The job of Revenue Management (or Yield Management) has many facets. While you sometimes have to play the diplomatic card and listen to the sales and marketing teams, you mustn’t be afraid to get into the negotiating ring when you have to, and swap your velvet gloves for boxing gloves. Revenue Management in fight mode. Here’s how.
Intensive training
One of the first qualities of a good Revenue Manager is firmness. Being firm does not mean being stubborn. It’s the ability to stick to your guns if there are no rational arguments to change your mind. This is in contrast to the stubborn person who sticks to his or her position regardless of the arguments exchanged.
In turn, you try to seduce the Yield Manager, pamper him, harass him, intimidate him, even making him bear responsibility for a collapse in sales if he doesn’t give in to the repeated demands of sales staff constantly looking for discounts.
You have to get used to taking knocks, to making the uncompromising truth of the figures speak for itself, and to dodging the pitfalls of superficial sales pitches. This is the Revenue Manager’s preparation. Perfecting your weapons and getting ready to enter the ring…
Stepping into the ring
The advantage is that Yield generally holds the finest level of information. Data day by day, by reservation, in volume and average price, by sales channel, by type of fare deterioration, with indicators of contribution, commercial performance, dilution and forecasting at the finest level.
The meeting is approaching. A square room. No audience, sometimes no referee. The protagonists sit down without looking at each other. The Yield Manager is armed. Prepared. Sharpened.
And the battle begins…
The first round
The first blows will come: « ‘we’re too expensive », « we don’t have enough stock », « I’m losing my customer », « my sales are collapsing », « I need a discount’, « I need an allotment ». « My market is late ».
And that’s not all, the second salvo: « I’ll never reach my budget », « Yield is preventing me from doing my job », « your teams always refuse my requests for special offers », « they’re locked up in their ivory tower ». « They need to get out in the field a bit ».
A round of observation for the Yield. He listens, he doesn’t give up. He takes it in his stride. More or less difficult, depending on his opponent’s passion. Fortunately, he’s not short of it either. And he has several advantages: data and a global vision of the company.
The fightback
The Yield Manager can then unfold his battle plan: objectify the decision. The Yield Manager relies on figures to make decisions, he must above all avoid being emotional, and he will draw his combat partner into this battle. The Yield Manager knows all the customer’s requests. They are very often, if not always, the same. He has prepared his meeting. He knows the figures.
- Are we too expensive?
Compared to whom? Compared to what? Is the delay really due to the price being too high?
- Are you behind in your market?
That’s because 2 of your customers have taken our product off the market. The others are ahead, in terms of volume and average price. We need to work on distribution, but price doesn’t seem to be a problem in your market.
- A special offer?
Another one…? (sic) The last 6 generated an average of 15 sales, when you had promised 200. Why should this one do any better?
- You don’t have enough stock? You need an allotment?
There are 30,000 rooms left to sell over the summer. Instead of selling the sexiest stock that’s all over the web, focus your teams on selling where it’s needed.
- Your budget?
We can do better by selling on other markets and other channels. We’re going to exceed the overall budget, even if it means doing less well in your area. Should we do without?
- Do you need a discount?
What will you get in return? How many additional sales do you plan to make to compensate for the price cut? How do you plan to communicate our offer? On what media, for what return on investment?
No low blows
Negotiations have rules. So does corporate life. The Revenue Manager responds by defending the company’s interests. A global approach that may conflict with local considerations. You respect your contacts. You demonstrate. We argue. Revenue Management’s best weapons are figures, analysis, the ability to keep a cool head and not over-react to micro-events. But also humour sometimes, boldness often, and teaching, always.
It takes tenacity. But Revenue Management needs to establish its authority quickly if it is not to be overwhelmed. Mark their territory and earn respect. Gain credibility by making the right first choices. Gain the trust of General Management. Without low blows. Revenue Management has nothing to hide. It openly assumes its positions.
Never knock out your opponent of one day, who must become your partner of tomorrow. After the storm, over a good cup of coffee, you take off your boxing gloves and put on your velvet gloves. But the iron fist is still there (although be careful not to burn yourself with the coffee cup, as metal is an extremely good conductor of heat…).
These battles are neither absurd nor unhealthy. In fact, they are proof that the company is in good health, because demand has to be greater than supply for the Yield to sort it out in order to maximise sales. The day there is no more fighting, means that the Yield will no longer bother sales staff. Either there won’t be enough demand to sort through, or the Yield will stop sorting it, leaving the first to arrive to help himself. The ring will close its doors, and soon so will the company…
Keywords: Revenue Management, Yield Management, Yield Manager, negotiation, boxing
Written by Pascal Niffoi & Romain Charié
Directeurs Associés Chez N&C
