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1、INNOVATIVE COST-SAVINGS STRATEGIES 6THAT ENHANCE BUSINESS TRAVELAn innovative cost-optimization focus,enabled by technology that reimagines the business travel process from start to finish,creates opportunities to reduce program costs and support business growth.This white paper examines a variety o
2、f cost-optimization strategies and their effects,including:increasing traveler compliance to book preferred rates through preferred channels;integrating technology systems;employing dynamic policy in order to respond to fast-changing conditions;implementing traveler incentive or rewards programs;low
3、ering or eliminating the cost of fees;and more.With inflation up,travel managers are under even greater pressure to bring costs down.In this high-stakes,high-pressure environment,innovative travel managers now must focus on cost-optimization strategies rather than broadly cutting costsa move that ca
4、n harm future business prospects.2 6 Innovative Cost-Savings Strategies That Enhance Business TravelInflation increases cost-savings focusAs organizations seek to streamline or accelerate growth in a pandemic-recovery environment characterized by price instability and other volatility due to inflati
5、on,travel managers are under even greater pressure to hold down program costs.Half of travel managers surveyed in Phocuswrights latest U.S.Corporate Travel Report identified cost savings as one of the three top priorities for their managed travel programs.And,in a recent Global Business Travel Assoc
6、iation(GBTA)recovery poll,71%of respondents across industry segmentsincluding about one-third of travel manager respondentsreported that inflation has had a significant effect on their travel programs.“Usually during periods of inflation,the most effective cost-control mechanism is reducing the numb
7、er of trips and travelers,”said Bob Brindley,senior vice president with Partnership Travel Consulting.“This is harder to do now because there are strong business needs to increase travel.”Many executives agree and believe that there will be a number of adverse effects if they reduce their organizati
8、ons business travel,according to a quarterly survey conducted in spring 2022 as a collaborative project of the U.S.Travel Association,J.D.Power,and Tourism Economics.In the survey,55%of executives from larger companies and 37%of executives from smaller companies said that while reduced business trav
9、el may yield short-term savings,it will result in long-term reductions in sales.More than a third of all executives surveyed(36%)also agreed that reducing business travel will have a negative effect on their companys financial performance,while 30%believed it will adversely influence their companys
10、ability to keep or acquire customers.Travel program priorities will evolve The business travel recovery picture is further complicated by an anticipated extension of pricing pressures into 2023.GBTAs 2022 Global Business Travel Forecast identified a variety of factors likely to shape pricing into 20
11、23,including slowing economic growth in many parts of the world,the associated potential of recession,ongoing inflationary pressures,and the conflict in Ukraine.Citing headwinds that include inflation and supply chain shortages,GBTAs 2022 Business Travel Index Outlook projected global business trave
12、l spending wont reach pre-pandemic levels until 2026,two years later than its prior projection issued in late 2021.Against that backdrop,the effect of remote work patterns and,in many cases,the success of video conferencing for business and internal meetings,have prompted organizations and travel ma
13、nagers to adapt the purpose of each business trip and howor ifit directly relates to building business.New challenges require new strategies“The challenges that we face today are different from what we faced before,”said Theresa Miano,senior manager of global travel with Thomson Reuters.“Were focusi
14、ng on necessary travel that is producing revenue for us and not the everyday travel we used to do.Our goal and objective is to make sure we are traveling to support the business.”Hansini Sharma,project lead for corporate travel with Acquis Consulting,noted that on top of“a whole kit and kaboodle of
15、factors that have really impacted the way programs are run,theres also an increase in the importance of duty of care and safety,and the wild card of a remote workforce.”As a result,“There is a lot of focus now on understanding how to optimize and manage costs while balancing some of the more people-
16、driven factors,”she said.“That has made the role of the travel manager more challenging in that these factors dont typically come together all at once.”In this fluid recovery environment,innovative travel managers need to carefully balance cost savings with business growth.Facilitated by technology
17、that integrates the business travel process from start to finish,a cost-optimization strategy creates opportunities to reduce program costs,increase efficiencies,support business growth,and enhance employee satisfaction.3 6 Innovative Cost-Savings Strategies That Enhance Business TravelINNOVATIVE CO
18、ST-SAVINGS STRATEGIES 6THAT ENHANCE BUSINESS TRAVELTHE STRATEGIESIncrease negotiated rate compliance on preferred platforms Increased booking tool compliance results in bottom-line cost-optimization benefits and negotiating opportunities with suppliers.“From a cost-control perspective,”noted consult
19、ant Brindley,“booking channel compliance provides access to discounts you have negotiated for your travelers,significantly lowering trip costs.These vary by company but are substantial for all but the smallest corporate buyers.With channel compliance you are also capturing more of your spend volume,
20、which potentially provides you with leverage to negotiate better pricing with suppliers than you have today.“Driving compliance to use preferred channels or platforms is important not just for cost control,but also for duty of care,”he added.“The more business you have going through an approved chan
21、nel,the more you are going to know where your travelers are.”As every travel manager knows,it is critically important that the booking experience itself is solid,because a smooth booking experience for travelers drives policy and platform.To date,creating that solid booking experience has eluded mos
22、t travel managers.Its also eluded the design of most booking tools,which can be wonky and difficult to use,due to their lack of focus on user experience.The resulting sub-par booking process may result in travelers abandoning the tool altogether and booking on consumer sites instead.According to Pho
23、cuswrights U.S.Corporate Travel Report 20202024,23%of companies struggle to get program compliance rates above 30%.For many travel managers,increased compliance has become an imperative in the pandemic recovery environment.Compounding the challenge,as noted in a Deloitte Insights report on the recov
24、ery of business travel,“The heightened duty of care brought on by the pandemic,as well as the desire to manage costs and manage environmental impact,have increased the emphasis on in-program booking.”Software company Smartsheet offers one solution:“Our booking platform is mandated,”said Michelle Amo
25、s,the companys global travel manager.All of Smartsheets negotiated preferred supplier rates are in the system,“and if you dont book within the platform,you wont get reimbursed,except in extreme circumstances.”Thats a shift for the company,along with an expansion of the trip review and justification
26、process prior to booking,and an increased emphasis on enforcing advanced purchase and expense report procedures.“Before we gave a lot of grace and a lot of reminders,”Amos said.“Now they may get grace if its a first-time violation of policy and a warning that if they do it again,it wont be reimburse
27、d,but for others its a hardline no.”14 6 Innovative Cost-Savings Strategies That Enhance Business TravelINNOVATIVE COST-SAVINGS STRATEGIES 6THAT ENHANCE BUSINESS TRAVELTake full advantage of negotiated rates Miano said accuracy in tracking traveler compliance with booking negotiated supplier rates h
28、as increased since the company hired a new travel management company about a year ago.“To have the ranking and positioning in our tool is making it easier for employees to pick the right choice,”she said.“We have pretty high compliance with our preferred rates,and we see pretty good savings from tha
29、t,”she added.“We get about 83%of our flights booked with our preferreds and about 73%are booked with our hotels.Im pretty happy with the 83%,but I would like to aim higher on the hotels,maybe to 80%.”Communication about the travel management solution and company policy played a key role in boosting
30、employee compliance with booking negotiated rates.The company utilized a variety of formats including its internal site,a company social networking site provided by a third party,management briefs,newsletters and word of mouth.“Every time we are on with the EA(executive assistant)groups or travelers
31、,we are making sure everybody is aware,”Miano said.Brindley noted that policy and platform compliance and taking full advantage of negotiated rates are“separate but related.When negotiating preferred pricing with suppliers,compliance drives credibility.Put another way,negotiated pricing is not susta
32、inable if the buyer under-delivers on its commitments.”He continued,“Its important for buyers to take steps to ensure that travelers are booking the best available prices that meet their needs.It is also important for buyers to track their contract performance and let suppliers know if they are not
33、price-competitive,even with the negotiated discounts.”Here too,of course,a user-friendly booking experience is an integral part of the equation.Frustrated travelers who abandon the companys tool in favor of easier-to-use consumer sites cant take advantage of negotiated rates,which results in higher
34、costs for the travel program.2Insights and AdviceMore mandates can mean less compliance:“Theres been this shift where people are seeing more lack of compliance when its a very highly regulated program,because travelers want to be able to choose what they are comfortable with.The higher the mandates
35、that you have in a program,or the more restrictions,the lower the compliance.The more flexibility you have,the higher the compliance.Its an odd conundrum,but when you offer more options,you increase compliance,because travelers can find something that theyre comfortable with.Its a really difficult b
36、alancing act because the only way you are going to achieve cost savings is to have a strong data set,and the only way you are going to get a strong data set is if people are compliant.”Hansini Sharma,Acquis Consulting5 6 Innovative Cost-Savings Strategies That Enhance Business TravelINNOVATIVE COST-
37、SAVINGS STRATEGIES 6THAT ENHANCE BUSINESS TRAVELIntegrate systems to optimize costs and increase spend visibility The integration of travel,payment,expense and accounting systems has emerged as the new gold standard in travel management.“This is an objective of most large travel buyers,and can be ac
38、complished by securing a travel stack via a TMC or directly from vendors and building a custom stack,”Brindley explained.“Most TMCs build a stack of services from third-party content plus content they have developed themselves,or you have a company like TripActions now Navan where almost everything
39、is internally developed.Each of these can have a positive impact on optimizing travel costs and improving cost visibility.“Whether its one single system or a collection of systems integrated together,the key is that its working as an integrated solution for the client,”he added.“That integration is
40、critically important because it then leads not only to efficiencies for the company,it translates into traveler satisfaction as well.”Amos said the ultimate goal is to capture the total cost of each trip,from the moment a traveler walks out the door.“That is going to help us make the right policy de
41、cisions based on trends and identify areas where we can cut and optimize,”she said.Smartsheet is beginning to build its own data integration solution by making improvements to its existing platform and features.“Im talking about door-to-door data aggregation,”Amos said.“That will tell us the whole s
42、tory,because right now we might know what the pie crust looks like,but we dont have a picture of the full pie.This will help us make truly wise and informed decisions and plot out what our next strategy will look like.Full integration will enable Smartsheet to track the ROI of business travel.My ult
43、imate goal is to identify the customers revenue as it relates to the corresponding travelers spend.”System integration is also front and center for Thomson Reuters.“An end-to-end solution for us is travel,card and expenses all in one.Thats our future state,thats our dream state,”Miano said.“We are l
44、ooking at a few options and its closer to becoming a reality than it was in the past.Right now,because we have different platforms for travel and expenses and cards,its a very manual process and its not easy.”Miano said the effect of an end-to-end solution will be huge for the company,especially in
45、terms of comprehensive spend visibility,“so we can tell where we should or shouldnt be spending our money,and time and resources will be saved because we wont have to have different people looking at different systems.”She added that tracking the return on investment(ROI)of business travel is also a
46、 key program goal for Thomson Reuters.“Our goal is to eventually track ROI,”Miano said.“Thats very important to us because it will tell us if we are traveling for the right reasons or if the right people are traveling.”“Im talking about door-to-door data aggregation.That will tell us the whole story
47、,because right now we might know what the pie crust looks like,but we dont have a picture of the full pie.”Michelle Amos,Smartsheet36 6 Innovative Cost-Savings Strategies That Enhance Business TravelINNOVATIVE COST-SAVINGS STRATEGIES 6THAT ENHANCE BUSINESS TRAVELUtilize dynamic policyFestive Roads“M
48、acroscope Report:The Macro Changes Affecting Travel Management in 2022 and Beyond”describes dynamic policy that aggregates deep and rich content from multiple sources as“table stakes”for innovative travel management programs.“Dynamic content is the next evolution that will usher in personalization,a
49、gile policy engines,and a much better shopping and on-trip experience,”according to the report.“One of the major drawbacks of using market price caps or budgets for air or hotel bookings is that travel pricing is incredibly dynamic,”Brindley said.“A dynamic spend policy can make an awful lot of sens
50、e,especially if its tied into a program where you are rewarding the traveler for beating the policy cap.”With a static policy,off-season pricing is relatively easy to beat.A traveler could then book the most expensive hotel room in a market and stay under the policy cap,even if that is not the best
51、cost-optimization decision for the company.The opposite is true during a high-priced time of the year,when a traveler can do their best to book in policy,but all available rates are above policy guidelines.“When rewards programs are set on a static basis it can lead to suboptimal decisions by travel
52、ers and prevent the company from getting the return on investment they wanted,”Brindley said.“In those environments,dynamically setting targets is much more efficient and is actually easier to explain.Travelers can understand the expectation is based on current market conditions,and if they want to
53、stay within the policy,they have to make sure they are hitting or beating that expectation.”In a Phocuswire white paper,Ofer Ben-David,now executive vice president of engineering at Navan formerly TripActions,described how dynamic policy tools can restrict or expand travelers booking options in resp
54、onse to changing market and internal organizational conditions.“Corporate travel and spend tools now need to have nuance built into policy so that its possible to restrict destinations,types of spend,and classes of service,”he said.“Tools like dynamic policy can also flex to give travelers more or l
55、ess space when inventory shiftsand youd be surprised by how much money a simple dynamic policy can save.”At Thomson Reuters,dynamic policy implementation is on Mianos wish list.“We are not there yet,but its something I am going to be looking at because I see some of our business units and groups sho
56、uld be set up a little bit differently than others,”she said.“Dynamic policy and pricing probably will come into play at some point.”4“An end-to-end solution for us is travel,card and expenses all in one.Thats our future state,thats our dream state.”Theresa Miano,Thomson ReutersCommunication and edu
57、cation are key:“In general,travelers want to do the right thing for their company,but they also want travel choices that meet their needs.Communication and education are critical to bridging that gap.Traveler engagement and communications are critical elements in successfully making policy changes o
58、r implementing cost-optimization initiatives because success requires buy-in from travelers.We have found that appropriate communications through the right channels at the right time actually empower travelers to make the right purchase decisions.They are more comfortable,and they feel they are part
59、 of the process and are valued.”Bob Brindley,Partnership Travel ConsultingInsights and Advice7 6 Innovative Cost-Savings Strategies That Enhance Business TravelINNOVATIVE COST-SAVINGS STRATEGIES 6THAT ENHANCE BUSINESS TRAVELImplement a traveler rewards programWhen positioned as an incentive to boost
60、 policy and platform compliance,traveler rewards programs can be a powerful cost-optimization tool.Rewards can help lower overall company costs since,in a tight job market,rewards programs can also assist with employee satisfaction and retention.According to Gallup research,the cost of replacing a f
61、ull-time employee can range from one-half to two times the employees annual salary,and there are multiple associated soft costs in terms of time and energy spent in onboarding new hires.Effective programs work on both levels.According to Brindley,“If rewards programs are designed correctly,that can
62、definitely enhance employee satisfaction and drive cost savings by reinforcing appropriate traveler buying behavior and supporting preferred suppliers.”Traveler rewards programs are currently available from independent rewards-focused platforms,some online booking channels and travel management comp
63、aniesor as part of an integrated service solution.In addition,some corporate travel departments run their own programs.Examples include sharing the savings from staying with friends or family on a business trip instead of a preferred hotel,or voluntarily downgrading to an economy-class flight if pol
64、icy allows business class.“While they may not be as complex as the programs offered by the technology tools in the market,they generally focus on particular areas a company wants to incentivize,”Brindley said.He added a critical caveat:“Incentives do drive the right kind of behavior,but finance depa
65、rtments typically feel travelers should be doing the right thing anyway and the company shouldnt have to pay a reward for that.”Smartsheet is a case in point.“We have internal awards and recognition boards,so we offer a lot of different avenues to recognize employees,”Amos said.“But our expectation
66、of employees is that they follow policy and comply with processes.”Thomson Reuters does not have a rewards program.“It doesnt fit our organization,”Miano said.“We looked at this multiple times.There are a lot of tax implications,and our goals are to follow policy.We shouldnt have to reward employees
67、 for following policy.”5Manage out as well as up:“Dont always manage upmanage out.Be proactive and ask people,How can I help?Most often,that will create a teachable moment about how the booking tool works and self-service options.It also leads to educating a traveler about the industry,leaving them
68、feeling more empowered and informed.Or,sometimes it will lead to a conversation about a true business need and a project that will give you the opportunity to deliver additional value to your organization.Also,become very close with all of the executive assistants.When vendors invite you to an event
69、,either bring them or send them.It goes a very long way.”Michelle Amos,Smartsheet Insights and Advice8 6 Innovative Cost-Savings Strategies That Enhance Business TravelINNOVATIVE COST-SAVINGS STRATEGIES 6THAT ENHANCE BUSINESS TRAVELOptimize trip transaction feesTravel management companies offer clie
70、nts a variety of different commercial models,including transaction fees,for their services.The models range from a per-transaction basis to a single per-trip fee that covers any changes when rebooked on the same record.As travel managers look to optimize programs,the per-trip model can generate uniq
71、ue program savings,particularly given the high rate of flight cancellations in 20222.4%of international and domestic flights from the beginning of the year through mid-September,according to FlightAware research.“Its hard with this changing landscape with the airlines,”said Miano.“With our TMC,as lo
72、ng as we can rebook it on the same record,we dont get charged another fee,so we educate employees about that.”Smartsheet pays its travel management provider on a per-transaction basis for air only,and pays an offline agency fee based on the type of interaction.“Weve negotiated pretty great fees from
73、 a TMC perspective,”Amos said.“A lot of carriers,especially for cancellations and changes,are waiving the fee and the cost of the increase in fare,as they rightly should.”According to Lora Ellis,a consultant with Festive Road,commercial models travel managers have inked with supplierswhether based o
74、n a transactional or management fee basisare an area ripe with cost-cutting potential.“Commercial models are a way of reducing hard costs,or at least aligning them more with the future,”she said.“For all the different types of providers in your program,consider how they charge now and how they shoul
75、d charge in the future.I think they are all open to talking about this.”6Other Opportunities For Cost OptimizationRather than static sourcing,some companies are implementing continuous sourcing,also referred to as continuous program management,as another cost-optimization strategy.“What that means i
76、s instead of waiting for your next quarterly business review with your supplier,or the next RFPwhich with air could happen every two to three yearsif you see there is a problem with the program you take action on it right away,”Brindley said.“Especially if a client thinks they are working with the r
77、ight mix of suppliers continuous sourcing is a more agile process.It means working closely with preferred suppliers,letting them know when they are not being competitive,and demonstrating to the supplier the client is keeping very close track of performance and internal compliance.Its a more positiv
78、e way of running travel programs for both buyers and suppliers,”he said.“Continuous sourcing also allows for evergreen contracting with the pricing terms amended as necessary,”Brindley added.“We have seen big improvements there in making the whole process more efficient for everybody.”Organizations
79、considering continuous sourcing first need to understand why they are doing it,according to Sharma.“It can be a smart option and a really effective way to save money if you are targeting specific business units or locations,”she said.“You have to weigh the cost of it to your organization,the time in
80、vestment,the resources,and examine if it actually delivers long-term value.”9 6 Innovative Cost-Savings Strategies That Enhance Business TravelINNOVATIVE COST-SAVINGS STRATEGIES 6THAT ENHANCE BUSINESS TRAVELBlended Travel Is on the Upswing and Offers Cost-Optimization OpportunitiesA recent Morning C
81、onsult report,“The State of Travel and Hospitality,”based on a survey of 11,000 frequent pre-pandemic business travelers,pointed to the emergence of new travel patterns and habits resulting from hybrid and remote workers.These new patterns most notably included a significant upswing in blended or“bl
82、eisure”travel that combines business and leisure trips.The study found that the share of frequent business travelers surveyed who expect to take a blended trip(40%)in the coming year is nearly equal to the share who expect to travel solely for business(41%).The report concluded that while business t
83、ravel will never return to a pre-pandemic normal,“a new era of blended travel is emerging in its place.Increased flexibility in work locations and schedules has prompted people to think about traveling in new ways.”The shifting demographics of the U.S.workforce toward younger employees who place a p
84、remium on flexibility and experience,including the Gen Z cohort,also plays a leading role in the rise of blended travel.“Companies have been adapting to it,and more are open to it as long as it still fits within their policy framework,”said Bob Brindley,senior vice president with Partnership Travel
85、Consulting.“As more travelers went remote and could work from anywhere it has become more realistic to offer these policies.The primary benefit is still employee satisfaction and retention,but if implemented correctly there could be some additional cost-savings opportunity.”Theresa Miano,senior mana
86、ger of global travel with Thomson Reuters,started seeing an impact on the companys hotel booking volume just a few months after enabling personal travel bookings through its travel management solution for the first time.The option was enabled in the summer of 2022 to drive more compliance to book on
87、 the travel management solution.“If more people are familiar with it,theyll use it more for business,”Miano said.“And we just wanted to pass along the negotiated discounts the TMC has for the employees to use.It was the first time we felt comfortable that it was separate enough that it wasnt going t
88、o be combined with our business travel numbers in reporting.”Importantly for employees,leisure extensions of business trips,as well as all leisure bookings,are not visible to the employer.And because theyre booked on the employees personal card,they dont appear on expense reports in any category.“Wh
89、en we negotiate with suppliers now,they are bringing in leisure rates.If the employee used their company email when booking personal travel,the hotel captured it as business travel even if its not.This may give us a better way to track that and provide more data to the suppliers.”10 6 Innovative Cos
90、t-Savings Strategies That Enhance Business TravelINNOVATIVE COST-SAVINGS STRATEGIES 6THAT ENHANCE BUSINESS TRAVELAbout NavanNavan is the all-in-one solution that makes travel easy so you can focus on being there,not getting there.Say goodbye to spending hours on the phone trying to change your fligh
91、t or saving stacks of receipts to manually input expenses.From EAs and finance teams to travel managers and employees,Navan empowers people to focus on the things that matter most to them all while providing companies with real-time visibility,savings,and control.Learn more at Diane Merlino WriterMa
92、ry Ann McNulty Executive Director,Content Solutions Louis Magliaro Executive Vice President&Group Publisher Lindsay Straub Vice President,Sales Mariza Moreira Group Design ManagerAngelica Mundrick Senior Graphic DesignerCONTENT SOLUTIONSInnovation in actionAs outlined in this white paper,implementin
93、g a holistic cost-optimization program with new strategies and tools will result in cost savings and a corporate travel program thats better positioned to handle future challenges.It will also improve traveler well-being while supporting broader business goals.And travel managers who can work with t
94、heir suppliers and systems providers to respond to post-pandemic challenges will enhance their visibility and roles within their organizations.Noted Sharma,“Theres a lot of opportunity for buyers and suppliers to work together in more strategic ways in the future,and a lot of mutually beneficial out
95、comes that can happen if you come to the table with the right mindset.”“Theres a lot of opportunity for buyers and suppliers to work together in more strategic ways in the future,and a lot of mutually beneficial outcomes that can happen if you come to the table with the right mindset.”Hansini Sharma,Acquis Consulting