If you've ever felt the pressure of closing a deal before the quarter closes, you can probably relate to the situation that Kevin Lambert found himself in earlier this year. As a Colorado-based field account executive for Nimsoft Inc., a provider of IT-monitoring software, he'd flown to Tampa to close a deal with a client—and to make sure nothing got in the way of getting it done.

Of course, something did. With the quarterly clock ticking, the CEO decided he wanted to postpone the deal for a day—which would push it into the next quarter and nullify the whole trip. Fortunately, after four hours of going over the numbers, talking with the corporate attorney and resolving the CEO's concerns, they signed the papers at 8 p.m. “There's no way that deal would've happened,” says Lambert, “if I hadn't been sitting right there.” The takeaway: At a time when companies are scrutinizing their business travel expenses down to the penny, the cost of not traveling can be a whole lot higher.

Expense vs Investment

Let's face it: the pressure to prove the value of your business travel has never been greater. First, the recession put corporate spending in the crosshairs, prompting thousands of companies to slash expenses wherever they could. Then, the so-called “AIG effect” put meetings and conventions in the spotlight, prompting thousands more to scale back their travel plans for fear of appearing extravagant. Between the crosshairs and the spotlight, a business trip you can't defend is bound to get shot down.

Fortunately, and despite these challenges, travel remains one of the most cost-effective means of building sales and conducting business. According to the National Business Travel Association (NBTA), U.S. businesses are currently spending a paltry 1.1 cent of every sales dollar on travel, a tiny percentage given the potential upside. By contrast, in a recent Harvard Business Review survey, 95 percent of subscribers said that they believe face to face meetings are a key to success in building long-term relationships.

That’s why it's so important to view travel not simply as an expense, but as an investment. Take trade shows and industry exhibitions, where gathering intelligence can be just as important as getting contracts signed. “In this business, the mantra for exhibitors used to be, 'This is what I make, please buy it,'” says Doug Ducate, president and CEO of the Center for Exhibition Industry Research. “Now, it's about having a conversation with your customers about what they're going to need for tomorrow.”

Or consider conferences and industry seminars, where the real business takes place not in the meetings and workshops, but in between them. “I don't go to conferences because I need to go to three seminars on managing travel,” says Doug Weeks, director of global sourcing and travel for Booz & Co., a management consulting firm. “I go because everybody's going to be there. There are dinners; there are conversations in the hallways. That's a huge piece of it.”

And it's a piece you simply can't recreate via phone, video conference or telepresence technology. Sure, the cost-savings can be tempting, but when it comes to B2B interaction, a human touch trumps the touch of a button in almost every situation. “Virtual meeting technology can be great,” notes Kevin Iwamoto, vice president of enterprise strategy for StarCite Inc., a provider of meeting-planning Web tools, “but you can't build a relationship with a flat-panel screen.”

Nor can you conduct an all-day meeting via phone or make a new client presentation via video—and it's impossible to ensure that everybody participating is fully engaged. (Is there anybody who hasn't checked their e-mail during a conference call?) “People put their phones on mute and do other things,” says Weeks. “Is that really creating value because you didn't want to travel?”

Shifting Expectations

The problem, of course, is that such arguments end up sounding warm and fuzzy at a time when cold, hard numbers rule the day. The idea of evaluating travel by Return on Objective or ROO—e.g., going to a trade show to meet 20 customers or get 50 new leads—is going the way of door-to-door salesmen and mimeograph machines. The new buzzword for business travel, taken from the worlds of finance and procurement, is Return on Investment, or ROI. “Management is looking for hard numbers,” says Ducate. “They want to know what the revenue expectation is from spending these dollars on this particular trip.”

Clearly, such calculations are easier for some trips (a sales call, for example) than others (a conference or convention), but the basic concept is the same. On one side of the ledger, the cost of traveling represents the investment; on the other, a quantifiable result measures the return. It may be a boost in sales, or a gain in market share that drives efficiency or future growth. If the return compares favorably to the appropriate pre-trip metrics—how many customers do we currently have? How efficient are we now?—you've got a far more compelling case for making the trip.

For large enterprises, such calculations are hardly new. But increasingly, even small companies are tracking their travel ROI—and expecting their employees to do the same. “Those kinds of justifications used to be part of the travel manager's responsibility,” says Iwamoto. “Now it's being pushed down to the individual traveler.” Furthermore, he says, the issue goes beyond simply cutting costs, although that's important, too. “A lot of business travelers feel they're being cost-effective by booking the lowest-priced hotel, for example, but that alone doesn't provide justification for why they should be taking the trip. You have to prove the value, not just the savings.”

Ultimately, though, companies that treat travel strictly as an expense to be cut in tough times cut themselves off from the very thing that will sustain them when things get better: timely information. “If you're not learning about new products and new trends because you didn't go to a conference,” asks Weeks, “how is that going to help you move forward?” Besides, he adds, “If you're not out there meeting with your clients, you better believe your competitors will be.”

ROI on the Road

Thinking about exhibiting at that big industry trade show, but concerned about the cost? If so, the ROI Toolkit (www.roitoolkit.exhibitsurveys.net) can help. This easy-to-use online tool enables you to input both pre-event data (net attendance, potential customer interest, staffing needs, etc.) and post-event results (audience reached, cost per qualified lead, potential revenue, etc.) to calculate your ROI. And, since the tool itself is free, its own ROI is pure profit.

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