How to Set Reasonable ROI Expectations for Business Travelers
Corporate travel is a proven way for many businesses to increase their profits. Whether you’re sending salespeople to close deals, representatives to tradeshows or executives to networking events, there’s always potential to achieve impressive return on investment.
In fact, a studies from the U.S. Travel Association found that most companies earn around $12.50 in incremental revenue for every dollar spent on business travel. Companies that cut corporate travel programs altogether lost an average of 17 percent of their profits for the year. These numbers show just how valuable strategic trips can be.
However, some travel managers and financial executives may struggle to set ROI expectations for business trips, especially if the company’s travel program is just taking off. Therefore, it’s essential to set challenging, but attainable, expectations for road warriors if you want to put your company in a position to achieve its goals.
Consider the Purpose of the Trip
The first factor that should be taken into account when determining expected ROI for business travelers is the nature of the trip. The U.S. Travel Association noted that there are four main benefits that can be achieved from corporate travel:
- Retaining existing customers
- Converting prospective customers
- Networking with key individuals
- Investing in employees
Naturally, some of these benefits will be associated with higher and more apparent ROI than others. For example, a few key business people traveling to visit an important client and upsell their current spend will likely result in high returns. On the other hand, sending a team to a training conference may have benefits in the long run, but it won’t result in clear, upfront ROI. The Travel Association’s report showed that, on average, customer meetings yielded an impressive $15 to $20 for every dollar spent, while conventions and trade shows resulted in around $4 to $6 in returns.
Take Traveler Needs into Account
It’s normal to expect employees to stay productive while they’re on the road, but when you’re considering what they should achieve, keep certain limitations in mind. Your workers may have six hours of downtime during a trip, but that doesn’t mean they’ll be able to work as they normally would. Traveling takes a toll both mentally and physically, so it’s necessary to give your road warriors time to recoup on their trips. They’ll need time to get through security, check into their hotels, scope out the destination and prepare for meetings, so take all these factors into account.
Additionally, it is important to discuss what extra tasks or projects you’d like travelers to complete while on the road, get managerial input on what’s feasible and adjust your ROI expectations accordingly.
“Travel policies play a key role in ROI.”
Review Company Travel Policies
Your company’s travel policies are going to be another key factor in determining returns from business trips. Concur reported that in 2012, the average cost of a dining transaction for an American corporate traveler was around $40. If your company allows workers to spend $150 on food expenses per diem, there’s definitely room for you to dial back costs and increase ROI. You can apply similar logic to hotel, airfare, ground transportation and entertainment costs as well.
Making business travel work for everyone
Employers should evaluate each trip as a unique experience before setting up tasks and objectives for traveling employees. Planning in advance will give both parties a say over what happens — and will help to safeguard against liability or damages.
Plan for the unexpected. Take flight delays, possible cancellations and city-specific issues into account when planning for a trip. Allow additional time for commuting if employees are traveling to an area where special events are taking place.
Encourage downtime. Getting plenty of rest is vital to good performance. Employees who feel rested and relaxed are more likely to focus on the task at hand and give a good performance during presentations or meetings.
Stay flexible. Even the most prepared travelers encounter roadblocks. Be prepared to accept assignments a day late, or even relieve traveling employees of certain tasks altogether. It’s more important for them to feel rested and confident than to complete a minor task.
Remember, traveling employees are the face of your organization while they’re on the road. To accurately represent you, they need to put their best foot forward — and tired, stressed employees don’t make a good impression. ROI doesn’t always mean cash in hand. Building good relationships and making connections is infinitely valuable to any organization, and should be recognized as such.
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Originally published at Limos STL.