Why Trip Friction matters, and how to use it
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Transcript of Why Trip Friction matters, and how to use it
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Travel Data Made Brighter A Gillespie+Diio Venture
Why Trip Friction™ Matters And How To Use It
March, 2014
tClara and Trip Friction are trademarks of tClara LLC © tClara 2014
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Scott Gillespie
• Co-founder of tClara, a travel data analytics firm focusing on Trip FrictionTM
• Speaker and writer on innovation and best practices in managed travel
• Founder and former CEO of Travel Analytics, a pioneer in airline sourcing
• Author of a U.S. patent on airline contract analysis
• MBA, University of Chicago
30.3.2014 2
Managing Partner, tClara Author, Gillespie’s Guide to Travel+Procurement
Pushing the corporate travel industry to think new thoughts and create more value
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Little change in 100 years
3/30/2014 3 Gillespie’s Guide to Travel+Procurement
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Where we’re headed
Discuss and Debate
Engaging the Business
Traveler Friction
We Need New Frontiers
Managed Travel 1.0 Has Peaked
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• 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
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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
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Managed Travel 1.0 has reached diminishing returns
3/30/2014 7 Gillespie’s Guide to Travel+Procurement
1995 2015
High
>
Incremental Value
Low
The castles have been
built
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Solid, safe, enduring – a valuable base
Immobile, inflexible
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value
3/30/2014 9 Gillespie’s Guide to Travel+Procurement
it’s time
new sources
to find
of
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3/30/2014 10
not
Castles
Ships We need
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Where are the new frontiers?
3/30/2014 11
Gillespie’s Guide to Travel+Procurement
Traveler Friction
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How do we optimize a travel program?
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Travel Program KPIs
Spend Savings Prices Variances
Finance, Procurement
Policy Compliance Traveler Satisfaction.
Travelers Operations
Agent Productivity Call Service Quality
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Travel Policy None Harsh
High
Costs
Supplier Cost
Travel Supplier Costs Are Controlled by Travel Policy and Procurement
Source: Scott Gillespie
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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
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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
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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
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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
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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
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Listening for
Traveler Friction
Is this the best we can do?
Traveler Complaints Business Leaders’ Complaints
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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
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HR has lots of good metrics Turnover Rate Cost per Hire Sick Days Healthcare Costs Productivity Metrics Engagement Scores Performance Ratings Employee Potential Ratings
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Measuring
HR costs
travel-related
is a
New Frontier
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Traditional travel metrics don’t work
6 trips between San Francisco and Seattle
Higher Trip Friction
$24,000 buys 12 round trips between L.A. and San Francisco in coach
6 trips between Phoenix and Frankfurt
$24,000 buys one first class ticket, NYC to Sydney
6,000 miles flown between D.C. and NYC in a quarter (15 trips)
6,000 miles flown between D.C. and Seattle, one trip
Trips?
Spend?
Miles?
or
or
or
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Trip Friction™ measures what matters
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
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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
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27
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
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28
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
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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
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Companies should understand their travel requirements from the traveler’s perspective
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Does your program have too much traveler friction? Some is controllable, much is not
Our Firm’s Trip Friction
score is in
the 87th percentile. That’s not
great.
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Travel Policy None Harsh
High
Costs
Supplier Cost
Goal: Reduce High-cost, Controllable Traveler Friction
Source: Scott Gillespie
Traveler Friction
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Trip Friction™ shows which travelers truly travel the hardest
Illustrative
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Trip Friction can be a basis for tiered travel policies
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
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Identify those travelers who are clearly “high friction”
Illustrative
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A: Build a Trip Friction Fact Base
Metrics
Turnover
Engagement Scores
Health Costs
Sales
Productivity
Customer Satisfaction
High Friction Travelers
+9%
-11%
+7%
-12%
-8%
+15%
Q: Does High Trip Friction Matter to Your Business?
HR
Business
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A: Build a Trip Friction Fact Base
Metrics
Turnover
Engagement Scores
Health Costs
Sales
Productivity
Customer Satisfaction
High Friction Travelers
+9%
-11%
+7%
-12%
-8%
+15%
Q: Does High Trip Friction Matter to Your Business?
HR
Business
Then test for differences
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30.3.2014 39
Metrics
Turnover
Engagement Scores
Health Costs
Sales
Productivity
Customer Satisfaction
High Friction Travelers
+9%
-11%
+7%
-12%
-8%
+15%
Q: Does High Trip Friction Matter to Your Business?
Develop Mitigation Strategies
Quarterly Monitoring
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Example: Trip Friction Demand Management Strategy
Top Travelers
By
Spend
Top Travelers
By
Friction
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High
Spend
High
Friction
Trip Friction Demand Management Strategy
Set a goal of reducing Spend
and Friction among this
group
• These high-value employees are likely at some risk
of burnout or attrition
• Easy to identify and engage – Some will not want or need help – Some will not be able to reduce their travel – Some will be grateful for the support
• Use benchmarks to help set goals
• Easy to measure results
• Helps build valuable relationships with HR and
Business Leaders
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High
Spend
High
Friction
Tailor interventions for this key group of travelers
Less
Travel
Easier
Travel $$ Recognition
Support,
Counseling
Trip Friction Demand Management Strategy
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Traveler's
Rank
Traveler
Name or ID
Trip Friction
Points, 12
Month Total
Percentile
Rank, Our
Firm
Percentile
Rank, All
Firms Q1 Q2 Q3 Q4
Trend,
Last 6
Months
1 Jori 22,560 96% 89%
2 Jana 21,730 95% 88%
3 Jamie 21,690 95% 88%
4 Jon 20,370 95% 88%
5 Jerry 18,650 92% 85%
6 Jayesh 18,120 92% 85%
7 Jules 17,600 88% 81%
8 Jhana 17,360 88% 81%
9 Jim 16,920 84% 77%
10 Jesper 16,840 84% 77%
Traveler's Trip Friction Points
Annual Traveler Ranking and Quarterly Friction
Track traveler progress internally and against benchmarks
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8.1
10.9
6
7
8
9
10
11
12
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Tri
p F
rict
ion
Inte
nsi
ty S
core
Trip Friction Intensity Trends
Benchmark Our Firm
Monitor your entire program’s friction footprint against the benchmark
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Metrics
Turnover
Engagement Scores
Health Costs
Sales
Productivity
Customer Satisfaction
High Friction Travelers
+9%
-11%
+7%
-12%
-8%
+15%
Add these metrics to your travel program’s KPIs
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Use Trip Friction to deliver new value to your business
2.6%
Lower Turnover
High Scores Low Scores
Stronger Engagement
Lower Total Cost of Travel
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In Summary • Managed Travel 1.0 has peaked • We need ships, not castles • Traveler friction is a new frontier • Find out if traveler friction matters in your firm • Add new business metrics to travel program KPIs • Use Trip Friction™ to deliver new value to your firm
Thank you! Scott Gillespie
Follow “Gillespie’s Guide to Travel+Procurement”
Glad to connect on LinkedIn