REVENUE MANAGEMENT, A SOLUTION TO FACE RISE IN COSTS
Sell at the right price, to the right customer, at the right time.
The «revenue management» is a set of levers allowing certain actors of the economy to increase their sales by optimizing their pricing: by modulating their rates according to the demand, these actors optimize their turnover thanks to a better pricing (segmentation and price level) and better management of stocks and oversupply.
Revenue management: a technique that has proven itself in the air.
This set of techniques was born in the United States in the 1980s, following the liberalization of airspace (opening to competition and then the possibility for airlines to make any type of connection in all countries). This deregulation has provoked a price battle that has prompted airline players to optimize their sales by setting their tariffs intelligently, while making the most of their demand and stocks.
Pricing (the art of setting the right price) and yield management (the art of best managing these prices) are therefore the two pillars of «revenue management»
By navigating the price grid defined beforehand, the actors of the air transport have thus succeeded in optimizing their sales and their turnover.
The «revenue management» then gradually spread in Europe, to all sectors that market goods and services that are not storable.
An interesting technique to deal with rising costs.
The hotel, catering, tourism, rail transport, culture and performing arts are among the sectors that use it.
And the results obtained are very advantageous, with an increase in revenues of 8% on average. Another strong point is that revenue management makes it possible to keep prices low or even lower them by improving fill rates.
The ideal tool to combine supply and demand.
To keep prices low, the goal is to sell at the right time, to the right customer and at the right price, structuring offers, anticipating demand and segmenting customers as precisely as possible. The idea is to set up real-time pricing that can adapt to fluctuating demand.
Big Data at the service of an increasingly efficient technique.
For effective «revenue management», we can now combine the power of Big Data and human expertise.
«The «revenue manager» is able to manage and optimize his entire stock. The digital tool identifies critical situations for him and offers him a series of levers to operate, increase prices, change the duration of stays… It is then up to him to make the right decisions.” explains Pascal Niffoi, co-founder and CEO of N&C, a revenue management consulting firm that is a partner of Impact Consultants.
A very current solution.
In an inflationary context, characterized by a deteriorated economic situation in France and abroad, «revenue management» is a real asset for companies that choose to use it. «The current situation, competition with other companies, the evolution of regulations are all factors that go in the direction of the adoption of revenue management» concludes Pascal Niffoi.
It is a growth solution for now, and for a long time!
Rodolphe Lenoir and Pascal Niffoi.