“If you cannot measure it, you cannot improve it.” This quote has been echoed by many thought leaders, including, Lord Kelvin who was renowned for devising the temperature scale. In today’s data-driven world, these words ring more true than ever before. It is no surprise that business functions like travel use data, metrics and KPIs to determine their current performance and look for improvement.
How do you know you are maximising savings, minimising costs and providing a good travel management experience? How do you know where you can improve? Selecting the right metrics and KPIs should be a key part of your data strategy and will inform how you manage your programme.
More importantly, given the changes for travel in 2020, focus areas for travel programmes are likely to shift and the metrics used to measure performance will be shifting too.
If you do not know where to start, here are some key KPIs that could define how your travel programme performs:
1. Total spend
Travel, in essence, is a procurement category, albeit an extremely complicated one. Total global travel spend is where we start. This figure may seem super basic but can be difficult to get right. For starters, studies show that TMC data misses around 40% of travel-related spend. TMC data also misses other spend like TMC management fees, cancellations, refunds and exchange fees. In light of the many refunds, exchanges and cancellations that happened in 2020, these fees need to be included as they may make up a larger portion of spend than you think. Ensure data from company credit cards and the expense system is used when calculating spend. This will help in making sure realistic targets are set for the next year.
After calculating total spend the next step is to compare it to previous years to calculate whether spend has increased or decreased. Compare travel spend year over year to look for trends and take action.
Total spend can also be broken down into different categories (Air, Hotel, Ground, Meals etc) to assess what is driving the final figure. You can also use these KPIs and measure spend by each company department, business unit or region against set goals. In this way, it is easy for companies to see where the most travel spend occurs and take action if necessary.
2. Contract performance KPIs
When it comes to effective supplier management, companies need to monitor their rates on an ongoing basis to ensure they are always getting a good discount. If not, these rates need to be renegotiated.
How do you know you are achieving the rates you wanted in negotiations?
For Air supplier management, measure air market share and average ticket price as a whole as well as per carrier and per route. For hotels, look at KPIs like average room nights and spend per chain and region while also looking at the average rate booked and comparing it to the Best Available Rate, or BAR for short. For ground transport look at average car rental rate and compare that to rates negotiated in contract.
An easy way to do this is to use an analytics tool that does the heavy lifting for you. PredictX Air Navigator measures air performance according to your agreed contracts – monitoring what your travellers pay and comparing it to negotiated discounts. On the hotel side, our hotel rate compliance dashboard allows users to easily monitor hotel rates negotiated vs discount achieved while booking. Whether you make use of dynamic or fixed discounts or even a mixture of both, this dashboard will allow you to see whether you are getting the best deal available.
It is also worth taking note of ancillary spend to check that suppliers are honouring the deals negotiated. For example, are travellers purchasing Wi-Fi onboard even though Wi-Fi is included in your company’s ticket price?
Measuring this kind of data allows your company to negotiate better discounts with suppliers while improving services for travellers.
3. Policy compliance
Policy compliance is important, not only for reducing spend and driving demand via preferred airline, hotel and ground supplier bookings, but also for ensuring traveller safety whilst on the road.
Improving policy compliance is no doubt a goal for many travel managers. Some metrics for compliance include:
- Online booking compliance
- Booking tool adoption
- Advanced booking compliance
- Class compliance
- Low fare compliance
- Preferred hotel compliance
- Expense policy compliance
You can also monitor risk by using metrics that highlight bookings made to risky destinations. This is helpful when ensuring that policy is followed and duty of care is managed.
As with spend, these KPIs can be broken down and measured by department, region, business unit and even traveller. Once this data is communicated and travellers know their behaviour is monitored, improvements can be made.
4. Savings opportunities
When looking at cost, the best measure of performance is usually the savings opportunities achieved and the savings opportunities missed.
This can be measured by looking at savings opportunities for ticket prices and rates by comparing what is booked to what is on the market. It can also be policy compliance based savings measured through looking at advanced purchase compliance, for example, and how much more money can be saved by adhering to the policy.
5. Traveller experience
Improving the traveller experience by reducing traveller friction has been a keen focus point in the industry in the last few years. In an effort to improve employee satisfaction, even when they are on the road, travel managers are also working with HR more and more.
If one of your programme goals is to improve the traveller experience by reducing friction, a KPI to consider may be traveller satisfaction and/or traveller friction.
Traveller satisfaction or friction can be measured by:
- Traveller survey results
- Days on the road
- Employee retention rates in the company
The climate crisis is not going away any time soon. According to the Greenhouse Gas Protocol, many companies now have to report on carbon emissions produced from third party providers their company uses in business activity, like business travel.
Measuring CO2 activity in the travel programme against previous years and agreed targets may be a beneficial KPI so travel teams can work with Sustainability teams within their company and produce the required reporting.
The first step in managing a travel programme is measuring where you stand first. If your company needs help calculating these KPIs accurately, do not hesitate to reach out to our travel experts and book a consultation.