Two months ago, we published a survey aimed at RM professionals, in order to add a practical perspective to our articles.
This survey had a relatively explorative goal – even though it had some closed-ended questions: We wanted to get professionals to put their own words on what they do.
It is not surprising that most of our respondents are currently working in the airline industry. Yet, we received contributions from the outdoor advertising, timeshare, hotel, and car rental industries.
As one of our respondents (obviously an airline RM professional) said: “The RM department should be the heart of the company, its main engine. It is the sector that assists in route planning, strategic planning and business strategies and marketing actions. Therefore, it should receive the best structure in the company.”
Pros and cons
Our respondents view Revenue Management as a sound, scientific and well justified approach to optimize revenue, and thus to boost the bottom line.
On the other hand, it seems that the main issue Revenue Management has to address is corporate culture. Top management does not always "trust" Revenue Managers, and does not always believe in RM’s potential. It can result in a poorly adapted organizational structure, and sloppy decision making process. In sufficiently large organizations, it appears that some Revenue Managers have trouble in getting credibility from other departments: The marketing department accuses them of neutralizing their efforts, whereas the sales department complains about removed responsibility.
Due to the same cultural issues, outsourcing Revenue Management does not seem completely feasible yet. As suggested, the data analysis part could be outsourced, while the interpretation part should stay within the company, close to the top management.
Metrics used / Analytics
Not surprisingly, most respondents declared that they use the following main structural variables:
Implementing Revenue Management
As one of the respondents summarizes it, “RM is far reaching”. Revenue Management is applicable to a wide scope of businesses, from the obvious to the not so obvious: Hotels, sales online in general, parking lots, hairdressers, supermarkets and retail as a whole.
If the pricing is dynamic in the airline industry, whether it should be uniform or dynamic when applied to other areas depends on the sector and the particular needs of the business.
We would like to thank all the respondents for their insights, and for their time. As we analyzed the results, we were glad to see certain issues that we had not completely addressed in the blog at that time - this will change soon.
The following are the main findings of our survey.
Organization – role in the company
All professionals believe that their role is crucial for their company’s success. The majority of them report directly to the top management, even if certain professionals have an extra hierarchical layer – sometimes, they report to the Revenue Management / Planning department.
All professionals believe that their role is crucial for their company’s success. The majority of them report directly to the top management, even if certain professionals have an extra hierarchical layer – sometimes, they report to the Revenue Management / Planning department.
As one of our respondents (obviously an airline RM professional) said: “The RM department should be the heart of the company, its main engine. It is the sector that assists in route planning, strategic planning and business strategies and marketing actions. Therefore, it should receive the best structure in the company.”
Pros and cons
Our respondents view Revenue Management as a sound, scientific and well justified approach to optimize revenue, and thus to boost the bottom line.
On the other hand, it seems that the main issue Revenue Management has to address is corporate culture. Top management does not always "trust" Revenue Managers, and does not always believe in RM’s potential. It can result in a poorly adapted organizational structure, and sloppy decision making process. In sufficiently large organizations, it appears that some Revenue Managers have trouble in getting credibility from other departments: The marketing department accuses them of neutralizing their efforts, whereas the sales department complains about removed responsibility.
Due to the same cultural issues, outsourcing Revenue Management does not seem completely feasible yet. As suggested, the data analysis part could be outsourced, while the interpretation part should stay within the company, close to the top management.
Metrics used / Analytics
Not surprisingly, most respondents declared that they use the following main structural variables:
- Revenue (price)
- Booking/reservation/inventory information (quantity)
- Forecast data
Implementing Revenue Management
As one of the respondents summarizes it, “RM is far reaching”. Revenue Management is applicable to a wide scope of businesses, from the obvious to the not so obvious: Hotels, sales online in general, parking lots, hairdressers, supermarkets and retail as a whole.
If the pricing is dynamic in the airline industry, whether it should be uniform or dynamic when applied to other areas depends on the sector and the particular needs of the business.
Great thoughts you got there, believe I may possibly try just some of it throughout my daily life.
ReplyDeleteRevenue Management
Revenue Management Systems has developed the most effective and best value revenue management systems available today.If anybody want to establish their and improve the effectiveness of your finance organization and lower your cost of compliance—even for the most complex revenue models.More info
ReplyDelete