Making the Business Case for Better Travel

The most common question I get after speaking about the benefits of reducing traveler friction is “OK, we get the idea, but how are we supposed to sell this to senior management?”

Here’s the answer:

The whole idea is to balance the costs and the benefits of better business travel, right?  So that means we need a way to quantify those things, in a way that makes sense to senior management.

The good news is that there is now enough research out there to help us frame the question with some clear logic and pretty good assumptions.

Gillespie’s Travel Policy Impact Model

I’ve developed a simple – and free – approach that any travel buyer can put to work right away. It’s an Excel model (see below) that asks you to fill in 16 things.  Do that, and you’ll see the results. Your results could look like this:

“If we spend an extra $35K per road warrior to give them better quality, lower-friction trips, we’ll get back a net gain of $90K each, for an ROI of about 260%”

Credibility Is Key

Travel managers,  you’ll be able to plug 10 of the 16 data things into the Cost section pretty much off the top of your heads.  You’ll probably need help with the 6 things in the Benefits section.

So go ask your colleagues for their input.  Get them to offer their best estimates for whichever variables in the model are in their wheelhouse.  For example, ask your HR expert how long the average road warrior stays with the company, and what it costs, fully loaded, to replace them.

Reasonable estimates are fine for this model.  Reasonable ranges may be even better, such as “We estimate that the replacement cost is probably between 150% and 250% of the road warrior’s annual compensation.”

Here’s a list of the stakeholders you might want to query to make a buttoned-up business case. What’s striking is the mix of views you’ll probably need to collect…not hard to do, mind you, and just by asking them you’ll strike up some really rich conversations:

  • The travel manager, of course
  • The travel management company (TMC)
  • The travel budget owners – those who control the travel budgets and their travelers
  • The road warriors
  • Finance and Procurement stakeholders
  • Human Resources – those in recruiting and talent retention roles
  • Your preferred airline and hotel partners

You’ll find that this model handles the potential benefits of a better travel policy in two ways.  One is the positive impact on road warrior retention, and the other – and much larger impact –  is the increase in the road warrior’s value add.

Value Add

Value add is the most important part of the model. Why? Because the only reason to invest in more expensive travel is if it will produce even more value add. And yep, there’s a way to estimate how much value the average road warrior adds to their company.

You’ll make an informed estimate of how much the value add increases, given whatever changes you have in mind for upgrading the travel policy.  Not in a scientific, provable way.  This is all about making some reasonable assumptions, given the context of the existing research out there and the good judgement of you and your colleagues.

The model calculates the increase in value add needed to break even on the better travel policy’s extra cost.  I think you’ll see that it doesn’t take much to justify better quality, lower friction travel for your road warriors.

The Model and User’s Guide

Here’s the Excel model. It’s very simple, just plug your values into the 16 yellow cells, and poof, you’ll see the results. To download it, right-click, and choose “Save link as…”

Right-click, then choose “Save link as…”

Here’s the User’s Guide to go with the model.  It offers explanations of terms and includes the research I think you’ll find relevant for choosing some of the values for your modeling.

Click to download this PDF

A big tip of the hat to Tom Ruesink, Laura Kusto and Mark Windsor for their valuable feedback and encouragement to make this a really useful tool.  Thanks to tClara for undertaking the research of more than 350 publicly traded firms to figure out what a realistic Value Add Factor is.

The model is free.  The framework is good, but can no doubt be made better.  I hope you’ll give it a spin, and then leave some helpful questions and suggestions below.

First time here? Follow this blog for more articles like this.  Always glad to connect on LinkedIn!

This entry was posted in Metrics and KPIs, Travel Management, Travel Policy, Traveler Friction, Trip Friction and tagged , , . Bookmark the permalink.

3 Responses to Making the Business Case for Better Travel

  1. Mark Windsor says:

    Thanks, Scott. This is a valuable tool. I tinkered around with something like this for quite some time, but I never had enough data to make the value add factor more than just a guess. This removes the guesswork.

    • Scott Gillespie says:

      It’s a good step in the right direction, isn’t it? Thank you, Mark, for your help and encouragement in making this a useful tool. I’m keen to see how it can be improved!

  2. Pingback: Webinar: Building the Case for Better Travel | Gillespie's Guide to Travel+Procurement

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