The Yield Management bad boys

There have been countless articles showing the extent to which Yield Management is the cynical practice of ugly, dehumanised capitalists. More recently, we have been condemning the rise in the price of surgical masks to deal with the Coronavirus, or the price of VTCs during strikes.

One case does not make a generality

First of all, as I often say, let’s not confuse a practice with its excesses. If there are bad dentists, that’s no reason to disqualify the profession as a whole. Debates are generally more balanced: we rightly denounce junk food in France, which doesn’t prevent us from saluting the fantastic work of the 49 new Michelin-starred restaurants. But Yield Management seems to escape this rule.

So yes, let’s start by agreeing with those who denounce purely opportunistic practices that hold consumers hostage. That’s just as well, because that’s not the kind of Yield Management we’re advocating. Because bludgeoning customers and taking them hostage means playing for the short term, damaging your reputation and destroying the customer relationship.

Left brain or right brain

Yield is not a purely tactical tool. Its added value is not essentially in finding and exploiting emergency situations. It is first and foremost a strategic tool in which value is created throughout the marketing cycle, with a robustness and consistency of pricing that enables it to avoid having to rush to the slightest climatic or geopolitical contingency in the hope of increasing sales. Of course, opportunism does exist, but it is often marginal in the optimisation process (the price of the last 2 rooms may still increase if the competitor no longer has availability, but this in no way makes the prices of the first 98 rooms any less competitive. If the prices are not appropriate, the hotel will not fill up…).

So why see the glass as half empty when it’s also half full? Yield management has helped to lower prices just as much as it has raised them. It is above all the range of prices that has changed: we have gone from a stepladder with 3 steps to a ladder with more rungs. A ladder that goes from the basement to the attic.

It’s up to us to put a bit of rationality and left-brain thinking back into the equation, where many people are reacting to scandalous articles with right-brain affect.

And you, in terms of Yield, are you left brain or right brain?

Keywords: Yield Management, opportunism, customer relations, added value, price consistency