Your meetings management goals are aligned with overall corporate goals, right? So how do you prove it? How do you know if you’re veering off track? How do you know where to make adjustments for a changing environment? Enter the key performance indicator.
Of the many definitions you might come across for key performance indicators, or KPIs, George Odom’s may be the cleverest. It’s certainly the easiest to grasp. “Way back when I tried to do this at Eli Lilly and Company,” he recalls, “someone said to me, ‘If you had to call in once a month and had only five minutes to ask how things are going, what are the things you would want to know?’”
The answer: Your KPIs.
“Any time you are managing any type of business, you need KPIs,” says Odom, who spent 29 years at Lilly (18 of them in travel and meetings), then moved on to Advito, the consulting arm of travel and meetings management biggie BCD Travel. Odom is now almost a year into a new job—president of his own consultancy, Strategic Travel and Meetings Group, focused on the strategy and structure of meetings. “I believe everyone can and should have these things in place,” he says.
Strategic vs. Tactical
Now for the complicated part: If the data from your KPIs provides a snapshot of your performance, how do you decide which and how many KPIs to use? What’s worth measuring? “You can get as crazy as you want,” says Kristen Dierickx, CMP, vice president, account management and operations, at BCD Meetings & Incentives in Chicago. “You can capture 200 data points per meeting. Or you can look at data in big buckets: total F&B spend, for example, not what you spent on breakfast. Some of my clients track meetings manually, through Excel, so they can’t have hundreds of KPIs. It’s a resource issue. Even with technology, it becomes an issue of data integrity. Entering data in 200 custom fields for every single component of a meeting means you risk empty fields and misleading trends.”
However many KPIs you end up with—20 or 200—you’ll always have them built in a hierarchy so that senior management sees only the top 5 or 10. (Remember Odom’s five-minute phone call.) Those top-level KPIs are a status report on you and your department. If one of them raises a red flag, you look to other KPIs to explain the situation. Take a dramatic increase in your top-level KPI looking at average room rate, for example, says Dierickx. Another KPI—one that tracks meeting sites—could offer this explanation: If you held 100 additional meetings in New York, that might raise the average rate. Then you could go deeper to find the reason for the New York meetings: They were all related to the acquisition of XYZ Co.
Take the Next Step
Now you’ve got the explanation, but rather than stop here, a strategic meeting manager might take action. Could some of those meetings be conducted virtually going forward? It could be time to create a KPI that measures the number of virtual meetings as compared to the number of overall internal meetings. And if that KPI is in place, you might implement a process for evaluating whether a meeting’s objectives could be met via videoconference or not. A virtual-meetings KPI could then lead you to a sustainability KPI that tracks carbon emissions.
“KPIs are always evolving,” notes Kari Schroeder-Bigot, vice president, sales, for travel and meetings company Advantage Performance Network in Savage, Minn. “We are in an ever-changing environment in terms of the economy, the marketplace, your competitors. This year you may have a different focus from last year. You need to adjust. That’s the challenge.” It’s also a big opportunity for meeting managers to position themselves as expert advisers, taking the lead on these kinds of strategic discussions and showing senior management how they help to move toward the company’s overall goals.
From Travel to Meetings
Karsten Hecht, senior director, Central Europe, for Advito, offers another example of the KPI hierarachy. At the highest level might be “change in travel costs,” Hecht explains. “That’s a trend and an indicator, but it doesn’t tell you anything. Below this strategic KPI you will have a level of tactical KPIs that might give you an indication of why things have changed.
“For example, the average cost per mile in airfare. Has that increased? That might explain why total travel costs have increased.” Then you would drill down to see why the average cost per mile has increased: Is there a different mix of economy- and business-class tickets or a different mix of destinations?
“To come to an explanation, you need to dig deeper into the tactical KPIs,” Hecht says. “On the other hand, the reason you need strategic-level KPIs is that if you are reporting to senior management, they are not interested in looking at pages and pages of data. The strategic KPIs allow you to create a one-page overview of where you are.” Hot off the press is a white paper from Advito on creating strategic KPIs for corporate travel management. The paper recommends eight to 12 KPIs for a senior management report, each with a traffic light symbol: A green light means that a goal is being met, an amber light suggests a potential issue, and a red light means you need to take action. Hecht offers credit-card usage as an example. If it’s 80 percent or above, that’s a green light. Between 77 percent and 80 percent is an amber warning light. And if it falls below 77 percent, that’s a red light.
Because of the maturity of travel programs, KPIs are farther along in travel management than in meetings management. Companies that want to use KPIs for meetings, says Hecht, need to “implement aprogram to guarantee you know where to get the data and you know the quality of the data. If there is no level of meeting management, then KPIs are just theoretical. Meeting spend is even more ‘invisible’ than travel spend. It could be hidden in HR or . You need a baseline volume to relate the measurements to.
“For example,” he continues, “if you show only an absolute number—we have tracked $1 million in meeting spend—it doesn’t tell you a lot. You will never know if this million is 10 percent or 80 percent of the overall volume and therefore you will not get any orientation of where you are in terms of coverage.” On the other hand, he says, “if you have identified the baseline volume—overall meeting spend in the company is $2 million—and you put the $1 million against that, you know that you still have 50 percent unmanaged spend.”
But even if a company is only beginning to implement an SMMP, BCD’s Dierickx believes there should be a strategic KPI in place to track savings. “At a minimum, negotiated savings and cost avoidance should be tracked and measured against spend no matter how new or mature your SMM program is,” she says. “We consult with our client base on defining their savings methodology. It varies depending on company practices, procurement influences, and what’s considered a realistic benchmark, that is, first-offer room rate or standard group rate versus final offer.”
How to Set Targets
Still, interpreting and using KPI data for meetings can be an uphill climb. In travel management, benchmarks are often used. Credit-card coverage, online adoption rates, and cost per mile of business travel are all measurements with available industry averages. Not so for things like meeting concessions or meeting-policy compliance. “KPIs can be difficult because when you put one in place, companies want to scorecard themselves against other companies,” says Kari Schroeder-Bigot.
For KPIs without benchmarks, Hecht says, setting targets “depends on where the company wants to go. What is the company’s strategy?” Determining targets is a challenge but also a communications opportunity, broadening the scope of a meeting manager’s influence. To determine targets or target ranges for some of your KPIs, you will need to contact stakeholders and connect the dots for them regarding why the measurements matter.
KPIs: Why Now?
Of course, these days travel and meetings are on corporate radar screens more than they used to be. The rapid increase of KPIs, says Advito’s Hecht, “has been driven by the economic crisis. Travel was not so visible before. Now there is a lot of management attention. They are asking, ‘What is the value you are adding?’ And this question is coming from the very top. So travel management organizations need to find ways to demonstrate and benchmark their performance. The need is really there to build KPIs to steer the travel program.”
The trend for meetings is much the same. “Control of meetings is a target for CFOs,” says BCD’s Dierickx. “[KPIs] help those individuals who are process- and performance-driven to embrace meetings.”
Adds Schroeder-Bigot, “I’m seeing a lot more buzz around KPIs. Many mature SMMPs have them in place. In the corporate environment, you see a desire for balanced scorecards and tracking performance. KPIs fit in that decision-making process. They can guide what you are doing and also evaluate what you are doing.” next big thing: demand management
There’s a buzz phrase in corporate travel that is surely coming soon to meetings: demand management. “For a year now, demand management has been the hot topic in travel management,” says Hecht. “It is driven by the idea of cost reduction, by asking: Can we replace some travel with virtual meetings?” But Hecht believes it must go beyond that, to where companies do cost/benefit analyses for all business travel (and, by extension, meetings). “No company has transparency aroundof business travel,” he says. “We are in a place to encourage companies to increase that transparency in order to proactively steer demand in the future.”
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