TRAVELLER BEHAVIOUR BY NICK EASEN
DECISIONS, DECISIONS
Travellers’ irrational behaviour can prove costly to business – but buyers can employ behavioural economics to ‘nudge’ people in the right direction
‘WELCOME TO
MUNICH.Please take public transport to your hotel – it’s the best option.’ Your executive may receive this text the next time they land in Germany – it’s called a ‘nudge’. But why do we need these positive, yet indirect sugges- tions? Because they can influence our decision-making, which can potentially save businesses money. Yet your traveller had an extremely
stressful day and was intending to take an extortionate taxi into town. In fact, 70 per cent of business travellers head for the taxi queue as the easiest way to find their way round an unfamiliar city, according to a recent survey by Egencia of over 6,000 executives in 12 countries, from the UK to India, Australia to Canada.
Certainly decisions made under pres-
sure or in ‘hot’ states are more irrational and completely different than those made in a more relaxed, or ‘cold’ state. We grossly misjudge how travellers will react in stress- ful, time-sensitive or urgent scenarios. And this can be observed in the higher levels of spending we see with executives’ last-minute arrangements, compared to those made weeks ago in a calm office. That taxi is obviously not the cheap- est option, but let’s face reality – it’s just human nature. Most executives are not rational robots who make cool calculations that are in their company’s best interests. The fact is we are wired to make irrational decisions time and time again, albeit in predictable ways.
This can certainly lead executives to go off-policy and blow travel budgets with unnerving regularity. “Travellers often choose carriers and vendors for emo- tional reasons, which can override rational
BUYINGBUSINESSTRAVEL.COM
decisions such as best value or proximity to the airport or to a meeting venue,” says Sean de Lacey, head of sales at Diversity Travel.
BEHAVIOURAL ECONOMICS Why do executives park in the short-stay, when the long-stay is better value? Why do travellers feel the need to bust the budget and book that off-plan, boutique hotel when they’ve had a particularly stressful trip? These questions can be answered by understanding ‘behavioural econom- ics’ – the study of how our emotions and psychology effect the economic decisions we make. “Yet in our opinion, few organisations
are consciously employing behavioural economic principals or nudges,” says Nigel Turner, senior director of business services at Carlson Wagonlit Travel (CWT). This appears to be the broad consensus. If travel managers are employing it, they are doing it in simple ways.
Leader boards
A MAJOR OIL AND GAS GIANT DISPLAYS EACH REGION’S PERFORMANCE and compliance with certain policies on a scoreboard, or ‘leader board’. These are openly displayed in each office globally. This sparks competition between the regions. The challenge is comparing regions when the business mix of air, hotels and rail varies, as does the online and offline booking limitations. This is considered a ‘soft’ approach to behavioural economics.
However, the science is evolving rapidly.
We can now not only monitor the choices we make, but we can influence them, too. Blame Amazon, Netflix, even HSBC – and you can also point a finger at consumer travel websites. Stir in a heady cocktail of complicated algorithms, as well as ‘big data’ and you have an incredibly powerful new set of tools. “Many corporations in the retail sector
are increasingly using sophisticated behav- ioural economics to influence consumer choices and, over time, it will start to filter down to managed travel,” explains Torsten Kriedt, vice-president of corporate intel- ligence at BCD Travel. For instance, global bank HSBC is now trialling a new smartphone app that tells customers when they’re spending too much on takeaways, coffee or drinking in a bar. Called HSBC Nudge, it analyses users’ account data to identify trends in spending habits. It also sends regular messages to make customers aware of the consequences that it will have on their finances. It’s not hard to imagine a tool like this coming to the business travel arena soon.
The techniques used follow the con-
troversial so-called ‘Nudge Unit’ of the British government, which employed subconscious strategies to persuade the general public to pay taxes, fines and charges they had been avoiding. Big players in this area are Amazon and
Netflix, which are increasingly aware of your previous purchases. They generate default suggestions, which are meant specifically for you. It makes choosing less daunting. A number of consumer travel websites are in on the game, too, offering
BBT MAY/JUNE 2016 105
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