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Trip Friction and Managed Travel 2.0
Scott Gillespie
30.10.2013 Helsinki
Scott Gillespie
• Co-founder of tClara, a travel data analytics
firm focusing on Trip Friction
• Founder and former CEO of...
Little change in
100 years
3/14/2014 3Gillespie’s Guide to Travel+Procurement
Where we’re headed
Discuss and Debate
Traveler Friction
Open Booking
We Need New Frontiers
Managed Travel (MT) 1.0 has Pea...
• 1994: Delta Air Lines caps commissions,
triggers TMC transaction fees and cost center
mentality
• Late 90’s: Strategic s...
 Consolidate TMCs
 Consolidate T&E card programs
 Consolidate travel data and reporting
 Comply with duty of care
 Us...
Managed Travel 1.0 has reached
diminishing returns
3/14/2014 7
Gillespie’s Guide to Travel+Procurement
1995 2015
High
>
In...
Solid, safe, enduring –
a valuable base
Immobile,
inflexible
value
3/14/2014 9
Gillespie’s Guide to Travel+Procurement
it’s time
new sources
to find
of
3/14/2014 10
not
Castles
Ships
We need
Where are the new frontiers?
3/14/2014 11
Gillespie’s Guide to Travel+Procurement
Open Booking
Traveler Friction
Open Booking’s Four Principles
3/14/2014 12
Gillespie’s Guide to Travel+Procurement
1. Shop anywhere –
period.
2. Book any...
• “I have had open booking for several years. It can and does work but it was
a lonely trail until recently. Conversations...
Evidence supports Open Booking
GBTA’s “Global Business Traveler 2012” study of
840 U.S. managed and unmanaged travelers:
1...
Open Booking is NOT Unmanaged
Brand.com
or OTA
Corporate
Traveler
Corporate
Booking
Data
Traveler’s
Expense
Report
Net of
...
Edit Rights will be essential
3/14/2014 16
Gillespie’s Guide to Travel+Procurement
Corporate
TMC
Trip
Changes
Right to edi...
The data channel trumps the booking channel
Data
Channels
over
Booking
Channels
Payment Providers
become
essential
data
suppliers
morph into
Traveler
Subscription fees
TMC Booking
fees
Security and
Service
Where are the new frontiers?
3/14/2014 20
Gillespie’s Guide to Travel+Procurement
Open Booking
Traveler Friction
How do we optimize
a travel program?
Travel Program KPIs
Spend
Savings
Prices
Variances
Finance,
Procurement
Policy
Compliance
Traveler
Satisfaction.
Travelers...
Travel Policy
None Harsh
High
Costs
Supplier Cost
Travel Supplier Costs Are
Controlled by Travel Policy and
Procurement
So...
Travel Policy
None Harsh
High
Costs
Supplier Cost
Traveler Friction Is The Hidden
Cost of Travel. It’s an HR Issue
Source:...
Travel Policy
None Harsh
High
Costs
Supplier Cost
The Total Trip Cost Is What Matters
Source: Scott Gillespie
• Lost produ...
Travel Policy
None Harsh
High
Costs
Supplier Cost
So We Must Measure Human Costs To Find
The Lowest Total Cost and Optimal...
Listening
for
Traveler Friction
Is this the best we can do?
Traveler Complaints
Business
Leaders’ Complaints
Travel Policy
None Harsh
High
Costs
Supplier Cost
If Human Costs are high, then the
optimal travel policy is lighter
Sourc...
Travel Policy
None Harsh
High
Costs
Supplier Cost
If Human Costs are low, then the
optimal policy is harsher
Source: Scott...
Companies
spend about
the same on
travel as
they do on
turnover:
1-3%
of revenues
Source: “Retention of Key Talent and the...
Human Resource KPIs
Turnover Rate
Cost per Hire
Sick Days
Healthcare Costs
Productivity Metrics
Engagement Scores
Performa...
Measuring
human costs
travel-related
is a
New
Frontier
Trip Friction™ - a measure of
the traveler’s experience
6-hour non-stop in
Business Class,
arriving home on
Friday afterno...
10 Firms in tClara’s 2013 Trip Friction
Benchmark Study
By Industry
High Tech 5 firms
Consulting 3 firms
Financial 1 firm
...
35
44%
27%
10%
19%
Work Time 8a-
6p, M-F
Home Time 6p-
10p, 6a-8a M-F
Sleep Time
10p-6a, M-F
Weekend Time
Sa-Su
When Do Tr...
Distribution of Trip Scores
42% are Harder Trips
27%
31%
20%
11%
4% 3% 2% 3%
Easy Moderate Fairly
Hard
Hard Very Hard Fair...
Next Step: Calculate scores for each
traveler, and benchmark entire programs
A high score indicates a higher travel-
related retention risk, and perhaps the
need for a softer travel policy.
Our Firm’...
Should you treat high-friction
travelers differently?
Illustrative
Should traveler friction be a
basis for tiered travel policies?
14.3.2014 40
Rank by Trip
Friction
Points
Traveler
Travele...
Should managers understand
each traveler’s recent travel
workload and trends?
41
High
Very High
Extreme
Can firms avoid losing their most
valued travelers?
Trip Friction Level
Very High
High – Med. High
Medium or Low
Circles r...
Travel Policy
None Harsh
High
Costs
Supplier Cost
Goal: Predictable Impact of
Travel Management
Source: Scott Gillespie
Tr...
Summary, then Debate
• Managed Travel 1.0 has peaked
• We need ships, not castles
• Open Booking and Traveler Friction
are...
Kiitos / Thank you
Scott Gillespie
Scott@tclara.com
Glad to connect on LinkedIn
Traditional travel metrics don’t work
6 trips between
San Francisco
and Seattle
6 trips between
Phoenix and
Frankfurt
$24,...
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Trip Friction and Managed Travel 2.0

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Desribes two frameworks for managing corporate travel.

Trip Friction is tClara's way of measuring traveler wear and tear, such that a travel manager or HR leader can pre-empt travel-related burnout risks.

Open Booking shifts much more responsibility to the traveler and the travel budget owner, while requiring travelers to book in ways that provide their booking data to their employers quickly.

Published in: Business

Trip Friction and Managed Travel 2.0

  1. 1. Trip Friction and Managed Travel 2.0 Scott Gillespie 30.10.2013 Helsinki
  2. 2. Scott Gillespie • Co-founder of tClara, a travel data analytics firm focusing on Trip Friction • Founder and former CEO of Travel Analytics, a pioneer in airline sourcing • Author of a U.S. Patent on airline contract analysis • Speaker and writer on innovation and best practices in managed travel 14.3.2014 2 Managing Partner, tClara Author, Gillespie’s Guide to Travel+Procurement Pushes the corporate travel industry to think new thoughts and create more value
  3. 3. Little change in 100 years 3/14/2014 3Gillespie’s Guide to Travel+Procurement
  4. 4. Where we’re headed Discuss and Debate Traveler Friction Open Booking We Need New Frontiers Managed Travel (MT) 1.0 has Peaked
  5. 5. • 1994: Delta Air Lines caps commissions, triggers TMC transaction fees and cost center mentality • Late 90’s: Strategic sourcing, corporate online booking tools and Prism put travel management in spotlight • 2007: UK’s Corporate Manslaughter Act makes duty of care a high priority Key Drivers of Managed Travel 1.0
  6. 6.  Consolidate TMCs  Consolidate T&E card programs  Consolidate travel data and reporting  Comply with duty of care  Use KPIs and benchmarking  80+ % online adoption  90+ % travel policy compliance  Optimize air, hotel and car programs After 20 years, best practices for Managed Travel 1.0 are well known
  7. 7. Managed Travel 1.0 has reached diminishing returns 3/14/2014 7 Gillespie’s Guide to Travel+Procurement 1995 2015 High > Incremental Value Low The castles have been built
  8. 8. Solid, safe, enduring – a valuable base Immobile, inflexible
  9. 9. value 3/14/2014 9 Gillespie’s Guide to Travel+Procurement it’s time new sources to find of
  10. 10. 3/14/2014 10 not Castles Ships We need
  11. 11. Where are the new frontiers? 3/14/2014 11 Gillespie’s Guide to Travel+Procurement Open Booking Traveler Friction
  12. 12. Open Booking’s Four Principles 3/14/2014 12 Gillespie’s Guide to Travel+Procurement 1. Shop anywhere – period. 2. Book anywhere – so long as data is captured quickly 3. Book anybody – so long as suppliers are safe 4. Book anything – so long as it is in budget
  13. 13. • “I have had open booking for several years. It can and does work but it was a lonely trail until recently. Conversations with TMCs, airlines, expense tools, hotel chains and other partners have exploded in the last 12 months though. • There is a realisation amongst all of these groups that they need to get a handle on the drift away from traditional policies in many corporates and find new value propositions - ones that focus more on the traveller than the travel manager in many respects. • There is a need for TMCs and travel managers to move from enforcement to empowerment... you can only fight a tide for so long and the question "I can get it cheaper on XYZ.com" still remains unanswered by most companies and travel 2.0 is searching for a way forward pulling the customer and the data into a virtuous environment.” Mike Tangney at Google says: (emphasis added) Published on “Managed Travel 2.0” discussion group, LinkedIn, 12 Jul ‘13
  14. 14. Evidence supports Open Booking GBTA’s “Global Business Traveler 2012” study of 840 U.S. managed and unmanaged travelers: 1. Unmanaged travelers were happier with their trips 1. For traveler comfort and convenience 2. For interesting and enjoyable trips 3. For getting the best prices 2. Unmanaged trips cost 3% less than managed trips
  15. 15. Open Booking is NOT Unmanaged Brand.com or OTA Corporate Traveler Corporate Booking Data Traveler’s Expense Report Net of Discounts Duty of Care Provider 3/14/2014 15Gillespie’s Guide to Travel+Procurement
  16. 16. Edit Rights will be essential 3/14/2014 16 Gillespie’s Guide to Travel+Procurement Corporate TMC Trip Changes Right to edit or cancel the booking Everybody is happy! Corporate Booking Data Corporate Traveler Brand.com or OTAs Net of Discounts
  17. 17. The data channel trumps the booking channel Data Channels over Booking Channels
  18. 18. Payment Providers become essential data suppliers
  19. 19. morph into Traveler Subscription fees TMC Booking fees Security and Service
  20. 20. Where are the new frontiers? 3/14/2014 20 Gillespie’s Guide to Travel+Procurement Open Booking Traveler Friction
  21. 21. How do we optimize a travel program?
  22. 22. Travel Program KPIs Spend Savings Prices Variances Finance, Procurement Policy Compliance Traveler Satisfaction. TravelersOperations Agent Productivity Call Service Quality
  23. 23. Travel Policy None Harsh High Costs Supplier Cost Travel Supplier Costs Are Controlled by Travel Policy and Procurement Source: Scott Gillespie
  24. 24. Travel Policy None Harsh High Costs Supplier Cost Traveler Friction Is The Hidden Cost of Travel. It’s an HR Issue Source: Scott Gillespie Human Cost, or Traveler Friction • Lost productivity • Reluctance to travel • Negative impacts on recruiting & retention •Traveler health issues
  25. 25. Travel Policy None Harsh High Costs Supplier Cost The Total Trip Cost Is What Matters Source: Scott Gillespie • Lost productivity • Reluctance to travel • Negative impacts on recruiting & retention •Traveler health issues Total Trip Cost Supplier Cost + Human Cost = Total Trip Cost Human Cost, or Traveler Friction
  26. 26. Travel Policy None Harsh High Costs Supplier Cost So We Must Measure Human Costs To Find The Lowest Total Cost and Optimal Policy Source: Scott Gillespie • Essential • Not well understood Total Trip Cost Human Cost, or Traveler Friction
  27. 27. Listening for Traveler Friction Is this the best we can do? Traveler Complaints Business Leaders’ Complaints
  28. 28. Travel Policy None Harsh High Costs Supplier Cost If Human Costs are high, then the optimal travel policy is lighter Source: Scott Gillespie Total Trip Cost Human Cost, or Traveler Friction
  29. 29. Travel Policy None Harsh High Costs Supplier Cost If Human Costs are low, then the optimal policy is harsher Source: Scott Gillespie Total Trip Cost Human Cost, or Traveler Friction
  30. 30. Companies spend about the same on travel as they do on turnover: 1-3% of revenues Source: “Retention of Key Talent and the Role of Rewards”, Scott, Hay Group, June 2012. tClara analysis
  31. 31. Human Resource KPIs Turnover Rate Cost per Hire Sick Days Healthcare Costs Productivity Metrics Engagement Scores Performance Ratings Employee Potential Ratings
  32. 32. Measuring human costs travel-related is a New Frontier
  33. 33. Trip Friction™ - a measure of the traveler’s experience 6-hour non-stop in Business Class, arriving home on Friday afternoon, after 2 nights away Trip A 6-hour red-eye flight, with a 4-hour layover, connecting on a regional jet, both legs in Coach, arriving home on Saturday afternoon, after 5 nights away Trip B 300 Trip Friction Points 900 Points
  34. 34. 10 Firms in tClara’s 2013 Trip Friction Benchmark Study By Industry High Tech 5 firms Consulting 3 firms Financial 1 firm Manufacture 1 firm By Annual Air Spend (USD) $1<10MM 2 firms $10<25MM 5 firms $25<50MM 1 firms $50+MM 2 firms Avg. Annual Air Spend, USA POS $36MM
  35. 35. 35 44% 27% 10% 19% Work Time 8a- 6p, M-F Home Time 6p- 10p, 6a-8a M-F Sleep Time 10p-6a, M-F Weekend Time Sa-Su When Do Travelers Fly? Share of Total Flight Hours 56% on Personal Time Source: tClara’s 2013 Trip Friction Benchmark study
  36. 36. Distribution of Trip Scores 42% are Harder Trips 27% 31% 20% 11% 4% 3% 2% 3% Easy Moderate Fairly Hard Hard Very Hard Fairly Extreme Extreme Very Extreme Source: tClara’s 2013 Trip Friction Benchmark study
  37. 37. Next Step: Calculate scores for each traveler, and benchmark entire programs
  38. 38. A high score indicates a higher travel- related retention risk, and perhaps the need for a softer travel policy. Our Firm’s Trip Friction score is in the 87th percentile. That’s not great.
  39. 39. Should you treat high-friction travelers differently? Illustrative
  40. 40. Should traveler friction be a basis for tiered travel policies? 14.3.2014 40 Rank by Trip Friction Points Traveler Traveler's Trip Friction Points for 2013 Traveler's Percentile Among All Firms in 2013 1 Veera 22,560 96% 2 Riku 21,730 95% 3 Johanna 21,690 95% 4 Juho 20,370 95% 5 Lida 18,650 92% 6 Sami 18,120 92% 7 Jenni 17,600 88% 8 Teemu 17,360 88% 9 Sonja 16,920 84% 10 Oskar 16,840 84% “18,000 points, or the 85th percentile” Use industry-wide percentiles
  41. 41. Should managers understand each traveler’s recent travel workload and trends? 41 High Very High Extreme
  42. 42. Can firms avoid losing their most valued travelers? Trip Friction Level Very High High – Med. High Medium or Low Circles represent employees High Value Talent at Risk?
  43. 43. Travel Policy None Harsh High Costs Supplier Cost Goal: Predictable Impact of Travel Management Source: Scott Gillespie Traveler Friction Retention Rates Health, Safety Costs Productivity Levels Engagement Scores Ticket Prices Room Rates Travel Spend
  44. 44. Summary, then Debate • Managed Travel 1.0 has peaked • We need ships, not castles • Open Booking and Traveler Friction are new frontiers • Open Booking’s first challenges are about technology – Will change the role of TMCs • Traveler Friction’s first challenges are about HR costs – Will change the role of Travel Managers 44
  45. 45. Kiitos / Thank you Scott Gillespie Scott@tclara.com Glad to connect on LinkedIn
  46. 46. Traditional travel metrics don’t work 6 trips between San Francisco and Seattle 6 trips between Phoenix and Frankfurt $24,000 buys 12 round trips between L.A. and San Francisco in coach $24,000 buys one first class ticket, NYC to Sydney 6,000 miles flown between D.C. and NYC in a quarter (30 one-way trips) 6,000 miles flown between D.C. and Seattle, a one-week trip Trips? Spend? Miles? Higher Trip Friction or or or

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