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Business talk: RM and Customer Relationship Management

In this video, Benoît Rottembourg shares his vision on the future of the revenue management. E-retailers, such as Amazon, should use these techniques.
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Let’s talk about the future of revenue management. How do you see that future? Will revenue management be a generalised practice? Which sectors are, according to you, the ones that are the most likely to adopt revenue management and that are not doing that today? First, you won’t be surprised by the fact that I don’t imagine a pure RM vision.
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Today, I profoundly think that revenue management and customer relationship management will converge in a way or another. If you think about it, the revenue management is a capacity centric vision of the company. You try to find a good mix to fill your capacity up. On the contrary, the customer relationship management tools are customer centric. They want to gain one euro at every sale and
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control the loyalty of the customer, control the terms, control many things… knowing the context of a few customers and the global state of your customer.
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So, for revenue management,
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getting closer to a customer relationship management perspective might bring really a new revenue.
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What is the use of a very sophisticated revenue management tool that helps to gain 1.5% of revenue when your customer would be really pleased to pay 5% more, just because on the Google list, the product is still the first one, and the second one is more expensive? So, some hybridisation will have to be performed at the crossroads between RM and CRM.
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Some companies, today, some e-retailers, for example, are very efficient in terms of price engines.
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Large retailers, like Amazon or CDiscount in France, know how to trigger some special tricks, or special offers, looking at the cookies of the customer, or the history of the customer. There is always a capacity constraint somewhere, the audience, the global wallet… There is always a capacity constraint. And, it’s my view, they should investigate a little more, looking at this constraint like supply chain constraints,
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sourcing constraints, of course, inventory constraints… So they also have a path to get closer to the RM practice. So, my vision is those two fields will get closer and closer in the coming years.
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A final question: what advice would you give people willing to do revenue management in their business? First, accumulate data at the finest possible grain. Accumulate. Then, be sure, make sure you have inside guys knowing the semantics, the business semantics of this data, then, clean the data.
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After that, don’t go too fast. Take some time for analysing, assessing the forecast accuracy of your business. What can be forecast? What can not be forecast? For one hundred campsites, maybe twenty have demand that can be forecast, and eighty do not. So, there is no one-size-fits-all algorithm. You have to make a choice about that.
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Then, used the basic rule: descriptive, predictive, prescriptive analytics, year by year, to avoid deceptive technology. So don’t listen to the consultants’… promises. Don’t listen to the editors’… phantasms. And do it step by step. It’s a lot of money. It involves lots of people. You will not do it twice. Take your time. There is no reason why you will not have some gains year by year and increase your gain if you follow such kind of trajectory.
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So, in the end, the most important of all:
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invest in qualified human resources, and maybe don’t take them in the very sophisticated industries. If you don’t know your business, the revenue management levers of your business, maybe it’s better to have generalists, discovering the business with an intellectual honesty. Thank you very much Benoit, for sharing your experience and your views on these topics with us. Thank you very much for all this environment. Thank you. Bye bye.
Will revenue management become a generalised practice? Which sectors are the most likely to adopt revenue management? How can revenue management be implemented in a business?
Benoît Rottembourg (Eurodecision) shares his vision for the future of revenue management as he sees it, based on his experience.
In his analysis, some companies should integrate two visions of their customers. Can you identify these two visions?

Join the discussion

In response to the above question, share your interpretation of Benoît Rottembourg’s explanations. Do you share his analysis?

Benoît Rottembourg is currently the “Head of Pricing Analytics” of MAERSK. He is the creator and was leading the “Pricing & Revenue Management” branch of Eurodecision.
He holds a Master’s degree in Computer Science from a French engineering university and a PhD in Applied Mathematics from Paris University. He teaches pricing and revenue management in some of the most prestigious universities in France. He has been an expert in revenue management for many years and has developed a revenue management platform for the camping industry, which is the leader in Europe.
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