The Buyer's Table: Consumerization In Corporate Travel

Nashville - In the second annual edition of The Buyer's Table during The Beat Live here last month, four seasoned travel management professionals discussed the challenges and opportunities related to consumerization in corporate travel. Fielding questions from attendees and The BTN Group executive editor and session moderator David Jonas were Cindy Heston, manager of strategic sourcing for travel at WellPoint; Bob McGurk, Turner Broadcasting System vice president for corporate travel services; Jim Sisco, Reed Elsevier global travel services director; and Rita Visser, Oracle global travel global process owner, executive travel services. Edited excerpts follow.

Cindy, why are you so jazzed about corporate travel strategy?

 Cindy Heston: We all experience as consumers the different technology platforms that are available to us, and when you go into the corporate side, what you see is very static and very bland. When I make a reservation, when I call the agency, very interestingly they don't have a historical buildup of my preferences, my past situations, whether I had issues on a trip, frequent flyer or hotel status, etc. So, looking at the tools that we have available to us today on the corporate side, there is a way to bend them to make them look and feel more like the consumer side that people see every day when they go on to Amazon or Yahoo Mail. Yahoo Mail knows I love to shop. They'll give me all the places I look on the web. Trying to marry that in the corporate world is difficult, and you really have to look at the technology platforms that we have today. They do need to be developed, and as travel buyers, we need to have a voice and have that discussion with our technology and our agency partners about how can we build something that looks and feels more like what your customers are getting in the consumer world. We have been successful in developing some new platforms, but it's definitely something that's bent and not built for.

Rita, this is all part and parcel of your new role at Oracle as travel's global process owner. Please explain.

 Rita Visser: There are five different silos: travel operations, travel sourcing, meetings and events, card and reporting. My job is to make sure all of those are interweaving correctly where needed and that everybody's got one vision in mind. I play all roles in some cases, and there are other times when I sit back and act as an internal consultant to all five teams. It's making sure that Oracle stays whole. If all things are equal, why did you choose this [travel option] over this one? What about when things aren't equal? When do we allow them to make choices that benefit them, and what does that do for Oracle? It's the CFO or the corporate controller who's writing the check for everybody's travel, but for their hope and their trust and faith in our travel department, they have to be able to say, "I'm signing this check because Rita and the entire travel team knows they made the best decision for Oracle."

Are you eyeing consumerization, Jim?

Jim Sisco: We continually look at it. Reed is an organization that's spread out. We have a lot of different policies. That makes it tough to come up with one consumerization product or tool. I agree with a lot of what Cindy said. I'd like to be on the forefront of whatever that next technology is, and we're always willing to talk to new suppliers and hear innovations We'll be the guinea pig if there's the right product that will work in our environment.

To be at the forefront, what are the first steps?

Sisco: It's consolidating down from multiple policies and multiple class policies we have. That's the first step. We can get that buy-off from the senior level, but you have to speak with several stakeholders. We're working on those things every single day. We're bettering what we put in front of executives, and we're actually getting them involved more in the daily decisions from the procurement perspective and then on the operations side.

Bob McGurk: People vote with their wallets. People decide where they want to stay because it's convenient for them, because it works for them. We fight battles all the time, and we decided a long time ago we're not going to fight certain battles. We've picked hotels. You all don't like them, why not? Do we have the wrong hotels and the wrong program in the wrong city? I'd like to see something that would allow us to be a little more dynamic in terms of putting people at hotels with features that do things. The agents are restricted by the GDSs. I'd love to open up the program. We have a bit of a more dynamic program at Turner, because we not only have to deal with corporate management and reporting up to Time Warner, but we have a news organization that has to spend money when and how it has to spend money. We have talent who doesn't seem to understand why there's a policy at all. We have executives who also don't understand why there is a policy, and we have a lot of distractions with other online booking tools. You're juggling a lot of things. You're trying to find a lot of ways to make other people happy and still comply with tax law, corporate policies and whatever. We monitor where people are spending money first. Where are we buying things? Are we buying things the right way? Are we wrong in our approach? Should we change our approach? Do we need to put more controls in? It's a lot of tools we have to manage.

Visser: A couple of years ago, everybody was talking about policy management and getting people to do what the company wanted them to do. Isn't that people's jobs, to follow policy? I'm a firm believer that, yes, they should follow policy, but there's a group of people coming into every organization right now that have made their own choices for forever. Knowing and understanding how and what they're buying ... We tell them where to buy, but we also want to understand where they shop. Most of our travelers are very compliant. They book through us as they should, but I need to understand where they're shopping, because it's double work for them to go on a trip anymore. If they're shopping somewhere else and just bringing it back to us, we have to have conversations with our suppliers to say, "Here's why people are shopping somewhere else. They're following policy. In the end, we're still getting what we need for them to get, but can we tie those two together?"

McGurk: The guiding principle we have at Turner: 80 percent of people will do the right thing. Ten percent of our people don't know what the right thing is, so you have to teach them. Then, you have that last 10 percent. Five percent think they can cheat you, and you have to have the controls in place to make them afraid to try, and 5 percent know they can cheat you. You have to have controls. Consumerization is wonderful, and it's great to let people do what they want, but how do you control it? Losses can be really big. Once a year, we have one or two big fraud issues. In the grand scheme of things, $50,000 worth of losses is a rounding error, but for me, it's a lot of money. No matter how you work the consumerization piece in, you need controls to make sure people aren't stealing from the company.

There seems to be a sense that it's harder than ever for managed travel programs to overcome the allure of consumer tools. Right now, is consumerization within corporate travel more of an opportunity or a challenge?

Visser: It is both. Roughly 80 percent of people are doing the right thing. For those who aren't, what are the adverse effects to us? The reason it's a challenge is that we have to find other ways to get that data. The reason it's an opportunity is I have to understand why they're doing that and how we can get that.

Heston: We've all had discussions on how we want to improve the experience for our customers, but build it in an area where you can still define value and understand that the ethics and the compliance are there. Working for a healthcare company, compliance is really important to us, and our internal customer base is very compliant. I don't have compliance issues, but how can I make the experience better for them?

I know [loyalty program] status means value to the organization because ancillary fees are lowered or diminished at that point. So, in partnering with our booking tool, we've been able to develop a new flight policy. Now, if you have status on our preferred carrier, the system says, "We know you have status, and we are going to tell you that you get all these great things in addition that are reimbursable per our policy." When they're in the experience, that preferred carrier is pushed, other carriers are demoted. They get a little more room as far as cost, because we know it's not about point of sale, its about beyond point of sale, and these individuals are aware. We've really marketed it. To build that proposition and business case was exciting. I worked with our travel agency, with our card side to look at ancillaries and with our airlines to understand all the different fees involved in the scenario.

We're seeing 20 to 30 percent gaps as far as the value when you look beyond the point of sale, looking at the entire trip journey and their activity, their behavior and their experience on the road. I used to wonder what [travelers] are doing when they walk out the door. That point-of-sale mentality has to shift. On the expense side, what are they expensing? And the way to close the gap is, what are they not expensing because of these relationships they have with their preferred partners that makes them happy and makes them have a better experience? They're upgraded, their bags come off first, they board first. For them it's a good experience, and for me, from a partnership standpoint, it's a value-add back to the organization.

Visser: It also changes the way we're procuring things. If 50 percent of our travelers travel with 4G- or 3G-enabled devices, why are our procurement teams busting hotels' heads over free Wi-Fi? Understanding those things is changing how we're having conversations with our suppliers.

Chuck Jensen, vice president of supply and distribution, Mr. Arlo: The younger generation's expectations on travel are very different. How would you see your programs evolving, if at all?

Visser: Do I foresee us changing anything in our policy because of the Millennials coming into our company? No, probably not. Do we have to look at how we're helping them to know and understand our policy differently? Absolutely. Do we need to communicate with them differently? Absolutely. Are we going to change some of our suppliers? I don't know. The other carrier has Wi-Fi and our legacy carrier does not. We're seeing buying patterns shifting. If it's apples to apples, and they make that decision because it's better for them, then that's the way it is. If it's not apples to apples, I need to guide them to the right decision. We do market differently to them.

Heston: From an industry standpoint, we are so hyped up on everything, and we don't pay attention to data. We need to be more disciplined and review our data to see whether these trends are real and how they exist in my organization. We have to understand the buying patterns between age groups, where they travel and how frequently they travel. Then you can really build a program. Are their buying habits different? That's going to be based on what your destinations are. In a consulting firm, you're going everywhere. You probably will see more of a generational buy in that firm where you have more of an open road. If you're manufacturing, you're probably going back and forth—60 percent of your transactions are to the same destinations and they are going to stay at the property near that particular office.

Get away from the hype. Look at the data and segment your company into certain silos that make sense, and rationalize it with your supplier base. The buys are different, so when they go in and book something, I can give them a different view than a road warrior who is in his 50s, who loves these other properties. But I'm going to try to align my supplier relationships to meet the needs of both and to represent them equally when they go through their experience and book.

To me, it's definitely happening across every industry, but in this particular industry, we need to get a little more buttoned up and more disciplined in understanding analytics. Love your data, and use it to the benefit of your supplier relationships and the traveler experience.

But how different are the buying patterns? The conventional thinking may be that younger generations might want a different experience, but we have heard anecdotally from those examining this in their organizations that there may not be that much difference.

Visser: I don't think the buying patterns are different. They know and understand there's a policy in our company that they have to live by. They might be shopping somewhere different. They might be looking at Hipmunk or at [a mapping service], so when they come to our booking tool, they know the area they want to be in.

I don't know that buying patterns have shifted yet because our policies haven't allowed them to shift. But, again, why are they shopping somewhere else? It will take some time for policies to be switched, for there to be leniency there. There are tools and products that make it available today, but I use the carrot and the stick. For now, I'm going to hold onto the carrot as long as we can so we don't have to beat them with the stick.

This report originally appeared in the Oct. 8, 2012, edition of Business Travel News.