By Dan Ruch, founder and CEO of Rocketrip
If business travel has mushroomed into one of your startup’s biggest costs, don’t worry – you’re not alone. Travel is typically a company’s third largest expense after rent and salaries, and reducing it can create way more friction than you might expect. Business travelers are used to maxing out their travel budget. If the company will spot a 5-star hotel and steak dinner, why not, right? As companies grow, they try to confront this mindset. They often implement strict travel policies and systems meant to curb spending. But if they’re not careful, this can deflate employee morale, reduce productivity and often lead to turnover.
So what’s a company to do?
Based on my experience helping organizations reduce travel costs with Rocketrip, I would argue that you need to consciously affect positive change in your travel culture. Rather than punishing high spenders, you’ll save way more money and make employees happier if you reward savings. These five steps will help you motivate cost-conscious travel:
1. Talk about it.
To begin changing your travel culture, educate your employees. Be transparent about what travel costs and how it affects the business’s bottom line. In startups, team members generally want to extend the company’s financial runway, but without awareness of how travel costs add up, they won’t necessarily recognize that small choices collectively make a huge difference.
2. Set Achievable Goals.
Cutting travel costs by 20 to 30 percent within six months is a reasonable goal. The key is to incentivize very small behavioral changes that snowball into significant savings. For example, when most people travel for business, they are conditioned to book a hotel. But what if they stayed with family or friends? What if they booked with Airbnb instead of a hotel chain? What if everyone booked flights 14 or more days in advance, saving upwards of 20 percent on flights? These are choices people already make when they travel on their own dime. To get to 20 or 30 percent in savings, think small and think holistically.
3. Reward People for Saving.
Give employees a percentage of the money they save – I recommend half. Do this, and you’ll find employees will be eager to make cost-effective choices. You’ll also find that employees will find very creative ways to save. I see people book two one-way tickets for a round trip flight or share rooms with colleagues just to up their rewards. If you reward on a team level too, teammates will motivate each other to save. However you structure rewards, the most important thing is that the more employees save, the more they should get back. This isn’t about tapping into greed – this is about acknowledging basic human nature and using incentives to drive results.
4. Lead From the Top.
To rally employees around saving, have your executives lead the charge. They too must be accountable for reducing business travel expenses. I know CEOs that have stayed with friends or spent their personal miles to drive cost savings. We have executives on the Rocketrip platform who book an Airbnb, buy groceries and invite their teams over for a family-style dinner during business trips. As these stories spread through an organization, they earn respect from employees who in turn emulate their leaders. Culture starts at the top.
5. Acknowledging and celebrating savings will cement your new travel culture.
That could mean sending out company-wide emails with stories of above and beyond savings, honoring top savers at a company event or granting special perks to the teams that make the biggest dent in travel expenses (tickets to a big sporting event, a team dinner on the company, etc.). I know one group of executives that plans to pool all their travel savings and donate the sum to the American Cancer Society – it’s a perfect celebration of success as well as a demonstration of leadership.
Keep in mind that motivating employees to save on travel isn’t simply about convincing people to pick the cheapest options – it’s about changing small habits at every stage of the travel process. From the decision to book early to the purchases employees make on the road, people will respond best to positive reinforcement and a holistic approach. To change travel culture, make saving benefit your employees as much as it benefits your bottom line.
Dan Ruch founded Rocketrip in 2013 after 10+ years in the ad tech space. Prior to founding Rocketrip, he was VP of Europe for Tremor Video, a leading provider of technology-driven video advertising solutions and ran Tremor’s business development efforts in the US. Early on in his career, he worked at TACODA until its successful exit to AOL, and at GroupM’s agency Mindshare / MAXUS global.