Everybody thinks business travel payments and bookings are a headache, until consumer-style rewards are thrown in.
San Francisco-based TripActions, which attempts to cut costs by rewarding employees for cost-effective travel, recently secured $14.6 million in a Series A funding round, the bulk of which came from Zeev Ventures and Lightspeed Venture Partners.
Investors have taken note of clients such as Survey Monkey, eHarmony, Jive and Tipalti, which have saved an average of $10,000 per month on business travel when using TripActions' customized machine-learning algorithms on employee behavior and other factors related to their business.
By choosing airlines, hotel and car or cab services that save the company money, the employee can earn TripBucks, which can be used to purchase Amazon gift cards, or saved for other purchases, or even to upgrade business travel arrangements in the future.
"We believed that if you give a choice to the employee, making it similar to when they are trying to save money as a regular consumer, better things will happen," said Ariel Cohen, CEO of the four-year old TripActions, and a co-founder along with IIan Twig.
Other companies have approached business travel expenses and payments in various ways to make the process more seamless and less costly. Some lean toward prepaid cards as a way to cap expenditures, while others have concentrated on apps that manage and track business expenses as they occur.
But TripActions speaks to a human trait that is common for those who must travel often.
Because employees tend to be less frugal when spending company money, business travel has really been "a currency problem and behavorial economics problem," Cohen said. "We wanted to close this gap between corporate currency and payments to the behavior you would achieve if it were the traveler's own money and payments."
TripBucks closes that gap, as the employee earns the reward each time a flight or hotel with costs under the company budget are chosen. "TripBucks becomes a form of currency to make payments for things they might normally buy," Cohen said.
Many companies offer expense management tools, like Concur, to make the payment and expense reconciliation process easier on the employee and the company, said Brian Riley, director of card services for Mercator Advisory Group.
"Those tools are great, and when you don't have them it is really noticeable," Riley said. "In that regard, TripActions is an interesting service, but some may question the point of incenting someone for doing the right thing."
Still, if a company is going over budget on travel expenses, TripActions is "certainly something worth trying, and if they [TripBucks] really turn out to be something useful and meaningful, that is an important point," Riley added.
A company may find TripActions beneficial, but so many business travelers using their own cards find certain airlines rewards schemes to provide great value, Riley said. Some cards provide extra points at certain levels or big incentives just for signing up and reaching a certain number of miles in a short period of time, he added.
But TripActions positions itself for the employee and company to benefit from the equation because the actual payment for airlines or hotels can continue to go through a corporate card, or sometimes an employee card. In that way, the employee can still earn points for a hotel or airline in addition to earning TripBucks by choosing more frugal options.
The company supports a variety of online payment methods, including virtual cards, and does not send an invoice or charge before or after the transactions. All transactions are online through TripActions' app. The company works through partners such as Priceline and Bookings.com to move bookings and payments through the company's system.
"We work directly with companies and are always identifying opportunities within our target market, which is medium-sized businesses," Cohen said. "But we are also working to have partnerships with others, and resellers and human resources companies are an opportunity for us."
Companies that provide shared office spaces are also "an interesting channel" for TripActions because those companies look to provide every possible service that its clients would expect if working for a large company, Cohen added.
"We are actually offering a complete travel solution for an enterprise," Cohen said. "TripBucks is a payments feature inside of that service and a method for companies to save money."
In addition to the money-saving aspects of booking business travel, TripActions also provides users with itinerary updates, notifying employees if flights have been canceled or delayed and providing options to act upon quickly.
TripActions charges the company a flat booking fee and gets a commission from the travel agent for booking a flight. But it does not charge a fee for the company to use the software nor does it seek a percentage of the savings a company enjoys from the service.
"We want these business travel transactions to be as clean as possible," Cohen said. "We want savings for the companies that are our clients."