The Government is moving to Revenue Integrity, why not you?

Successful experiment in Strasbourg

Noting that it is ‘often difficult for the forces of law and order to control deviant practices that are becoming more widespread’ and wishing to ‘encourage more systematic application of penalties’ following deviations by cyclists, the CNSR experts are also calling for a ‘campaign to raise awareness of the need to obey the rules’. In France, anyone cycling in the wrong direction is liable to a €90 fine; in the Alsatian capital, the fine is half that. But since the experiment was launched in 2012, more than 833 tickets have been issued… and the number of accidents involving bicycles has fallen by 37% in one year 

(source: le Parisien).

This is welcome news. Lower fines for cyclists! But let’s make no mistake. The idea is not to « please » cyclists, but to increase the effectiveness of road safety measures.

The principle is well known to Revenue Management professionals: « Encourage more systematic application of penalties » and run « campaigns to raise awareness of the need to comply with the rules ». This is precisely what is implemented in the branch of Revenue Management known as Revenue Integrity.

What does Revenue Integrity mean?

One of the challenges of Revenue Management is to segment demand by offering rates tailored to each type of customer, with prices and associated pricing conditions; holidays can be: exchangeable, modifiable, refundable, with or without penalty, with or without pre-payment, with or without deposit, etc…

Failure to comply with these pricing conditions generates huge losses for companies.

Revenue Integrity identifies bookings that do not comply with the rules and proposes a comprehensive system to limit the resulting losses:

  • Identification of booking or invoicing anomalies for immediate correction where possible (e.g. missing deposits)
  • Clarification of unclear conditions (e.g. on the amount of discounts communicated as free nights on a long stay)
  • Relaxation of rules when they are outside the market
  • Firm application (e.g. on deposits to be paid for groups).

It is precisely this last aspect of Revenue Integrity that is highlighted here: Relax the rule but be firmer in its application

Because when a rule is too strict, too hard, too restrictive, it becomes unenforceable. And we are mistaken if we think that it is nevertheless applied partially or from time to time. In general, it is simply not applied at all!

So it’s better to make the rules more flexible and remain firm in their application than to persist with unenforceable rules that also undermine the credibility of the client.

The next step we could suggest to the government would be to introduce a more sophisticated approach to differentiated pricing, to ensure that the price is more closely aligned with the service provided or the inconvenience caused: if parking in streets far from urban centres of interest is often less expensive than spaces at the foot of shops, parking tickets could follow the same logic, with double-parking being penalised more on narrow streets or during peak traffic hours.

But let’s not get carried away: the government is moving towards Revenue Integrity. That’s a good thing. And tomorrow, why not you?

Keywords: Revenue Management, Revenue Integrity, fare conditions, French Government, le Parisien