When it comes to business travel, there's a lot more to consider than just the bottom line. Yes, it's important to save money where you can, but cutting corners on your budget will only end up costing you more in the long run. That's why it's essential to understand the difference between an investment and an expense.
If you're a corporate finance manager, you know that tracking and managing your company's travel budget is essential for staying profitable. Measuring your ROI for a travel program can be a bit of a challenge, but it’s doable. With a clear understanding of how your company's travel program is performing, you can make informed decisions about where to allocate your resources. These are a few factors to consider when measuring the ROI of your company's travel program:
Understand Your Company’s Overall Goal and the Trips’ KPIs
The first step is to understand your company's goals for the travel program. What are the goals that you're trying to achieve? What are the KPIs that you're trying to hit? Once you have a clear understanding of your company's goals, you can start to look at how travel plays into those goals so that you can better measure the ROI.
For example, if your company's goal is to increase sales, then you'll want to look at how these trips are impacting sales numbers. Are there more sales after a trip? Are there more critical deals being closed? If so, you can start to see how the travel program is impacting your company's core goals. By understanding your company's goals and measuring the effects of travel on those goals, you can ensure that your travel budget is an investment, not an expense.
Set up the Right Data Tracking and Reporting System
The data that you track will depend on your company's goals, but some examples include travel spending, the number of trips taken, the length of each stay, and the sales numbers. By tracking all of this data, you can start to see patterns and trends that will help you understand the ROI of your travel program.
To accurately measure ROI, you need to have a robust data tracking and reporting system in place. This will allow you to track all of the relevant data points that you need to make informed decisions about your travel program. Several different software programs can help with this, so it's crucial to find one that fits your company's needs. Once you have the right system in place, you can easily track all of the data points that are relevant to your company's goals.
Standardise How You Measure ROI
There are a few different ways to measure ROI, so it's important to standardise your methods. One way to standardise measurement is to use a standard metric, such as cost per lead or cost per sale. This allows you to compare apples to apples when looking at the data so you can easily compare the results of different trips to each other and see which are performing the best.
Another way to standardise measurement is to use a consistent time frame. For example, you might measure the results of a trip six months after it took place. This will allow you to see how the travel program is impacting your company over time so you can make adjustments as needed. A consistent time frame also makes it easier to compare the results of different trips against each other to see which are performing the best.
Measuring Direct and Indirect Impact
Business travel can be an important investment in a company's future. By taking the time to measure both the direct and indirect impacts of travel on your business, you can make sure that your business travel budget is being used wisely.
Here is the difference between direct and indirect impact:
Direct impacts are those that are easily quantifiable, such as the cost of airfare, lodging, and ground transportation. These are the travel expenses that are typically captured in an expenses report, so they’re easy to measure. All you need to do is look at the travel expenses for the year and compare them to last year's travel budget without considering any other factors.
The indirect impact is more difficult to quantify and measure, but it's just as important. It includes the value of face-to-face interactions with clients, the opportunity to build relationships with potential customers, and the chance to learn about new markets. It also consists of the impact that travel has on employee morale and productivity. When employees can take advantage of corporate travel opportunities, they often come back feeling motivated and inspired to do their best work.
So, what's the verdict? Is corporate travel a necessary investment for your business or an unnecessary expense?
The answer is simply that it depends.
If you're looking to increase sales, grow your company, and create a more productive workforce, then corporate travel is an investment that will pay off in the long run. However, if you're only travelling for the sake of appearances or to save money on employee costs, then it might be time to reevaluate your priorities.
At the end of the day, it's up to you and your team to decide whether corporate travel is worth the investment. Overall, however, corporate travel can be seen as an asset, and it’s important to view it as such to get the most out of it. By planning and managing your travel budget well, you can ensure that your company reaps the rewards of travelling for business.