Turning data into action – find the right KPIs for your travel programme
Why you need KPIs
Key performance indicators have become an accepted tool for improving all aspects of business management – and travel is no exception. KPIs are the essential measurements which reveal the health of your organisation’s travel programme. Even more importantly, says TravelpoolEurope managing director Søren Schødt, “they are the key to taking action to change the programme. KPIs show you where the needle sits on the dial today, but they also show realistic targets for where you could take the programme tomorrow.”
There are other benefits too. KPIs are excellent communication tools. Sharing your KPI dashboard with internal departments and budget holders shows them where they need to change their behaviour. The data is even more powerful if you can use benchmarks to show how their booking performance compares with others within the organisation, or with other companies.
KPIs are also very helpful for communicating to senior management. “If you send your executive team a clear one-page dashboard each month, you can share your successes with them,” says Schødt. “And if one particular KPI is performing badly, such as the number of days flights are booked in advance, you can show senior management why you want their support to take remedial action. For example, you might ask the chief financial officer to send a memo telling travellers they must book earlier to save money and that any flights booked less than eight days in advance need prior approval from line managers.”
Understand your KPI objectives
But even though few people would dispute KPIs are important, deciding the right ones to collect is a harder question. If companies choose the wrong KPIs, then spend a lot of time trying to move the needle on them, they could waste significant resources.
Perhaps the most important consideration when choosing relevant KPIs is whether they relate directly to the company’s core strategic priorities. Those priorities will nearly always include cost reduction, but others could be improving traveller convenience, reducing environmental impact or managing duty of care. If a KPI does not ultimately contribute towards a strategic priority, it is probably not worth having.
Keep the KPIs under review. Every few months it is worth asking whether what you are measuring remains relevant to the goals of the travel programme.
Make good use of the KPIs
There is also little point in creating KPIs unless you really do follow up with identifying and then carrying out the action points that would improve the indicators. “KPIs need to be seen as the start of the process, not the end of it,” says Schødt.
Find the appropriate data
Another major KPI challenge is finding accurate and complete data to feed them. Management information from travel management companies, corporate cards, expense management systems and accounts payable could all be relevant. Make sure to filter out any duplication of data.
Which KPIs should I use?
No two companies use exactly the same travel management KPIs, but as an example of what your selection might look like, these are the indicators monitored by TravelpoolEurope.
How often did travellers select the lowest logical fare offered to them?
TravelpoolEurope’s policy is to choose the lowest available fare, regardless of the airline. Other companies may want to know instead how often a preferred supplier was chosen, if that is what their policy commands.
Average number of days fares purchased before departure
A critical KPI for many travel programmes, because booking earlier is usually (though not always) much cheaper.
Percentage of flights bought through credit cards
The objective of this KPI is to keep the figure as low as possible. The official payment channel for flights booked through TravelpoolEurope’s TMC or online booking tool is a lodge card, so flights paid via an individual credit card can only have been through non-compliant booking channels.
How many hotel bookings exceed the rate cap for that city?
Rate caps are a very clear limit to set for travellers. This KPI target should be close to zero per cent. If there are any spikes, investigate the figure for underlying causes, such as a popular hotel raising its prices.
Hotel attachment rate
How many flight or rail bookings for more than one night have a hotel booking attached to them? This is a vital KPI for improving compliance both for cost control and duty of care purposes because if there is no attachment it usually means travellers are booking rooms outside policy.
What was the room rate and what was the total paid?
If travellers are spending heavily on extras, they may be breaching travel policy. Or, taking a more optimistic view, there could be some additional non-rate negotiating opportunities with hotels.
Booked room rate versus paid room rate
The main purpose of this KPI is to check hotels are honouring the discounted rates they have agreed with their corporate client. The data can be monitored through booking records and expense reports.
Percentage of bookings with preferred vendors
The higher the figure, the better the chance of negotiating favourable corporate agreements next time.
This KPI ensures travellers are booking the a policy-compliant size of car. The information is normally gained directly invoice data from the rental suppliers, which shows what travellers really drove instead of what they originally booked.
Meetings and conferences
Average price paid per participant
Figures broken down into bookings of packages of 0.5, 1 and 1.5 days. The information is useful for defining and negotiating standard packages of that length (se article on meetings management).
Online booking tool
What percentage of reservations are made through the approved booking tool instead of by telephone to the TMC? A critical KPI because TMC fees are much lower for online bookings.
Error rates – how many bookings have mistakes?
Alarm bells should ring if the figure exceeds one per cent.
The TravelpoolEurope perspective – KPIs are more complicated than they look
Anyone can create a list of potential managed travel KPIs in five minutes. Making sure you choose the right ones for your business – and that you have good enough data to measure them accurately – is a much tougher proposition.
So take time to review your KPI selection instead of rushing in. There are more KPIs than the ones listed here. Some strategic KPIs are more likely to be influenced by the wider business instead of the travel manager. Examples include travel intensity, which tracks total travel costs against total income and sales; and a KPI for measuring the percentage of meetings staged through virtual technologies instead of physical travel.