Revenue Management – Starting with the Foundations – People
The first and most critical part of any Revenue Journey is to make sure you have a good organizational foundation with the right team members. The members of the team will have to put revenue management in place and execute all the different components during the journey, whether it be reviewing and aligning processes, engaging consultants or evaluating software options. They will be formalizing the revenue management culture for the company. For all revenue journeys, in hotels, car parks, attraction parks, movie theaters and other industries this step has to be taken. Without the right team in place, the journey could easily get off track.
Identifying Decision Makers and Influencers
Firstly I need to discuss the difference between the revenue decision maker and the revenue influencer. Both these groups of people need to be involved in the journey, but in different ways.
The revenue decision makers are those people that set the price, decide on inventory allocations and can accept or deny a piece of business. They create the strategy for the company how to drive their revenues. These are typically the Director or Revenue, Director of Sales and the General Manager.
The revenue influencers can be split into two groups, the direct influencers and the indirect influencers. The direct influencers are those that create demand, like sales managers, or the people that sell over the phone like reservations teams or people that manage the electronic distribution channels. The indirect influencers are the operations team members. They are responsible for providing the customer with a good experience, which will result in good online reviews. Driving great online reviews is a key component of every successful revenue strategy.
Whether a revenue decision maker or an influencer, all have a task in the Revenue Journey.
The leader in a Revenue Journey is the Director of Revenue or the Revenue Manager. They keep the team together, drive the agenda forward and make sure that progress continues to be made.
The navigators during the journey are team members like the e-commerce manager, the marketing manager, the sales manager and the business analyst.
They are experts in their areas and have their ears to the ground. They will help validate trends that are showing in analytical reviews and can help the leader to determine whether to make a left or right turn.
The executive sponsor of the journey is the person who sets the direction for the trip and supports the team along the way. They help remove obstacles and roadblocks and serve as the arbiter in case of differences of opinion on how to move forward. This is typically the General Manager at a property or the CEO/Chairman at corporate level.
Size of the Team
I often get the question when you need a Director of Revenue. As a guideline a business that makes US$ 5M or more in revenue should have a Revenue Manager. If the business makes more than US$ 15M in revenue you should have a Director of Revenue and a Revenue Analyst. If the business makes US$ 25M you add an additional member to the team.
With size and complexity the team may require further strengthening. Also companies with multiple business units in a similar location, like a city, should appoint a Cluster Director of Revenue. The cluster person would be responsible to maximize cluster opportunities rather than optimize individual properties.
Experience of the Team
Another regular question that I get is what kind of experience the revenue person should have. The main responsibilities of a Director of Revenue include: analytically understanding of the business and being able to formulate and communicate the revenue strategy for the business.
This means that a master degree is required, preferably in Business or Statistics. The Director of Revenue should be able to communicate effectively with all stakeholders including senior management of a company, board of directors and owners.
The difference between getting an average revenue person and a great revenue person, who can drive revenue culture and optimize revenues effectively, can easily make a 5%-15% difference in your revenues both positively and negatively. So getting the right person is critical!
In the Revenue Journey Part 4, I will talk about creating the distribution infrastructure.