Traveler Friction vs Travel Policies
Travel programs depend on travel policies for savings. See how the blue line curves down, just like we expect? Travel policies reduce the cost of a trip. Good to know, right?
But as you increase the strength of that travel policy, you create costs.
Costs we’ll call “traveler friction”. That’s the red curve in the chart above.
Traveler friction comes in the form of lower traveler productivity. Think flying coach from Chicago to Singapore, or taking a short-haul connection for a lower fare.
Push a traveler through too many of these knotholes, and she may soon find reasons to not take the next trip. That’s got to cost a company something.
Tighten that travel policy too much, and you wind up with recruiting and retention problems. Those have serious costs.
What’s tough about these traveler friction costs is that they are really hard to measure. It comes down to managerial judgement – that good old gut feeling. But they are real, and they move in the opposite direction of a policy’s savings.
Here’s the kicker. Companies do not try to minimize the cost of their trips, nor should they. Companies do try to minimize the total cost of traveling. That’s the sum of the trip’s cost plus the cost of traveler friction. The total cost is the black curve in the chart.
Companies settle on a travel policy that produces the lowest total cost, which for most is a moderate travel policy. That’s why most companies don’t mandate, and never will.
Suppliers need to give up wishing for tight travel policies. They simply don’t save enough to make them worthwhile to most buyers.
When Looser Travel Policies Make Sense
Buyers should loosen their travel policies if either of two things happen.
One is if it gets harder to get savings from travel policies. Think smaller corporate discounts from airlines and hotels. As in exactly what’s happening right now in many markets.
The other is if travelers get more frustrated by existing travel policies.
Think opportunity costs, as in what’s out there, beyond the walled garden of your current travel program. Are competitors relaxing their travel policies in an effort to recruit better talent?
Are app-savvy travelers finding even more and better ways to shop, book and manage their travel experiences? Do these better options make your travel program look worse by comparison?
Is the basic experience of traveling getting worse – as in less predictable, less comfortable?
If yes, your traveler friction (the red curve) is getting steeper, whether you know it or not.
When program savings flatten out, or traveler friction goes up – guess what? The bottom of the total cost curve shifts to the left.
Meaning you gotta loosen the travel policy. Or put up with higher total costs.
Up next: The Convenient Fiction of Program Optimization
Author’s note: Evan Konwiser contributes significantly to this series.
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