Kelly Cuts Costs By Adding A Res Agent
<B> Kelly Cuts Costs By Adding A Res Agent</B>
By Sarah Welt
<I>Troy, Mich.</I> - Taking a counter-intuitive tack to reduce travel costs, Kelly Services added, rather than removed, a reservations agent--and shaved close to $40,000 off its total tab in the first three months.
Adding an agent is just one step in a quality initiative launched two years ago when the Fortune 500 company first decided to manage travel. Since bringing in Jack Reynaert Jr. to run its travel program in 1996, Kelly has tightened its belt and adhered to a strict seven-day advanced purchase policy, made greater use of flight selections outside the traditional one-hour window, enlisted senior management involvement and pulled together its data. As a result, the temporary office assistance services company has saved $1.1 million on its $5 million air travel budget.
Reynaert, Kelly Services' manager of meeting and travel planning and the son of the former corporate travel manager at Ford Motor Co., Dearborn, in January added an extra agent to the company's onsite travel office to allow reservationists to have more time to search out low-cost travel alternatives.
He believed that his four onsite agents, employees of Maritz Travel Co., were so busy booking regular day-to-day business trips that they did not have the time to explore further cost-saving options. "I said it might cost us a little bit more in our financials but I think we are going to save a lot more off our airfare," he said.
With an extra pair of hands in the travel office, Kelly's agents have been able to spend more time searching out alternative flight selections, use more connections, choose more obscure routing and book flights outside the one-hour travel window that policy dictated. Sometimes it's simply a matter of convincing an airline to give a refund on a nonrefundable ticket, getting a hotel to waive its cancellation policy or providing a car upgrade.
Reynaert began tracking savings from the additional agent in January, when the company saved $16,600. February brought another $10,000 in savings; March brought $12,500. "That is the annual salary for an onsite agent right there in three months," Reynaert said. Since April, Kelly Services has saved an additional $70,000--with $38,000 in June alone.
In January 1996, before Kelly Services launched its travel policy, it calculated its lost savings percentage--when travelers refused to take alternatives and were not saving the company money--at 17.1 percent. At that time, "Travelers did what they darn well pleased," Reynaert said.
When he came on board in August, lost savings were still fluctuating at 12 to 14 percent, but with the new travel guidelines, telling travelers to take the lowest price within the fare window, lost savings dropped to 9.4 percent.
By the end of 1997, average lost opportunity was down to 1.8 percent. So far this year, it's at 0.8 percent.
In September 1996, Reynaert began encouraging travelers to book at least seven days in advance. That mandate shifted the balance from roughly 45 percent of tickets being booked at the last minute to about 28 percent--and "does control our airfare spending significantly," Reynaert said--resulting in a 24 percent drop in ticket costs.
Reynaert's Excel spreadsheet shows that the average price for tickets booked less than seven days in advance was $570. For those booked seven to 20 days in advance it was $463, while tickets booked 21 days or more in advance averaged only $371. Thanks to the increase in advance bookings, Kelly's overall average year-to-date ticket price is $476.
Today economy class is standard, even for overseas trips. "Unless a trip is 12 hours or more," said Reynaert, "then we allow business class for international travel. We have a strict policy that goes for VIPs too."
Reynaert decided to offer travel outside the one-hour window after he began issuing survey cards with each ticket last February and found that travelers seemed willing to vary their travel plans to hold down costs--if only they knew how. according to Reynaert, "They'd go on the Internet, and search and come back with an Expedia quote and say, 'Hey, I found a $300 option, why didn't you offer me that?' And we'd say, 'Well, it was six hours later than you asked to travel.' "
The company also has realized savings in ticket delivery costs since it began pushing the use of e-tickets eight months ago. Though it is not mandated, today 90 percent of Kelly travelers use e-tickets.
None of these initiatives could have gotten off the ground if Reynaert didn't have senior management buy-in. He said even the CEO is involved in reviewing what processes go out to employees: "The CEO is very hands-on with the travel program and sees it's very important and necessary to manage properly."
On the technology front, Reynaert is working to get a travel request form in Lotus Notes approved by management. His vision is that travelers would send travel requests to the travel agency for approval and also copy their managers. The agency would respond back with the booking and copy the manager, so that the manager would have a second chance to say, "I don't want you to go on this trip."
As for other suppliers, Kelly has 90 percent compliance with its preferred car rental supplier, National, and has negotiated discounts with four carriers. It uses Maritz's hotel program.
In a new policy he hopes to institute by October, Reynaert has added an amendment allowing travelers to use Business Travel News' Corporate Travel Index as a guide, and book hotels up to 10 percent above the average rate cited in BTN without prior approval being necessary.