Year 36 of Revenue Management, since Bob Cross arrived at Delta Airlines.
O most powerful Master Yielda, God of Revenue Managers, Guardian of Demand Forecasting, Creator of the Bid Price, Founder of Artificial Intelligence, with these lines I implore you to help Revenue Managers of good will to save what remains of your beautiful word.
The main principles of Pricing and Yield reached by the critics
Your main principles on pricing and yield are in danger, under fire from customers; your commandments are being ignored by many of us, disorientated in an ultra-competitive market.
- Out of Hubris, we created ever more complex tools to forecast demand and optimise inventories, and like Doctor Frankenstein, we lost control of them.
- Out of Greed, blinded by the lure of profit, we introduced hidden handling fees, unjustified commissions and IP tracking to create a false sense of urgency and push customers to book.
- Out of Laziness, because we didn’t want to explain our now illegible pricing strategy to customers, we left it up to the OTAs, Google Flight and others to tell them when to book.
- Out of a Desire to do as he does, we have copied our neighbour and his pricing strategy, thinking that we can do as well as he does, even though our customer bases are different.
- With Luxure, we gave in to excessive promotions and increasingly restrictive general terms and conditions of sale, making the price scale too complex for the customer.
- Because we were Greedy, we didn’t put the human resources in place to manage prices, and put an extra cap on an already busy Director’s head. We let the OTAs handle our distribution instead of relying on sales forces that needed to be reinvented.
- Out of the Anger of our customers, members of parliament want to legislate and ban RM because we have let it drift rather than defending its true values.
We are so blinded by the lure of profit, by the race for technology, by this exacerbated competition, that we no longer hear your word: in all circumstances, Upward Pricing, Price Parity on all Sales Channels, combined with clear terms and conditions that customers can understand.
And yet there are many advantages to RM!
Master Yielda, please help me to make all those who refine, polish and « over-polish » their RMs understand that the devil is in the detail, that the best is the enemy of the good… We lose the customer – they end up turning away from us and we destroy value.
Help me keep MR alive for those who want to give it up. Remember the story of Bob Cross, your Prophet, who showed us the way during his time at Delta Airlines: by simply seasonalising prices according to supply and demand, and by creating a simple segmentation that passengers can understand, he generated almost $400 million in profits… only Pricing of this type can generate such substantial revenues.
Help me to explain to the customers who howl against Revenue Management that without it :
- There would be no SNCF Prem’s tickets
- There are no Low Cost companies’ 1€ prices
- There are no seats on trains/planes/hotels during the periods requested for those who cannot book six months in advance.
- There is no flexibility in bookings.
Help me to explain to my friends and family the beauty of this profession, the joy of seeing the future when you can anticipate demand, the insatiable desire to always do better in our daily optimisation.
Master Yielda, I’m sure that your word will live forever and that it will come back stronger, but I’m calling on your breath to restore the reputation of our fine Revenue Management business as quickly as possible.
Keywords: Revenue Managers, Pricing, Yield, Revenue Management
