Building strategic KPIs to boost your company’s travel program performance
How effectively are you driving your travel program in line with your company’s core strategic goals? A new white paper from Advito, BCD Travel’s consulting division, explains how creating and monitoring a manageable set of strategic key performance indicators delivers value directly from the travel department to the boardroom… and to travel managers’ career progression.
Travel managers work so hard on running their travel program day to day that it can sometimes be hard to step back and see the bigger picture. In particular, are they looking at the right data to help them make the right business decisions, not just for the program itself but to meet the strategic goals of the entire business?
A newly published white paper by Advito, the consulting division of BCD Travel, aims to help travel managers achieve exactly that ambition. From numbers to action – Improving travel program management through strategic KPIs and meaningful savings measurements looks at:
- How to create strategic key performance indicators which measure how successfully a travel program is meeting the company’s core strategic goals.
- How to make meaningful savings measurements which genuinely give a business insight into whether it is achieving the best possible price for its travel.
The white paper also includes case studies from two companies that successfully use strategic KPI to align their travel programs with corporate goals: EADS and Nestlé.
Steps to building a successful strategic KPI program:
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Strategic KPIs
The “Strategic KPIs track travel program performance against strategic corporate goals such as cost containment, sustainability, process efficiency or revenue generation,” says Torsten Kriedt, vice president of corporate intelligence, product planning and portfolio management. “We believe the strategic KPIs for a corporate travel program must balance comprehensiveness with avoidance of over-complexity.”
According to the white paper, there are four main reasons for creating a strategic KPI structure:
- Education – strategic KPIs allow travel managers and other relevant managers to gain adeeper understanding of the purpose of the travel program
- Decisive intervention – managers can intervene quickly with remedies iftarget ranges are not being met
- Communication – effective tools for convincing departments or budgetholdersto change their behavior
- Career progression – provide a showcase for the issues travel managerswork on and prove they are capable of high-level strategic thinking.
The white paper also provides an example of what a balanced set of strategic travel KPIs might look like. A small sampling from that list includes:
| KPI | Relevance |
| Travel management services coverage | How much of the total T&E spend is influenced by travel management? |
| Value of managed travel | How much have we saved by sourcing and steering effectively? |
| Policy compliance | How well do travelers adhere to key policy components? |
| Change in total travel cost | How much is travel management contributing to a bottom-line impact in operating expenses? |
“We think this is a pretty good set of strategic travel KPIs which could be considered as a starting point for a benchmarked industry standard,” says Kriedt. “We are hoping to explore the idea through industry associations and other forums over the next few months.
The idea of strategic KPIs may sound daunting initially, but in fact most large companies with managed programs are making at least some of these measurements today. Association of Corporate Travel Executives (ACTE) buyer members surveyed in April on behalf of Advito confirmed there is heavy use of the traditional indicators relating to spend and compliance. The figures also heralded significant potential for growth in two demand management-related KPIs: usage of virtual meetings and travel expenses related to incremental turnover.
Meaningful savings measurements
Since cost control is a central strategic goal for many companies, it is very likely that some of their strategic travel KPIs relate to cost. But how can a travel manager measure savings meaningfully? For example:
- Is it useful to compare average ticket price this year against average ticket price last year, when the difference between the two may be caused by external rather than internal factors?
- Should savings be measured on the level of discount negotiated? Since it is easier to negotiate a large discount on an expensive fare class than a cheaper one, this measurement may not be helpful either.
The white paper suggests solving the problem by using indices to understand savings in a relevant real-world context. It also encourages travel managers to evaluate savings by means other than supplier negotiation. Examples include:
Behavioral savings – equipping travelers with tools and motivation to “do the right thing”
Demand management – such as using video-conferencing and other travel alternatives.
The white paper also sets out tips on how to source and manage high-quality data for strategic KPIs and savings analysis.
“As with all areas of corporate life, there is increasing pressure on travel managers to ensure their program is bringing value to their organization,” says Kriedt. “Using strategic KPIs helps keep their work fully in line with a company’s goals – and is seen to be.”
To obtain a copy of the Advito white paper, From Numbers to Action, please visit BCD Travel’s Whitepaper Downloads Center.