With the success of strategic sourcing, companies are starting to apply another procurement practice to their meetings: key performance indicators.
Take Toyota Motor Sales USA Inc., Torrance, Calif. The company developed a strategic sourcing group within its meetings and events department in January and has been diligently tracking sourcing-related KPIs such as turnaround time for site searches and cost savings on F&B, room rental, reused space, and cancellation fees. Since the process has been in place, Toyota has consistently exceeded its targets by at least 50 percent, says Louann Cashill, CMP, CMM, meeting services manager for the company. “[Tracking these metrics] has really helped us to demonstrate the value that we provide to the company.”
The process also allows Toyota to benchmark its success, which will be instrumental as Cashill and her team look to get management's buy-in for implementing the program companywide. Right now, use of her department, which handles only a quarter of the company's meetings, is not mandated. That is likely to change once Cashill and her team present the data they have collected. “We can see where we have gained the most savings,” she says, “and then repeat that process.”
Toyota currently tracks KPIs for all meetings and events with 10 or more people that go through its sourcing group, and that includes closely measuring external partners such as StarCite, which the company uses for sourcing. “We turn domestic site searches around in 72 business hours and international site searches around in 96 hours,” says Cashill. “We really hold [StarCite] to that performance level because our internal clients hold us to that.”
While Toyota is ahead of the curve when it comes to using KPIs to measure meeting sourcing internally, the U.K.-based meetings group at Pfizer tracks them externally. Pfizer uses StarCite to track all the activity done by its internal team as well as three preferred event-management providers that handle meeting logistics. The department has set performance targets for these preferred providers, and those targets are reviewed quarterly. “We've developed a KPI matrix that we measure vendor performance against,” says Richard Parker, manager,operations event management, for Pfizer's U.K. division.
The performance targets are based on cost savings, and providers are expected to achieve a set savings percentage each quarter. Bonuses are given for any savings beyond the minimum expectations, and financial penalties are assessed for providers that fall below the expected levels. “They are really incented at all times to negotiate the best rates on our behalf,” says Parker.
Sunnyvale, Calif.-based spend-management solution provider Ariba uses its own technology to track internal meetings as well as customer-facing events. “We eat our own dog food,” says Traci Oziemblowsky, CMM, CMP, senior manager of corporate events. “We adhere to our own best practices for sourcing and procurement.” For trade shows, for example, Ariba tracks such KPIs as cost per attendee, number of booth visits, leads in the pipeline, and deals closed, as well as the dollar value associated with each.
Why this increased focus on tracking meetings-related metrics? It's being driven by a number of things, says Justin Falgione, senior category manager at Ariba. “Sarbanes-Oxley, cost-management pressures, and the advent of more data-management tools are all driving folks to seek greater visibility into their spend,” he says.
What to Track
TOP MEETINGS-RELATED KPIs FOR INTERNAL AND EXTERNAL (CUSTOMER-FACING) MEETINGS:
Cost per attendee/Lodging, airfare, and F&B as a percentage of total meeting costs
FOR CORPORATE TRAVEL:
Average ticket price/Lowest fare obtained/Traveler satisfaction surveys/compliance rates/Online booking adoption rates/Average base hotel room rate per night/Average agency transaction fees
FOR EXTERNAL MEETINGS:
Leads generated/Dollars in the pipeline/Deals closed