Does business travel pay off? For a small business watching every dollar, you might expect the answer to be “No.” But a recent research report, The Role of Business Travel in the U.S. Economic Recovery, found that business travel helps drive business sales and growth even in tough economic times.
Specifically, the study found, every $1 invested in business travel led to an additional $9.50 in revenue and $2.90 in profit on average. The study included meetings, conventions and sales trips, and followed businesses in 14 industries over 18 years. It was conducted as a follow-up to an earlier study in 2009, with the goal of seeing how widespread travel cutbacks during the recession had affected businesses.
The study by Travel Effect found that on the whole, most businesses have increased their spending on travel after cutting back substantially in 2008 and 2009. The number of business trips increased in 2011 and 2012, and business travel spending hit a new high in 2011. The frequent business travelers in the survey say they believe business travel will continue to expand in 2013.
There’s good reason to increase your business travel spending: Data from 2007 through 2011 in 61 industries found that the industries in which companies spent the most on business travel during the recession had the highest growth in profits. In addition, almost 60 percent of the frequent business travelers in the survey believed that spending more on business travel would have a positive impact on their companies’ revenues and profitability.
In contrast, when business travelers at companies that had cut business travel spending since 2007 were asked how the cutbacks affected the business, 57 percent said cutting back on business travel had hurt the business. Just 4 percent said it had helped.
In-person meetings with customers and prospects are the biggest benefit of business travel. Business travelers polled in the survey said that, on average, prospects are nearly twice as likely to convert to buyers after an in-person meeting than without one. In addition, business travelers believe that if they could no longer travel for in-person meetings, they’d eventually lose 42 percent of their existing customers.
While business travelers said in-person meetings were the most important reason for business travel, conferences and trade shows were also named as important, primarily because they offer the opportunity to meet with prospects and customers.
What’s the lesson for your business? Videoconferences and teleconferences can supplant some, but not all, business travel events. If at all possible, maintain enough travel budget that you can meet with key customers and prospects in person—if not for every meeting, at least often enough to sustain and maintain a good relationship.
Image by Flickr user Sean MacEntee (Creative Commons)