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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AirPlus Gets A+ on Ancillary Fees Report

AirPlus has cracked the code on reporting airline ancillary fees.

Travel managers will find these reports extremely useful.  You’ll know with great  certainty what your travelers are buying from each airline. You’ll be able to answer important questions, such as:

  • How much are we spending on Ancillary Fees (AF)?
  • What are the biggest sub-categories of AF – baggage fees, onboard fees, upgrades, extra mileage, etc. (and therefore, implications for negotiations)?
  • What’s the average Continue reading

TIILTS: Better Travel Data Reporting

Quick, now – what’s the biggest innovation in travel data reporting over the last ten years?

  • Dashboards or Balanced Scorecards?  Those trace back to 1987.
  • Web-based travel reports?  Gotta be 15 years old, at least.
  • Comparative price benchmarking? 15 years old, minimum.
  • Travel program benchmarking done online?7 years old.
  • “One number score”, aka batting average? 5 years old.

My point? Corporate travel managers need a new generation of travel data tools.  I’m not selling anything.  But I can see the numbers on the wall, at least in terms of what’s needed. Here goes:

Core Value: is Descriptive, should be Prescriptive Continue reading

Stairsteps to Data Heaven

Why is it so damned hard to get great value from the sea of travel data out there?

You’d think that corporate travel, a large and mature industry, would have cracked the code by now. And yet most buyers are still struggling to get anything more than mediocre value from their data reporting tools. Continue reading

The Real Question Behind Travel ROI

Charles Petruccelli, President of Global Travel Services at American Express, sees great value in helping companies find their industry-optimized level of travel spend.

Where American Express leads, the travel industry often follows.  So the quest for finding travel ROI isn’t going away.

But is it the right question to answer?  If it isn’t, then what is?  Here’s my take:

I think American Express and other industry leaders should absolutely want to help companies optimize their travel spend.

As Herve’ Sedky, SVP and GM, Global Business Partnerships at American Express Business Travel, said at the Masters Program last week, “Travel is like cholesterol.  There’s good travel and bad travel.  We want more of the good and less of the bad.” Continue reading

Travel Benchmarking Done Well

Benchmarking is one of the most popular requests from travel managers – and one of the most difficult services to provide.  I’ve argued strongly that price benchmarking is wrong and worthless.  Not changing my tune on that one.

Performance benchmarking, however, has a big part to play in any up-and-coming travel program.  The problem Continue reading

ROI on Travel and Meetings – Why Bother?

Have you noticed a surge of interest in measuring ROI on travel and meeting (T&M) spend?  I’ll get right to the point.  Trying to measure the return on travel or meeting spend is not worth the effort.

It’s like taking a long walk in the desert with a crappy map.  You wouldn’t do it by choice.

I get why suppliers, lobbyists and trade associations want to link spending with a positive economic return, especially in these harsh financial times.  I get why buyers would like some way to measure the ROI of their travel budgets.  And I like numbers  and metrics and quantifying stuff more than most people…so why don’t I like this quest to measure travel ROI?

It’s Impractical Continue reading

Savings Metrics, Rat Farms and KPIs Gone Bad

Decades ago, goes the story*,  the French colonialists grew tired of the rat population in Hanoi.  So the French offered a bounty on dead rats.  What happened?  The industrious Vietnamese began raising rats.

Therein lies the trouble with metrics.  Be careful what you measure.  And what metric is more important than savings in the procurement world?

You’d think that such a basic word as savings would have a pretty well-agreed definition – especially when the S word is the focal point of just about every RFP process.  Unfortunately, there are very big differences in how buyers define and measure savings.  Let’s have a look at the slightly satirical implications for travel procurement. Continue reading

Service Standards for Travel Suppliers?

A travel manager in Canada recently asked me for a set of standards that she might use in her Service Level Agreements (SLAs) with her contracted travel suppliers.  I had to admit that not only did I not have any templates, but I wasn’t even sure where she might look.  I took a quick look on the NBTA and ACTE sites, but didn’t see anything.  (If I missed something, please let me know.)

Today, Dennis Bailey (thank you!) sent me this notice of a tender from the Institute of Travel and Meetings (ITM).  ITM are addressing the need for service metrics head-on. Bully for them!

Service standards are Continue reading