And spend no dollar that works like a dime
No matter the size of company, public or private, executives have long battled with getting a handle on spend across their businesses to meet financial goals for investors and shareholders. The rise of smart data applications across the last decade has made tying spend to revenue, with simple budgeting and forecasting, far easier today than when I started my career in technology – but it still causes headaches for many companies.
Salesforce, the pioneers of cloud computing, have eased some of this pain and the sheer number of applications built on their platform is testament to this. But where sales, marketing, service, finance and even HR have transformed into data-driven functions that can track and analyse every single penny of investment, travel and expenses still desperately lags behind.
In fact, Business Travel News recently reported that just 13% of companies were actively taking steps to measure business travel ROI. This is even more staggering when 81% recognised the importance of doing so. What exactly is holding these companies back?
Why measuring return on travel spend is so critical to company growth
Take sales. You have to spend money to make money and so a sales function’s travel spend is typically the largest in an organisation, consuming on average 10% of all business costs. Understanding what they’re giving back is therefore critical for sales leaders who are tasked with P&L responsibility. Being able to derive customer acquisition costs is just the start but extend this to making data-driven decisions such as whether to travel for a prospect meeting at certain stages of the sales cycle or correlating win/loss to the number of on-site visits. It could really help improve the profitability of closed deals. A closed deal isn’t so rewarding when the sales team have spent inordinate amounts of money on travel and expenses in the process.
The holy grail is being able to see how many on-site visits are generally needed to close a deal. What happened to the ‘Closed-Lost’ deal that had three on-site visits costing over $15,000 and only had a probability of 40%? It’s easy to see how this focus on profitability over revenue could improve the growth prospects of any given company.
Not forgetting general business expenses
Beyond this, there is general business spend. Expenses coming from internal training, quarterly meetings, meetings with Board of Directors or investors for example. Employee onboarding sessions, recognition scheme costs, equipment and supplies, even dry-erase markers and sticky notes (for product designers) – it all increases operating costs. Tracking this spend is just as important in order to derive true ROI.
Ultimately, combining travel spend with all business spend in the same application as your operational data gives management the level of real-time visibility required for financial reporting. It is essential to understanding entire business operations for short or long-term forecasting and planning. And it is possible.
I will cover off how in my next blog. In the meantime, I’ll continue to work with customers so that we can get that 13% much, much higher – and make every penny work like a dollar!