenge to create a set of Key Performance Indicators for travel category managers.  Nicolas Borel, Torsten Kriedt, James Westgarth and I have been working on this project for quite a few months now.

We settled on twenty-one KPIs, complete with definitions and likely data sources.  Of course, you can’t have a KPI Toolkit without an Excel file, right?  So we designed an easy self-scoring worksheet that allows you to customize the weights of each KPI to suit your interests. Our KPIs focus on transient travel – the groups and meetings side was out of scope from the get-go.

Folks, these KPIs are suggestions – they are not industry-agreed standards.  They are meant as a thoughtful starting point for considering which KPIs are best for your travel program.

Updated: Here are the two files we created:

2012 KPI Reference Guide for GBTA This PDF describes the 21 KPIs in detail, and provides more information about the scope and limitations of this effort.

KPI Scoring Wizard This Excel file contains a simple worksheet that allows custom weighting and scoring of each KPI.

GBTA (Global Business Travel Association) members have access to the KPI toolkit via the GBTA website.  The KPI toolkit is but one ; many other valuable resources are available to GBTA members. If you are not yet a member, you may join GBTA here.

Here is a whitepaper from Advito, BCD’s consulting unit, on the role of KPIs in a strategically managed travel program: Strategic Travel Program KPIs from Advito

On a related note, here’s a post on the pitfalls of using KPIs.

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16 Responses to KPI Toolkit for Travel Managers

  1. Tom Stoklosa says:

    You consistently find the best graphics for your presentations to make them eye catching.

    • Scott Gillespie says:

      Thanks, Tom! Props to “Presentation Zen” by Garr Reynolds. Great book on how and why to let visuals carry the day. Not to mention that the hunt for the right pic is kinda fun :)

  2. Christa Degnan Manning says:

    Can’t wait to see them!

  3. Tom Tulloch says:

    KPI’s can be very useful; the “key” to leveraging KPI’s to your advantage includes having real time or near time data supporting the metrics. I look forward to seeing how closely the 21 categories you gentlemen arrived on mirror the categories that our customers are currently monitoring. While these type of metrics have been around for a while the next big trend is KPP’s, or Key Performance Predictors which may prove to be more valuable than KPI’s for planning, forecasting and managing purposes.

    • Scott Gillespie says:

      Key Performance Predictors sound interesting, Tom. Seems consistent with the themes of data mining and predictive analytics. Can you share any travel-specific examples?

  4. Tom Tulloch says:

    Sure we have a current customer who is growing very rapidly and they have come up with a formulaic method of leveraging historical expense data, applying some simple predictive metrics relative to spend per employee to predict/forecast what their spend will be in forward looking fashion. The resulting KPP allows them to determine whether they will be above or below their budget based on staffing plans. It’s not a perfect process and I think we will see other better examples. I believe that KPP’s will be very valuable to companies with large spend categories for Air and Hotel especially during peak travel seasons and in markets that have limited capacity or availability, it will be interesting to see if these types of KPP’s have an impact on advanced booking patterns.

  5. Scott, I was all ready to get my hands on this tool and explore the 21 points, and begin to gather data and measure performance… then I opened the link to the webinar and found out I would have to be a member of this GBTA group to have access to the tool. How sad. Is there any chance that there will be some sort of abbreviated version made available to the general population who are responsible for T&E spend and performance management but are not dedicated travel specialist?

    • Scott Gillespie says:

      Understood, Jerry. I’ll have a chat with the folks at GBTA.

    • Scott Gillespie says:

      Jerry, I’ve provided links in the original post above, to the two files that my fellow co-authors and I created for this project. Folks can now download the PDF and Excel file from my blog.

      I hope you find these files useful. Feedback will be welcomed, of course!

      • Thanks so much Scott. I’ll let you know once we’ve had an opportunity to properly assess these documents. From first glance they appear to be very through, I’m sure they will be invaluable as we mature this category.

  6. Pingback: Data Quality is Traveling… | The Data Roundtable

  7. Great work … What about the policy itself? I would add a KPI about the evaluation by the travelers of the travel policy, of the preferred suppliers chosen, of the compliance process and of tools. Should be done at least twice a year.
    What is needed is a quick feedback to be able to react quickly if something needs to be improved.

    Performance without a context is also difficult to use, so I propose to correlate some of the KPI with the ones of the industry and of the growth of the company business.

    • Scott Gillespie says:

      Fully agree, William, about the need to measure the travelers’ views on the topics you listed. We included traveler satisfaction as one of the KPIs, but left the elements to measure up to the user. Your specifics are good advice – thank you.

      Likewise, KPIs – or any metric – without context is not very valuable. Correlating some of them with what’s going on in the larger aspect of the company, or in travel industry, or at benchmark peers, makes great sense.

  8. Rich Murnane says:

    Hello Scott,

    I was very much impressed with the work you guys did (and the webinar0, so much so I wrote about it in a “Data Management” blog post. If you’d like to take a peek you can check it out here: http://www.dataroundtable.com/?p=9822

    Thank you very much for putting this all together and best regards…Rich Murnane

    • Scott Gillespie says:

      Thank you, Rich! It was a fun project, especially working with three other very good travel data experts. Looks like, from reading your article, that you’re in the thick of travel data quality issues. Let’s stay in touch, and please share any tips you have creating good travel data deliverables – KPIs or otherwise!

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