Tom Rigby, Head of Commercial and Product Development at Reed & Mackay, on how corporate clients want tailored travel programmes to drive savings.
Corporate travel spend is rebounding from the depths of the recession, but clients are getting smarter about business travel, and want providers to tailor a corporate travel programme to drive savings. They want an ‘intelligent’ programme. And cost control is king.
This means many internal travel departments are no longer autonomous, but now come under the control of a company’s procurement department. This requires a more consultative, collaborative relationship between travel providers and procurement. Transparency has always been an important aspect of our service offering and never more so than today.
Give us the raw data
For a start, corporate clients want to see the same travel data as us. They need access to raw data- travel spend, fares, destination options- so they can manipulate it themselves. Both parties need to look at this data in great detail- the dual aspect is important. Why? Because we can share best practise with our clients. And our clients in turn will be aware of company strategy and business objectives and so will need to reflect this in their travel spend policy.
This drives a need for business intelligence products that provide dynamic and transparent data, so that both travel managers and external consultants can both manipulate and analyse the same data. It’s the main reason why we use IBM Cognos business intelligence and performance management software. With the ability to take raw data and model it to our reporting and analysis requirements, we can have ‘one version of the truth’ to report travel data both internally and to our clients. By utilising the analysis capability of Cognos we can identify trends, exceptions and behavioural patterns in our client’s data, allowing us to make recommendations to our clients to manage their travel programme effectively, as well as delivering real monetary savings. By partnering with an external business intelligence company we can be sure that we fully utilise the benefits of IBM Cognos whilst ensuring internal staff are equipped with ‘best-in-industry’ knowledge of Cognos products.
Some of our legal clients, for example, operate in a partnership environment, which makes it difficult to mandate rules on corporate travel. Instead, we use our information management software to show data that can assist in making business decisions in a collaborative way; by giving, say, a law firm client a snapshot of a firm’s travel spend, partners can then identify opportunities for savings or agree changes to their corporate travel guidelines.
It’s more than just raw data
But it is not just information management technology that gives us an edge over our competitors, and helps us to make savings for our clients. Our proprietary IT generates more fare searches faster than your average search, drawing data from the internet, corporate fares, market fares and agency fares. Reed & Mackay’s systems produce 150% more fare searches than your average search, in less time, meaning more savings and better deals for clients. For example, when booking inter-Africa travel, other bookings systems would not be able to pull internal airlines that may have a questionable track record. Our technology – highlights reliability and will source alternative options. But our employee know-how is still crucial. Our technology is both a support for and an enabler of the skilled consultants we employ, who, on average, have 19 years’ experience in booking corporate travel
Here’s what your peers are doing..
Increasingly, clients also want to know what their competitors and peers are doing, they want to benchmark their business practises and policies against their own. So the fact that we can communicate travel data in this way, added to the fact that we work for – many clients within the same industry, means we can – inform our customers:
‘ Your industry peers are currently booking X% in business class, to X destinations, with an average advance purchase of X days resulting in an average transaction value of X.’ This highlights a number of key cost driving factors impacting your travel trends whilst also providing clear saving opportunities…’…all the while ensuring that we respect our clients’ confidentiality and do not divulge sensitive data.
New cost structure
Sharing data and adopting a collaborative approach to working with corporate travel clients is also transforming the costing structure within the industry.
At Reed & Mackay we are leading that change in terms of how we charge clients, and reward our employees. We bill clients an upfront fee for our services. We incentivise our travel consultants by rewarding them for the savings they deliver to our clients, over a sustained period of time: this is unique to our company, and it ensures our clients’ interests are aligned with our own.
One of the most effective ways the corporate travel industry can deliver those savings to clients is by so-called ‘intelligent purchasing’. By identifying travel trends- such as a particular route or destination frequented by a certain executive type, say lawyers or private equity directors- travel providers can leverage their customer base, and purchasing power, for the benefit of their clients.
The depth and breadth of our own client list means we can take a look at the amount of travel spend we invest in a particular route. This is particularly effective for common routes such as NYC where several airlines fly. For more unusual route such as West Africa, airlines often have a monopoly on these routes so our role is to lobby on our clients behalf to deliver schedule options most convenient for clients, or use our commanding position representing a critical mass of firms in a particular industry group, to negotiate special rates. We will look at our consolidated travel spend for that region, go to an airline and negotiate lower fares for those clients on those routes.
Sharing best practise
Helping corporate clients achieve an efficient, sustainable and cost-effective travel programme is all about collaboration and sharing information. Above all, it is about sharing best practise. A client’s business objective may include a 5% across the board reduction in company costs. That can mean procurement urging us to book the cheapest fare. It is up to us to explain that travel spend must be strategic in order to deliver the greatest leverage, convenience and savings to the client. A client may have a tendency to book fully flexible fares for fear of penalties yet analysis of the company’s behaviour patterns may render fully flexible fares more costly even if the client does make changes. There was a trend driven by the recession to change the cabin class rules in travel policies ultimately downgrading from business to premium/economy. The cost to the business due to the productivity limitations this places on travellers is shifting the thinking back to business. Ultimately it’s about delivering the best value on a travel programme that saves clients’ money but most importantly enables them to do their job.