Geraldine Valenti: Segmenting travellers holds the key to new savings

As negotiation season commences, it is the time when corporate travel managers promise volume in return for discounts and suppliers promise the opposite: discounts in return for volume. It's an annual opportunity to find savings in the corporate travel budget.

Or is it? Many mature travel programmes are already consolidated, globalised and, above all, optimised. On top of that, recent consolidation in the hotel industry is likely to make it harder for travel managers to drive deals. So the negotiations are probably all about cementing what you already have, not necessarily generating new savings.

Travellers hold the key

Then how can you find new opportunities?

The solution sounds straightforward: travellers hold the key to new savings.

First of all, compliance to the travel policy can be part of that answer. Travel managers spend time and energy putting together a list of preferred suppliers with preferential rates, only for a significant proportion of travellers to use other suppliers. Discussing non-compliant spending isn't new. It usually accounts for around a quarter to a third of all travel and expense spending.

This is where we get to the heart of what's new with savings opportunities: by segmenting travellers, you can isolate those who are the least compliant and change their behaviour.

Which travellers should you target?

You can cut and dice travellers every way you want: age, gender, frequency of travel, favoured routes and so on. That's the beauty of Big Data.

Let's consider restrictive fare usage as one example. You may see today a performance of 75%, which may be considered as a satisfying achievement with limited room for improvement. However a segmentation between traveller types can show that 'beginners' (one trip per year) achieve a higher result above 80% when road warriors, concentrating the biggest spend, only get to 60%. This becomes your identified savings opportunity.

Among many reasons for these differences between traveller categories, two of them seem particularly impactful.

People behave in different ways because they have different expectations and requirements. When it comes to hotels, occasional travellers want a good location. In fact, in our recent survey, more than half ranked location as the most important criteria. They also rely on well-known brands because of the comfort of the quality assurance they provide. A big-brand hotel in a decent location is likely to be part of the travel programme, which is good news for compliance.

Frequent travellers, on the other hand, are away from home so much that those big brands have lost their sheen. They want a hotel to have the wow factor, which typically means a boutique hotel. And they don't really mind where it is; only a quarter of road warriors put location first. That adds up to non-compliant spending: it's very hard to make corporate deals with out-of-the-way one-off hotels.

Going beyond travellers

In most organisations, the more you travel the less you manage your own bookings because you have access to personal assistants. You might think personal assistants would only make compliant bookings. But you'd be wrong: the opposite in true. Assistants actually tend to make bookings they know will make the traveller happy, regardless of policy.

Occasional travellers are again much better at complying with the policy. It's all about guilt. Because they generally make their own bookings, they're more likely to choose cheaper, policy-compliant options. They don't want to be seen to be over-spending on their expenses and they don't have the buffer of someone else making the decisions for them.

How to target communications

Data analysis is always interesting and, as we've seen, teaches some interesting lessons. What really matters is working out what to do with the new information.

We've learnt that frequent travellers are the least likely people to comply with travel policy, which increases overall spending. Consequently they need to be encouraged and persuaded to become more compliant. We've also learnt it isn't enough just to target the travellers; their assistants also need to change behaviour.

It all comes down to how travel managers communicate. Since it's the communicator's job to make sure the recipient gets the right message, travel managers need to tailor what they say to different types of travellers. Mass emails don't work.

People who travel once or twice a year don't want their inbox filled up with information about corporate travel. It's irrelevant to them so they'll simply ignore it, perhaps missing something important. They need information only rarely, but enough to make sure they know and understand the travel policy.

Frequent travellers, however, do want and need useful travel information. After all, it's applicable to their everyday work. But for all those companies that have established travel policies, road warriors probably feel like they've seen a thousand emails about the need to adhere to the policy and that it's more cost efficient if they do. It's just noise now. So communications need to be fresh and relevant.

There are alternatives as well, particularly when you know the role personal assistants play. Travel managers can easily organise face to face meetings with them to explain the importance of complying with policy. I'm willing to bet not many companies have tried that, though when they do, it pays dividends. One travel manager sat down with assistants to explain it was better to accept the (low, as it transpired) risk of paying about $70 to modify an air ticket rather than paying for much more expensive flexible fares. Following these educational sessions, compliance to this KPI significantly increased by 11%, driven by bookings made by assistants.

My message to travel managers, based on a very clear evidence, is that you can reduce costs by communicating more effectively to your frequent travellers and their assistants. Go for it.

• Geraldine is leading a masterclass on managing suppliers and service providers in Asia at Business Travel Show, 22-23 February. Find out more here