Revenue Management

Revenue Management a Key to Profits in Some Industries

For certain industries, sophisticated inventory allocation and pricing techniques known collectively as “revenue management” have become a key driver of revenues and profits. In particular, revenue management is applicable to industries characterized by:

• Goods that are fixed in number, purchasable in advance of use, and transient in the sense that if the goods are not used by a certain time they lose their value.
  
  
• A demand market in which potential customers differ significantly in their degree of price sensitivity.
  
  
• Relatively high fixed costs and low marginal costs such that additional sales strongly impact the bottom line.
  
  

Airlines were the pioneers in developing advanced revenue management techniques as they sought to sell seats on flights in a manner that maximized revenue and profits. The hotel industry, rental cars, advertising media, and telecommunications are just a few of the other sectors in which revenue management has had a profound impact on operations and profitability.

Market segmentation, differential pricing, demand forecasting, and inventory allocation are key drivers of a successful revenue management program. For example, in the airline industry, a fixed inventory of coach seats on a given flight might be segmented into higher-priced inventory available for purchase with few restrictions, and lower-priced inventory that carries various restrictions such as early purchase requirements, non-refundability, and so on. Segmenting by time is another common revenue management tactic, such as when travel and accommodations are less expensive during off-peak days and seasons, or when telephone calling rates are lower on nights and weekends.

Effective Revenue Management Requires Visibility and Responsiveness

To be effective, revenue management requires that well-informed, intelligent choices be made about market segmentation, inventory allocation, and pricing, often in a dynamic manner right up to the “use it or lose it” moment when the goods will lose their value if not sold. To make these informed and intelligent choices, decision makers must have the right support system―one that provides real time visibility into the wide range of fast-moving internal and external events that impact the demand for a business’s goods, as well as the ability to respond quickly and effectively to those events.

Progress RPM Delivers Unmatched Visibility and Responsiveness

The Progress® Responsive Processing Management suite is the ideal platform for the development and deployment of world-class revenue management applications. Seamlessly integrating many of Progress Software’s industry-leading technologies, the Progress® RPM suite delivers:

• Comprehensive real-time visibility into transactions, processes, and events across your entire enterprise, as well as business-impacting external events.
  
  
• High-performance, complex-event processing that empowers you to immediately sense and respond to revenue-impacting opportunities or threats in real time.
  
  
• Event driven business process management tools that enable you to continuously optimize your revenue management processes.
  
  

The Progress RPM platform easily integrates with your existing IT systems and supports solutions to a wide range of complex operational challenges such as event-driven customer service, claims automation, application performance management, intelligent BPM solutions, and more.

Learn more about how Progress Software’s Responsive Process Management suite can take your business to new levels of operational responsiveness and revenue optimization.