Energizer Battery Corp. during the past year moved 65 percent of its international air travel spend to economy class from business class, reducing overall travel spending by 15 percent, according to Doris Lee Middleton, the company's manager of human resources and travel services. Speaking here this month at a National Business Travel Association event and in a follow-up interview with The Transnational, Middleton described that accomplishment as her "greatest success," made possible by close coordination with Energizer's travel management company, BCD Travel, and a willingness to allow travelers to share in the savings.
"For the difference between business class and economy or coach class, we share the difference with the traveler up to $2,000," Middleton explained. "In the case of Asia, we will give up to $3,000." Energizer banks the balance of the savings. "When you are talking about millions of dollars in savings, that is an incentive." Shared savings generally are made available in relation to roundtrips, "however there have been a few exceptions where we've reimbursed travelers for only one leg of an international trip."
Middleton said that about 45 percent of company travel costs are for international trips, including those to Canada, other parts of the Americas, Europe, and increasingly Asia. "We have several manufacturing locations in Asia and a lot of our travel trends have changed," she added.
Energizer informs travelers of the shared-savings option through a newsletter that details dollars saved, and Middleton also credited the company's collaborative relationship with BCD Travel for enabling such a strategy. "The TMC played an important role in helping to influence the buyers' decisions," she said. "It's really just the communication [and agents asking] 'Did you know that Energizer offers this program?' and helping them to make early buying decisions so they could get seats behind the bulkhead for additional leg room."
Owing to security concerns in less-frequented locations or for more complex itineraries, Energizer insists that many international travelers book trips via BCD Travel telephone reservations. That provides opportunities for BCD agents to inform travelers of the coach incentive program. The agents also calculate the incentive the traveler would receive for opting to participate.
"We asked our TMC to indicate at the very bottom of the itinerary that this particular ticket qualifies for a reimbursement," Middleton explained. "That becomes a notification to our confirmation on the expense report side that they can pay the reimbursement."
When asked about tax issues for those travelers willing to fly coach and share in the savings, Middleton said that incentives provided count as taxable income, but the company's employees have not experienced many issues. "The salary is grossed up by that amount," Middleton said. "My TMC passes that information onto expense reporting, it passes onto HR; it’s electronic, it is all seamless."
TMC Service Level Agreement
Energizer's relationship with BCD began four years ago with a request for proposals process that sought a TMC "to manage the day-to-day relationships, so I am not bogged down," Middleton said. "What you really want is a contract that manages that daily operational piece and it's not me bickering with my TMC. I have other things on my plate and I want the service level agreement to manage that."
Contract terms ultimately included penalties for nonperformance in such areas as call response, handling and encouraging online transactions, providing reports and other "quantitative as well as qualitative key performance indicators." The SLA also measured how often the TMC offers the lowest fares, checked by Energizer through a "regular audit" by a third party.
Energizer's deal with BCD also covered innovation. There would be "a set amount of value each quarter that the TMC would bring to the table in the way of innovation, cost savings and efficiency," Middleton explained. "If that didn't happen, we asked the TMC to give up part of their management fee because that is what you want a TMC to do: provide added value." She noted that the TMC was not be penalized for suggestions that would require travel policy changes that Energizer was unwilling to make.
Regarding the overall contract and various SLA components, Energizer during its four-year relationship with the TMC "had only one or two times that there was a penalty to pay and because we want to be a collaborative partner, we have only asked them to pay it one time."
When asked if Energizer was willing to incent the TMC to outperform expectations, Middleton responded, "Why should we incent them to do what’s right, what they are supposed to be doing? I know that some people look at it a different way; if I am going to penalize you why shouldn't I incent you to go above? We didn't think that was necessary."
Account Management Challenges
Middleton acknowledged that working with the TMC had its challenges, notably in account management. "TMCs tend to promote agents from within to account management roles," she said. "They are not necessarily a good fit. They are not strategic thinkers necessarily. They may not be great communicators and they may not be great problem solvers. They tend to be kind of one-dimensional. They want to manage the transactional fees and the operational fees because I guess that's where they came from. I found that to be true with my previous TMC as well as the one that I am partnered with now."
However, "after four account managers we found an excellent fit," Middleton said. "When you have an effectively managed travel program, what you want from an account manager is someone to come on site with you and help you kick the travel program to a next level--to pull together my spend so that I can have a globally managed program as opposed to a multinational program."