Are you there yet? Have you figured out how to measure the ROI of travel?

April 7, 2010 at 9:12 am Leave a comment

You’re quite a masochist if you choose to squish four kids into a minivan for a 15-hour road trip to Cooperstown, NY, an adventure to the Baseball Hall of Fame. That is, unless you’ve made a wise investment to “pimp your ride” with a DVD player. It’s one instance when I fully advocate turning my kids into mindless drones, to replace the whining, fighting and constant ringing of “are we there yet,” with bug-eyed blank stares that are mesmerized by a sea-dwelling sponge that wears pants. The return on investment (ROI) for a moving movie theater is my sanity. Let’s just say that I hit a positive ROI with this investment before we even hit the freeway onramp.

The ROI of business travel

Whereas I measure my return in terms of peace and sanity, most corporations look to revenue and ultimately profits. Over the past few economically challenging years, our industry increasingly fought to justify its relevance and resources. NBTA sponsored a major study entitled “Can we afford not to invest in business travel” and the U.S. Travel Association commissioned a similar report – both analyzed more than 10 years worth of industry data. The proof is in the pudding, and the results would even excite Bill Cosby. The simple conclusion is that business travel directly leads to sales and profits (the first study claims $15 in profits for every $1 in travel spend and the latter suggests $3.80 in profits for every dollar spent). I’m a huge proponent of travel alternatives such as web-conferencing, but there are many instances where the face-to-face meeting is necessary in order to seal the deal.

These studies are very telling, but it’s important that you don’t just rely on the secondhand information. You need to do the analysis and prove the point with your own data.  You should have all the T&E expense information at your fingertips, and when you join forces with the departments that actually do the traveling, you’ll understand how travel has a positive impact on the business. Here are some tips to start:

  • Collect your own data – not just the “T”, the “T&E” (“E” as in “entertainment”, which is how your CFO views all the other things that appear on an expense report)
    • Find a corporate booking tool that travelers want to use
    • Automate expense reporting.  If you don’t already, seriously think about it
    • Make sure your expense tool integrates with any credit card feed (personal and/or corporate).  Comparing the credit card feed to the booked expenses is the best way to track expenses
  • Work with other departments to understand how travel impacts the business
    • Pull the quarterly sales revenue numbers, work with the marketing team to extract the ROI on big events, and establish metrics with other departments that travel
    • Take their data, correlate it to the travel and expense data to then determine the positive impact travel has on other departments
    • And Voila! You’ve just proven how important travel is to your company and each individual department your travel program supports

Let’s consider this the scientific part of the equation. The data is there and nobody can deny it. In the next post, we’ll look at the artistic side of the equation, determining the ROI of “comfortable” business travel. Although it might not be as easy to calculate, almost everyone who regularly travels for work has endured their own “Planes, Trains and Automobiles” experience. We’ll provide some practical examples of how comfortable travel will not only increase your employees’ satisfaction and boost their productivity, but how it ultimately increases revenue.

Entry filed under: Business Travel, expense, Mike's musings, Mobile, Travel ROI. Tags: , , , , , , , , , .

Choose Your Own Adventure The ROI of “comfortable” business travel. Just ask Dan Quayle.

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