A cognitive bias we all have is extrapolation. We take the current situation and project it far into the future assuming it’ll look exactly like today. It is easy to take today’s coronavirus world, extrapolate it, and imagine a future much like today. Like how travel, or more specifically, how business travel looks today.
From The Reformed Broker
It’s hard to imagine work-related travel bouncing back to 2019 levels in the near future. Not just because people are worried about getting infected, but because the pandemic period has shone a light on a line-item expense that is probably unjustifiable. If we can school children on Zoom, why can’t we agree to a supply contract for plastic knives and forks? I love going out to speak at conferences and eating lunch with clients all over the country – but it’s not like I’m going to sit around doing nothing in the absence of it. Are you?
How many business trips of the future have been canceled in advance of their own existence, like Marty McFly fading away in family photos from the future when it looks as though his teenaged parents may not end up falling in love? How many family vacations just became driving excursions? I don’t think we can know, but if I had to guess, I would say less flights, higher prices, less business travel, more drivable family vacations.
In-Person Sales ROI
Will business travel and business sales be forever changed because of Coronavirus?
I don’t think so.
Business travel will come back. Even if finding a vaccine takes 5 plus years, business travel will come back.
Coming out of the pandemic, travel will still be suppressed. That’s the natural human response to a disaster. I agree with Josh that in the short-run businesses will look to save money and reduce travel and conduct business via video conferencing. But in-person sales meetings have an advantage over other mediums.
- You can mirror your body language to your prospect to get them to like and trust you.
- You get your prospect’s undivided attention. They’re not looking at their phone while sitting on a conference call.
- Your messaging is clearer.
- The reciprocation bias kicks in.
It is because of these benefits that in-person sales meetings convert at higher ratios than other types of sales.
- In-person requests are 34 times more successful than those made over email (source)
- The close rate for in-person meetings is 40% (source)
- Executives and business travelers estimate that 28% of their current business would be lost without in-person meetings (source)
All it takes is one enterprising salesperson to shoulder the cost of their travel at first. Then everyone else will want to increase their travel more to increase their sales too. Businesses will again see that the return on investment is worth it to pay for travel. And other businesses will follow suit to keep up with their competitors.
The Ostrich Paradox
We, humans in general, tend to forget the lessons learned from past disasters.
In 2011 the Japanese city of Miyako was destroyed by a Tsunami.
A wave approaches Miyako City from the Heigawa estuary in Iwate Prefecture after the magnitude 8.9 earthquake struck the area March 11, 2011. Picture taken March 11, 2011. REUTERS
This was not the first time Miyako was destroyed by a Tsunami. In 1933 Miyako was destroyed by an earthquake and a Tsunami. Over 43% of the population died in the disaster.
Surrounding Miyako and the Iwate Prefecture Coastline are many stone markers, some centuries-old, indicating the high water marks from previous Tsunamis. One marker inscribed in Kanji states.
High dwellings are the peace and harmony of our descendants. Remember the calamity of the great tsunamis. Do not build below this point.
The stone tablet on the edge of the village of Aneyoshi.
It is a warning to future generations that are thinking about resettling the port valley. “Avoid our suffering. Please keep to higher ground”.
As we wrote in the 34th issue of the AMM Dividend Letter there are a handful of psychological factors that play into our ability to forget
Myopia Bias
We treat rewards that are immediately present far more favorably than rewards that are well into the future. We focus more on our short-term actions than long-term ones. This makes it very hard to stick to behaviors that protect us from low-probability but high consequence events that could occur sometime in the future.
The last major global pandemic of consequence happened in 1918 over 100 years ago. The impact of coronavirus will fade with time.
Amnesia Bias
Memories of pain are short-term and easily replaced by more positive memories. This quirk helps us overcome short-term setbacks and to learn. We’ll never forget a disaster but we will forget the pain. And we’ll fall back into our old behaviors the more distant the memories become.
Optimism Bias
We tend to believe we aren’t as susceptible to harm as other people. Do you have an emergency supply of food, water, and other essentials in case of a destructive earthquake or wildfire? How many people in Florida stayed home to ride out the recent hurricanes instead of heeding evacuation orders? Look how many people continue with high-risk behaviors during this pandemic behavior even though they could forgo them.
Inertia
When we have to make tough decisions based on an uncertain future our brains get stuck in a state of “analysis paralysis”. In this state, we fall back on the default option. The default option is usually doing nothing.
Herding
A lot of what we do is based on social clues from others. We look to the group to determine the appropriate action. If our neighbors are not preparing for a disaster or evacuating we tend to do what they are doing. People living in high potential flood areas will buy or not buy flood insurance based on if their neighbor has bought it or not. When we start to see other people reverting back to their daily routines during this pandemic, we too will fill the pull to do the same.
Tomorrow is not Today
It looks like some form of a vaccine is coming. When it does come, will business travel look the same as it does in today’s coronavirus world? Will salespeople and businesses cut travel from their expenses if it means lower sales, lower commissions, and lower profit?
A common saying is, don’t be against human ingenuity. I’ll add another one, don’t bet against the human desire to travel. We’ve been traveling it ever since we first step foot out of the plains of Africa and we’ll continue traveling after coronavirus. Extrapolating the state of business travel today into the future is betting against both. And it’s a reason why both Hilton (HLT) and Marriott (MAR) are on our watch list for when they reinstate a dividend.
