Despite the fact that our company specializes in managing travel for professional service firms, Ovation's clients are no exception to the recent recession-driven trend of belt-tightening, travel cutting and premium service shunning.
This unprecedented reaction to the global economic crisis is understandable: Cut all costs, including travel, and where travel can't be cut, cut premium service. Without fully considering the consequences, however, this could have the opposite of the desired effect.
In September, the National Business Travel Association unveiled a study showing for every $1 spent on business travel, the average ROI is $15. The study said, "Companies are potentially losing out on nearly $200 billion in 2009 in additional gross profits because they are not optimizing their investments in strategic business travel."
So, how to strategize business travel? First, acknowledge it as an investment toward future gains, which is intuitive and which the NBTA study seems to prove. Second, the old adage, "You have to spend money to make money" comes to mind, as does the fact that "business class" service was named that for a reason.
Business travel often is obligatory. What you can control, though, is the wear and tear on your traveler, and their physiognomy may reflect directly on your ROI.
Here's a hypothetical situation involving a seasoned road warrior on a long-haul flight to make a best-and-final presentation that could mean millions in new revenue. The competition has been narrowed to two contenders and you have a 50/50 shot at this new business.
Option 1: You choose to send the road warrior in economy class. They spend a six-hour flight cooped up with a very tall gentleman and his elbow, a man who, by the way, has the sniffles. Little rest or relaxation is had. In fact, a migraine edges in, as does a neck cramp. Exhausted, our road warrior barely makes it to the hotel and wakes the following morning with fatigue, migraine, a neck cramp and, on top of everything else, the sniffles. The road warrior gives their all at the best-and-final, but of course their "all" is somewhat depleted, and your ROI is zero.
Option 2: You choose to send the road warrior in business class. They spend the flight somewhat stretched out with full use of both arm rests. They review the presentation, fine-tune some things and still are able to catch some shuteye. Migraine-free, they wake up feeling energized and alert. The road warrior knocks the socks off the prospect. Your ROI is millions of dollars.
Let's say your company chooses Option 1 and your competitor chooses Option 2. You saved a few hundred dollars on the plane ticket. Your competitor shelled out a few hundred more on the plane ticket but won the business.
I'll add salt to the wound. You probably wouldn't have had to spend hundreds more to secure premium class. You or your travel management company could have upgraded the traveler, utilized their frequent flyer miles to secure the upgrade or negotiated a superior rate on your company's behalf. Planning a corporate program wisely means much more than ham-fistedly taking travel to the chopping block.
You have the opportunity to choose your own ROI. That means first understanding that travel is as much investment as expense, and then taking a surgical approach to maximizing the return on that investment by closely monitoring and exploiting all cost-cutting and upgrade options, without sending your road warriors through the wringer.