Do you really need to travel to see your client? Why can't you have a videoconference instead? While I'm an advocate of virtual meetings, travel is necessary in many cases. Rather than supply you with another article on the value of travel, let's focus on the return on investment.
For sake of simplicity, let's use a scenario. Presume that you want to visit a client that has been loyal for two years. It is a fairly new relationship, a competitive market and a cost reduction environment -- how often should you travel to visit with them? How often are your competitors traveling to their clients? Or, worse yet, to your client?
Let's do the math:
1. Develop objectives of the travel and the evaluation method you're going to use:
Objective = gain new business within the next six months
Evaluation method = forecasted an incoming order from the client
2. Collect or forecast the Data = you either receive an order for $50K or you forecast that they will purchase $50K in the next 6 months.
3. Isolate the effects of the travel and calculate the ROI
Let's presume a few factors that may make your client purchase your product or service:
1) the client needs your product or service
2) you have increased your marketing efforts on your product or service
3) the quality of your product is superior to your competitors
4) your company is ethical and reputable
5) your track record of service and efficiency speaks for itself
6) you had a recent training event that they attended
7) you continue to build the relationship with the client.
If you win the business, how much can you contribute to building the relationship? There is no book that will formulate this for you…rather, you must use institutional knowledge to understand your business, your competitors and your relationship value.
Let's presume the relationship building is worth 10% and the other six factors above are worth 90%. You believe that if you travel to visit the client, you have a 10% more chance of making the sale than if you do not get in front of him or her.
- Let's presume the travel costs are estimated to be $1000 for sake of simplicity.
- Remember, our forecasted sale is worth $50K. You could calculate the future value of a sale in six months, but we'll skip that for now.
- We believe that if we visit the client, we'll have a 10% more chance of making the $50K sale. Therefore, we're isolating the effects of travel to be worth $5K, or the "gain."
- Gains = $5K; Travel Costs = $1K
- The Return on Investment calculation is (gains - costs)/costs
Answer - relationship building by traveling to the client is worth a forecasted 400% return on investment.
4. Granted, if you only do this exercise once, it may not carry validity in your organization. However, if you regularly calculate the value of travel and isolate the return on investment compared to other factors, you will help your leadership understand that traveling to visit clients is worth it. Report the business impact and the intangible benefits.
This exercise can be used in training, meetings, business cases, or other complex situations. If you want help, contact me, or, the guru and my mentor, Dr. Jack Phillips. I'm proud to say that I've been following and using his work since the early 90's from my training and development career. I still learn from him today.
Debi Scholar, CMM, CMP, CTE, CTT Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more... Follow me on Twitter ... http://www.twitter.com/debischolar and on LinkedIN at http://www.linkedin.com/in/dscholar
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