Revenue Management, Part 4: Strategies and Processes
The Revenue Management blog series is created and written by Ryan Krukar, Inntopia Business Intelligence Specialist, and Melissa Jordan, eLearning Specialist.
If you’ve read the other three posts, you’re probably thinking “how do I bring all of this together?” Ask yourself these three things:
- What is my strategy?
- What are my goals?
- What processes do I need to achieve my goals?
How Do I Develop a Revenue Strategy?
Work with your entire team to determine what your revenue goals are as an organization, and then lay out the steps that you must take to achieve those goals. This is the simplest iteration of a revenue strategy. Wise revenue managers will listen to the input provided by all team members, not just those who are the primary decision makers. Often, your line-level team members who have high customer interaction will have the most relevant feedback as to what works and what does not work.
Establish KPI’s (Key Performance Indicators) to measure the progress of your strategy. This is a very important process to have in place but it’s remarkable how frequently operators lose focus of actively measuring success because they neglect establishing KPI’s.
As you determine what your revenue strategy is, it is imperative to establish S.M.A.R.T goals: easily measured, time-frame specific, and clearly understood. For example, “Our resort wants to lead our competitive set in lift ticket revenue for the Christmas Holiday period.” This example sets a specific, measurable, achievable, and relevant goal that is confined to a specific time period by which to evaluate success.
What Happens if You Are Not Meeting Your Established KPI’s?
Examine why you are not meeting the established KPI’s. Is it a result of lack of commitment or effort towards the overall strategy? Are there external factors at work, such as the ones discussed in Part 2 of the series (weather, economics, etc.)? What changes do you need to make based on the data you’ve gathered from looking at your KPI’s?
If goals are not being met, be proactive in deciding how to adjust your strategy. As with anything, developing a revenue strategy requires a learning curve and you are not always going to be 100% successful immediately. Remember, you can adjust as you learn what is working or what isn’t working.
Commit to Your Strategies and Processes
Success takes time. It’s important to commit to your revenue objectives and the actions you need to take to achieve them. This is not always easy, especially if you are changing the culture in a business that has “always done things” a certain way.
Although it is important to fully commit, do not be oblivious to the data you have at your disposal. If your strategies or processes are continually delivering a result that is short of expectations, you MUST make changes to your revenue strategy and KPI’s.
What Happens if My Revenue Strategy is Proving to be Successful/Unsuccessful?
If your revenue strategy is successful and meeting the goals you initially established, congratulations! The focus now becomes sustainability of your success and growing revenue opportunities. At this point, you should review all KPI’s you have been measuring and enhance opportunities by further exploiting those successes you’ve experienced.
For example, perhaps you have exceeded the number of lift tickets you’ve sold for the month of January AND have exceeded the average daily lift ticket rate. At this point, it appears demand is strong, weather conditions are favorable, the economy is strong, etc. To enhance your goals, you could increase the number of lift tickets you want to sell for February while increasing the overall rate. This could be done by heavily marketing multi-day lift tickets for mid-week use by offering a moderate savings or resort inclusion to the consumer (i.e. the value proposition).
If your revenue strategy is unsuccessful, look at your KPI’s and determine why it failed. If you’ve defined your revenue strategy and KPI’s appropriately, it should be obvious what happened.
Examples of changes that might need to be made can be related to items such as: perceived value for the products you are selling and the sustainability of the price you are charging versus the value provided, the business segment to which you are selling, the type of products you are offering, and the diversity of products, the resort conditions or facilities you are maintaining, customer service experiences, ancillary sales challenges, etc.
I hope that this series has been helpful as I have enjoyed the opportunity to share a little bit about the revenue management world with you. Keep in mind that the Inntopia team is always available to work with any of our partners directly if you would like help or suggestions with anything revenue management specific. We have some really special revenue management tools in the pipeline, so stay on the lookout for those!
Read our other Revenue Management Series blog posts here: