Inventor of a New Air KPI

While data can paint a picture for travel buyers, the results that Shawn Johnson saw from standard airline metrics looked more like an abstract work than a realist masterpiece. “When I first came into the travel space, one of the things I saw was that there seems to be a hyperfocus on managing and lowering costs,” said Johnson, support services director for The Church of Jesus Christ of Latter-Day Saints. “That’s a great thing and certainly is an initiative for the church, as well, but the measures we use in the industry didn’t seem to tell the full picture of what the value of an airline partnership was.”

Those common metrics—cost per mile, cost per segment and cost per traveler, for example—were missing many of the elements of what is important to travelers when choosing an airline. Johnson and his team developed ambitious plans to change the way they work with their supplier partners.

The LDS church travel program has a global reach; on any given day, one of its more than 65,000 missionaries and other travelers could be flying to any country in the world, and the church’s travel program was the 47th largest based on U.S.-booked airline volume, according to the 2017 BTN Corporate Travel 100. Thus, the church had a massive number of airline partners. Because joint ventures, partnerships and codeshare agreements have proliferated in recent years, consolidation could allow the church better relationships with the remaining carriers. Better metrics, however, would be key in determining which partnerships to keep.

Take two airlines that fly from Salt Lake City to Chicago. The one with the lowest fares would always win in a cost-per-mile comparison. Yet, a cheaper airline that’s more prone to cancellations and unable to assist travelers during disruptions, for example, creates an additional cost, he said. Johnson and his team set out to get input from across the organization—from leadership; travelers, particularly road warriors; and people from organizations with which the church works, such as Brigham Young University’s three schools, each of which each has its own travel team but negotiates under the LDS church umbrella—to define value and quality.

“Sometimes, travel management organizations or travel departments feel like they are on an island within their organizations, maybe even working against internal partners to try to justify the existence of travel,” Johnson said. “We wanted to break that down and develop a very cross-departmental, cross-geographic team in the way that we looked at airline partnerships and any strategic travel initiatives.”

A New Metric

As travelers’ needs crystallized, Johnson and his team discovered their next challenge. “We had developed a pretty strong understanding of what was most important to us, but how do you quantify some of those elements of value—things that reduce friction to a traveler—that aren’t just cost?” Johnson said. “Things that are not as quantifiable—how do you show that in an environment that is very quantitative?”

Johnson’s idea was to create a new metric, quality cost per mile, which factored those elements into the standard cost measurement. He concentrated on a balancing act: keeping that metric from becoming overly subjective, which would detract from its value, while including the areas of greatest importance to church leadership and key travelers.

Some elements were easily quantifiable with solid data. The U.S. Department of Transportation and other sources around the world provide on-time rankings, cancellation percentages, baggage handling performance and other operational data that affect value. With that data, the LDS church could look at its needs in terms of network and coverage and rank suppliers by their abilities to get travelers where they need to go.

Other elements were more qualitative but no less important. How well, for example, could an airline respond to travelers’ needs, such as rebooking, in an emergency situation? What sort of solutions did an airline provide to improve travel experiences? What sort of benefits—
frequent-flier programs or upgrades, for example—does a carrier offer?

The quality of a carrier’s sales team is another factor, Johnson said. Are account reps empowered to make decisions on behalf of their own airlines and the global partnership? Does the supplier offer meaningful reporting? How creative is it in finding solutions for its clients, such as simplifying contracts? “Our best suppliers are the ones that will come to the table and challenge the way we do things,” Johnson said. “We want to capture those types of things: When you leave the conversation with them, there’s a real value they have brought not just from their standpoint but to our business.”

Using both third-party and in-house data, Johnson and his team compiled all that information to produce a “quality factor” for each airline partner. It weights elements based on their value to the church and its travelers. That factors into the cost-per-mile or cost-per-segment equation to form quality cost per mile or segment, which paints a better picture of the whole cost of travel, Johnson said.

Scott Gillespie, co-founder and managing partner of tClara and one of the consultants Johnson worked with in developing the metrics, saw the church’s intiative as groundbreaking. “No other program ... that I am aware of has really made substantial improvements to” standard airline metrics, he said.

Everyone Benefits

The new metrics have proven beneficial to LDS church leadership, travelers and suppliers, Johnson said. The church can easily identify airlines that are not bringing much value and has significantly consolidated partners, Johnson said. Given the nature of the organization, traveler compliance to preferred suppliers has always been high, but consolidation has made it much easier for the church to fulfill its commitments to suppliers, he said.

On a deeper level, the supplier consolidation demonstrates to airline partners that the church places value on more than just pure cost savings. “This kind of approach incentivizes or encourages our suppliers to continue to innovate and strive for optimal performance,” Johnson said. “It has made our dialogue with those suppliers more meaningful.”

As part of those deeper partnerships, some airlines have stepped up outside standard travel, such as helping the church with humanitarian responses, he said. The new metrics have made it easier for LDS church leadership to understand the workings of the travel department and paint “a clear picture of why we might not always choose the lowest-cost supplier,” Johnson said. “They get it, and it makes sense.”

The travelers, meanwhile, have indicated improvement. “Internally, we’ve seen a significant shift over the last few years in traveler satisfaction scores,” Johnson said. “Even what you hear anecdotally—there’s been an increase in the level of satisfaction in what we are doing with suppliers.”

Finishing Touches

Johnson is quite happy with the metrics as they stand, but next, he’ll integrate them more deeply into the full travel procurement process. He’d like to see them become a bigger part of his quarterly business reviews with airlines: When airline partners are at the reviews, the metrics could provide opportunities for improvement. He also would like the metrics to become a bigger part of the RFP process, both in regional and large-scale cases. As the measurements continue to be refined and the organization becomes more comfortable with the quality portion of the metrics, they will play an increasingly bigger role in supplier decisions, he said.

Then there’s working with church leadership and travelers. “There’s a constant effort that has to be in place all the time to educate and teach throughout the organization,” Johnson said. “How do you simplify these measures and make it easy to explain, understand and see the impact?”

In addition, Johnson and his team are looking at similar metrics for hotels. That proves more of a challenge, as it requires drilling down to the property level. Even so, metrics that combine quality with savings should have a place in any part of a travel program, he said.

“Even suppliers that we are looking at for data perspectives or [a] systems and tools perspective, if we’re not looking at a full picture of the way that relationship is adding value to our organization, we are potentially a bit shortsighted,” Johnson said. “The principle of how we measure and value elements outside of cost—that has to be a part of the way we look at every single supplier that we interface with.”