Rocketrip CEO Dan Ruch thinks too few travel managers are advocates for travelers. He said the profession has a policy compliance problem and lacks innovation. His new, big-name clients apparently agree with at least some of that.
Rocketrip this month announced that General Electric and Twitter signed on. Most clients now are mid-sized or larger. That’s a change from the small-market focus Rocketrip launched with in 2013.
Rocketrip uses algorithms to present a trip budget to client employees when they’re searching for travel options. When travelers spend less, they split the savings with their employers. The thinking is that rewarding frugality is better than chastising extravagance.
Car information and shopping platform Edmunds is another new Rocketrip client. “We have a fairly non-restrictive travel policy,” according to emailed statements attributed to chief people officer Julie Merges. “We trust our employees to make smart choices that are reasonable and appropriate.
“The gamification aspect of Rocketrip was one of the main reasons we engaged with the platform,” Merges added. “Rocketrip takes an unpleasant task (booking travel) and makes it engaging and enjoyable.” The program taps into “natural enthusiasm for beating the system and having a little fun.”
Once Edmunds travelers use Rocketrip to find the price to beat, they’re “encouraged” to book travel through Egencia, according to Merges. “The two sites are integrated in a fairly seamless way and we’ve taken advantage of Rocketrip’s web browser plug-in to make the process even more fluid.” She said the set-up was “fairly simple.”
Integrating with client travel management companies is not how Rocketrip entered the market. Rather, it began with the “gloves off” against TMCs, Ruch said during a Feb. 15 New York City Business Travel Association meeting. The company didn’t fare well with that approach, he admitted. “I didn’t understand the role TMCs play when I first started.”
Nearly every one of Rocketrip’s clients uses a travel management company. “In most cases, we partner with the TMCs to incentivize decision-making on top of the services that the TMC provides,” Ruch said. “It requires deep integration with existing infrastructure. We spend our time connecting the dots. TMCs, online booking tools and expense have to be our partners.”
Rocketrip’s smallest customers spend about $2 million on travel annually, Ruch said. He claimed the biggest top $1 billion. In all, the account roster numbers in the “high-double-digits.”
Ruch said the Rocketrip model works at programs of all sizes — managed or unmanaged — because “human beings tend to respond to incentives in similar ways.” For the same reason, it works at companies in various sectors. “Even in the most conservative industries,” Ruch said, “people are realizing that, in terms of talent retention, it matters how we treat employees.” He said Rocketrip has clients in manufacturing, for example.
Ruch had a simple response to the concern that some travelers will sacrifice too much comfort and productivity — and therefore jeopardize their missions — in an attempt to maximize rewards. “Travelers are smart enough to know what works for them,” he said.
In another pivot, Rocketrip about 18 months ago changed its pricing structure. When it started, the company charged a percentage of savings realized by the client, which Rocketrip advertises as typically around 30 percent. Ruch said that performance-based model was the wrong one because “clients weren’t investing in the success of the program.”
Now it charges a license fee equating to about 2 percent of the client’s travel spending. “If a client spends $100 million, we charge $2 million to manage the program,” Ruch explained. “If we return back to them $30 million in savings, half goes to employees and half goes to the company, so $13 million in net savings after rewards and our fees.”
He said the charge can be lower than 2 percent for big clients with multiyear contracts.
Such clients typically have negotiated supplier agreements, which Ruch admitted can be a complication. He asked what difference the hotel contract for 8 percent off best available rate makes if “I get 30 percent of your employees to stay with friends?” For air travel, he noted, losing an airline discount program could mean executives flying premium class at the last minute will pay a lot more.
In some cases, he said, Rocketrip will run a “program design” for large clients that accounts for the potential negative impact on supplier deals. Sometimes the analysis is “so sophisticated,” Ruch added, that Rocketrip will guarantee results: “You spend $5 million on travel, and it costs $100,000 to run the program. If we don’t return at least your investment, we’ll return the $100,000 because we know it works.”
Ruch said rare failures normally stem from “a weird cultural fit.” Maybe employees aren’t engaged, he said, or maybe they hate the CFO.
That’s apparently not happening at Edmunds. According to Merges, the program first opened to sales leaders and trainers. It then expanded to the rest of the sales team and is expected to cover all employees.
“The more people use it, the more we’re hearing reports of top savers and employees bragging to one another about their expertise in travel booking,” Merges said. “Now it’s a point of interaction for our salespeople and increases their engagement, their sense of camaraderie and their connection to Edmunds.”
Based in Santa Monica, Calif., Edmunds in 2016 had 528 travelers, according to a spokesperson.
Travel management pros at GE and Twitter declined to comment for this article.
Additional info: In August 2016, Rocketrip introduced a rewards program for administrative assistants who book on travelers’ behalf. In June it raised an additional $9 million in financing, led by Bessemer Venture Partners. In October, the company introduced a customizable analytics console. It plans to soon provide internal and external benchmarking, and a mapping feature showing where employees should be based on their bookings.