Skip to 0 minutes and 14 seconds We see a lot of online company that tried to take into account some of the movements you do with your mouse, online, or where you live or what you do at what time of period. What do you think of these practices? You mean like IP tracking and OS detection? Exactly. I totally disagree.
Skip to 0 minutes and 36 seconds For me, it’s a very short term vision. Because you’re going to notice, for example OS detection, like people who have an Apple computer, they have more revenue. Why not? So they are going to pay more. Again, on IP tracking, the concept of IP tracking is that you see that somebody is looking and looking and looking on a specific flight, so he’s probably going to buy it. And so you increase the price, little bit by little bit, not up to hurry him to book. So the thing is that people now notice that. They try to, I do know how to say it in French… . .
Skip to 1 minute and 21 seconds avoid the system… They have a bad image of the company that do that, because, the customer says “okay he wants to “arnaquer”
Skip to 1 minute and 35 seconds (fraud)”. I do not know how to say it in English. Fool me. Yes fool me! These people, I’ve noticed that, they say “okay I’m going to check on a specific computer then I will book on another computer”. So, instead of doing something simple, they destroyed the service they give to their customers. And, you notice now some people that says “okay if you want to have this low price then you have to book at two AM in the morning”. It’s totally silly.
Skip to 2 minutes and 14 seconds How do you see the future of revenue management? Will it be implemented everywhere?
Skip to 2 minutes and 20 seconds First of all, I think revenue management is already implemented everywhere.
Skip to 2 minutes and 27 seconds It’s just the different leverages that are not implemented. As soon as you make your price changing, then you’re doing revenue management, more or less, but you’re doing. Now, to answer to your first question,
Skip to 2 minutes and 45 seconds I would say: two options. Or revenue management is going to be made by algorithms with all these big data and you’re going to have more and more information on your computer and you’re going to make price very specifically for this specific computer. But you may fall again on the first IP tracking option. Or it would be very simple, company will do very simple pricing, because it’s now too complex to manage it.
Skip to 3 minutes and 19 seconds And which sector in particular will do revenue manager?
Skip to 3 minutes and 26 seconds Which sector?
Skip to 3 minutes and 26 seconds I think: all the shared economy, like Airbnb.
Skip to 3 minutes and 34 seconds For the moment, the capacity, the offer (supply) is growing with the demand. In revenue management, you make more money when you increase your offer (supply). When you can increase your offer (supply), in order to have more demand instead of increasing price a little bit. So Airbnb, for the moment, they just take more and more apartments and they increase their revenue. Now in the future, when the market will be stabilized, they will start to increase their revenue by managing their prices. There will be complex because it’s very difficult to forecast a demand when you have just one apartment. Very very difficult. And the person that will decide the price of this apartment is somebody who doesn’t know anything about revenue management.
Skip to 4 minutes and 29 seconds So it’s a big issue for Airbnb if they want to increase their prices. Do the people inside company accepts revenue management techniques?
Skip to 4 minutes and 45 seconds As revenue management is going to put some constraints, because there are going to say no to some kind of customers -the customers that are paying less, if it’s a high demanded period for sure - revenue
Skip to 4 minutes and 58 seconds management is going to say: no, not this one.
Skip to 5 minutes and 4 seconds Salesmen, for them, the easiest way to sell, is to have a very attractive price. When they fight hard to get some customers, with a low price, they come back to revenue management, and
Skip to 5 minutes and 17 seconds says: “Okay do you accept my group? No !” So, they are not happy for sure. But for me, it’s pretty good that salesmen
Skip to 5 minutes and 30 seconds and revenue managers are not friends. They fight. Because it means that you have high demand, you need to select the best parts. And it’s also mean that revenue management is going to do the good choices and that salesmen are coming with business.
Skip to 5 minutes and 49 seconds A more general and final question: which advice would you give to people willing to start revenue management in their business?
Skip to 5 minutes and 57 seconds If they don’t do revenue management, I would say: do something simple.
Skip to 6 minutes and 5 seconds And be sure that, when you want to change your rates, increase or decrease the rates, it’s automatically done. It’s automatically put on the market. And that, the whole company knows exactly the pricing strategy, so the whole company can explain it to the customer.
Skip to 6 minutes and 25 seconds Saying: “OK, price are high for this reason, price are low for this reason, you can find low price at distant, you can find high price at this time…”.
Skip to 6 minutes and 37 seconds This is really the message for me: the best leverages are simple leverages. But well understood by everybody and applied. Thank you Romain. Thank you very much.
Business talk: on IP-tracking and OS detection
Some online retailers use shoppers’ information to adjust their prices or price menus. Some use the “IP address” - a number assigned to devices connected to the Internet - to identify the user’s physical location (“IP tracking”), while others use the Operating System of the shopper’s computer (Linux, MacOS or MS-Windows) to change the ranking of products on offer (“OS detection”).
Romain Charié (N&C) shares his views on those practices and on the future of revenue management.
In his view, revenue management could be implemented in many sectors, but can you identify some important caveats in the interview?
Join the discussion
In response to the above question, share your interpretation of Romain Charié’s explanations.
Romain Charié has created and is currently the Associate Director of the company N&C in Paris.
He has provided advice and designed revenue management tools for several firms in France. He worked for several major companies in revenue management, such as Air France, Europcar, Disneyland Paris, among others. He has been an engineer and revenue management expert for more than 15 years.
© By ENAC - Christophe Bontemps CC BY-NC-SA 3.0