Cracking the Small Business Travel Code

22 September 2016

Business travel, just like HR or Expense Management, is a business process. Exactly how well defined that process is varies massively between organisations, but like most things in business, the more efficient it is the better.

The beauty of business processes is that they can be automated, and travel is no exception. About 10 years ago, big organisations with large travel spend, started pushing for process automation and the corporate online booking tool was born. Travel agencies gave – and indeed continue to give – businesses access to the best online travel booking tools, as part of their service proposition. With the right technology everyone wins.

Over the last few years, the market for corporate online booking technology has matured and the market for corporate travel services has been commoditised. In the hunt for growth, the ‘managed’ travel industry (travel agencies), turned its attention to the smaller end of the business spectrum, where the vast majority of travel - at least 66% - is ‘unmanaged’. Capturing unmanaged travel and turning it into managed travel – which means that it goes through a travel agency, rather than going direct to suppliers - is obviously good news for anyone involved in managed travel.

There are dozens of articles floating around the web stating that the small business market (SME/SMB) is the next ‘big thing’ for TMCs and when enterprise travel is under control, this is arguably a fair conclusion to make.

Indeed, in a recent interview in the Company Dime, Doug Anderson, former CEO of CWT said “Global travel management companies could make a better job of servicing small and medium enterprises. There is an opportunity for whoever it is that gets there first with the best answer.” We wholeheartedly agree with him.

On the surface at least, the SME market really does look like a ‘big thing’. There are literally hundreds of thousands of businesses across Australasia and millions globally, that all spend on travel, making it hugely valuable ($15bn in AU and NZ). Any organisation that can crack the ‘SME travel code’ should, at least in theory, be able to make it BIG.

However, cracking the SME travel code is not as straightforward as it perhaps looks. SMEs are a wildly diverse group and have - at least on some level - already solved the problem. Their solution may not be the most efficient, or effective, but as the old adage goes, “if it ain’t broke, why try and fix it?’ In SME land, where time and resource are typically tight, messing with non-core business processes like travel is not a priority. To bother, SMEs need to be doing enough travel to feel the pain of poor process - which eliminates at least half of them, based on our research.

To crack the SME code requires a fundamentally different approach.

At Serko we know a lot about the space as we’ve studied it hard. Based on our research we know 5 things for certain about the SME code:

1)   It’s got to be a technology-led proposition

To win the battle for SME the proposition has to have the right combination of tech and service, but it has to be tech-led. SMEs want to be able to onboard themselves, in their own time, quickly and simply without any third-party involvement. There cannot be any up front costs and as soon as there are people involved in the process, then there are costs that someone has to absorb.

2)   It’s got to be free to use

There’s a reason that at least 2/3 of SMEs behave like leisure travellers and book direct and that’s cost. It’s not that the SMEs don’t value the services offered by a travel agency, they just don’t want to pay for them up front. Instead, they choose to internalise the cost of search and booking. And they are not wrong. For the most part, domestic and trans-Tasman travel is pretty simple and straightforward - travellers book online and don’t need to talk or interact with anyone. So why pay?

However, when it goes wrong or gets complicated, they need an option to pay, to avoid call-centre hell. It’s a completely rational approach to managing travel and optimising resources.

3)   It can’t come with a commitment

In the same way that SMEs don’t want to pay for a service they don’t use, they definitely don’t want to get locked into any kind of contract that commits them to anything. We live in an on-demand world and for SMEs, travel services should be exactly that.

4)   It’s got to be better than what they’ve got today

As we mentioned earlier, SMEs have already solved the travel problem, mostly by booking direct. The problem of course is that booking direct is a terrible time sink and one that SMEs can ill afford. To crack the code, the solution must be significantly better than what’s on offer today. It has to be faster, simpler and ideally cheaper than what they are currently doing.

5)   It’s got to integrate with other business systems

Modern business is done in the cloud and for small businesses that have adopted cloud-based systems such as Xero, the opportunity to allow data to flow between related systems presents itself. Travel involves spending money on credit cards, which someone, somewhere has to reconcile. If both the travel system and the accounting system are talking to one-another, then there are significant time savings to be gained.

It was with these 5 insights, that we designed and built, the first true SME travel management proposition.

And the result? Well, just over 6 weeks in the signs are positive. For small SMEs that book a fair-bit of travel but don’t want - or can’t get access to the tech), it looks like a perfect fit. More than 500 SMEs have signed up and the booking volume is ramping fast. 

Time will of course tell whether our new hybrid tech/service SME travel proposition really does crack the code, but everything is pointing in the right direction.

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