Is Revenue Management your Saving Grace?

As we head towards the end of 2022 businesses prepare for the coming year. The end of the year is marred by Big Tech lay-offs as we see the seemingly untouchable are being pushed to reconsider their investments, FTEs and cost structures.

In a year where inflation is expected to reach 8,8% according to the IMF, where living expenses are under enormous pressure for households, the willingness to pay for products and services is sure to take a hit.

Despite the gloomy forecast and the „fallback plan for the fallback plan“ that is certainly in many a business plan for 2023 we must bear in mind that crisis also creates opportunity.

The worse things businesses can do

The last two decades have seen their fair share of different economic crises and whilst some industries are new to the „crisis mode“ there are certain patterns that repeat themselves:

1. Cost cutting (what we can expect: marketing budget cuts, people being laid off)

2. Focusing on core portfolio of products or services (what we can expect: innovation agendas withdrawal, new business development being halted)

3. Value erosion (what we can expect: over-promoting to maintain volume and share to ensure fixed costs coverage)

While the above are understandable, I have many a time been against these moves when discussing these in my previous corporate roles and consultancy assignments. It is however not realistic that businesses will be able to fully escape any of these, despite their leaders' best intentions. So if the above are given, what is the best approach we can have?

Revenue Management – A Saving Grace of your business

I would like to hereby put forward the hypothesis that Revenue Management as a discipline is a saving grace for all businesses. Whilst pushing for growth via investment and innovation is something I advocate for in times of crisis, good Revenue Management is a safe bet, and here is why:

• It allows you to deliver positively on cost cutting and on focusing on the core portfolio

• It maintains your businesses value by understanding the willingness to pay of your target market

• As a discipline it allows you to bring high resolution on your business' levers and understand the causality effects within it

Revenue Management is great, but where do I start?

For fear of sounding overly cliche: just start.

Any business can start by pulling out the notorious Excel Worksheet and punching numbers in. As the old adage goes, if you cannot measure it, you cannot manage it. Make sure you have put into place basic measurement tools, as any measure is better than no measure at all. 

In today's economy there are many solutions out there. Full transparency on the business plug, together with my business partners EM Analytic Solutions, we provide such as service. Together we develop and bring to our clients tailor made and off-the shelf revenue management tools that help identify and tap into the key revenue growth drivers and margin optimisation levers for your business using Explainable Machine Learning and AI tools. Yes, explainable. Because we want to ensure that what AI identifies and recommends is aligned with business logic. We’re humans after all.

The beauty of the solution is that it can be acquired as a subscription base services allowing you to keep a low impact on your P&L.

Starting with any type of Revenue Management solution is better than having none. If you would like to discuss your Revenue Management needs drop us a line!