As you review your budget going into next year, you may be wondering how important it is for your company to send employees that that tradeshow or to host that conference for prospective clients. Before you make any drastic cuts in your meetings spend, you might want to consider what new research has to say about the link between business travel and business growth.
A recent study by Oxford Economics found that for every dollar invested in business travel, businesses see an average increase in revenue of $12.50 and $3.80 in new profits. What's especially notable about this new research is not just the findings, but that it marks the first time that the return on investment of business travel has been successfully measured.
"This study shows that not all spending cuts are smart cuts," said Adam Sacks, managing director of Oxford Economics, in a statement. "When companies cut their travel budgets, there are negative consequences that we can now quantify, in terms of lost revenue and profit growth, and in terms of giving competitors a distinct advantage."
Covering 14 economic sectors over a span of 13 years, the study found that cutting back on business travel can negatively impact corporate profits. In fact, an average U.S. company would forfeit 15 percent of its profits in the first year of eliminating business travel. It would take more than three years for profits to recover.
"In tough economic times, many business executives have an understandable short-run focus on managing costs. The report points out the less visible—but significant—long-term benefits resulting from business travel, such as partnership building and new business opportunities," said Dr. Martin A. Asher, adjunct professor of finance at the Wharton School. "Increased business travel in this economy can actually increase sales and reduce the financial decline companies might otherwise suffer."
As we already know, most business people agree that in-person meetings build better relationships. The Oxford study also found such meetings gain customers.
Roughly 40 percent of prospective customers are converted to new customers with an in-person meeting, the study reported, compared to 16 percent without such a meeting. Executives cited customer meetings as having the greatest returns, approximately $15-$19.99 per dollar invested, with conference and tradeshow participation returns ranging from $4-$5.99 per dollar invested.
Read the full results at Meetings Mean Business.
A recent study by Oxford Economics found that for every dollar invested in business travel, businesses see an average increase in revenue of $12.50 and $3.80 in new profits. What's especially notable about this new research is not just the findings, but that it marks the first time that the return on investment of business travel has been successfully measured.
"This study shows that not all spending cuts are smart cuts," said Adam Sacks, managing director of Oxford Economics, in a statement. "When companies cut their travel budgets, there are negative consequences that we can now quantify, in terms of lost revenue and profit growth, and in terms of giving competitors a distinct advantage."
Covering 14 economic sectors over a span of 13 years, the study found that cutting back on business travel can negatively impact corporate profits. In fact, an average U.S. company would forfeit 15 percent of its profits in the first year of eliminating business travel. It would take more than three years for profits to recover.
"In tough economic times, many business executives have an understandable short-run focus on managing costs. The report points out the less visible—but significant—long-term benefits resulting from business travel, such as partnership building and new business opportunities," said Dr. Martin A. Asher, adjunct professor of finance at the Wharton School. "Increased business travel in this economy can actually increase sales and reduce the financial decline companies might otherwise suffer."
As we already know, most business people agree that in-person meetings build better relationships. The Oxford study also found such meetings gain customers.
Roughly 40 percent of prospective customers are converted to new customers with an in-person meeting, the study reported, compared to 16 percent without such a meeting. Executives cited customer meetings as having the greatest returns, approximately $15-$19.99 per dollar invested, with conference and tradeshow participation returns ranging from $4-$5.99 per dollar invested.
Read the full results at Meetings Mean Business.
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