Disrupting Revenue Management
By Renie Cavallari Founder & Chief Inspirational Officer, Aspire Marketing | September 29, 2019
Revenue management is a process that has one primary deliverable…profit optimization. Traditional revenue management foundations such as demand dictating price, distribution channel management and inventory optimization still remain important, but it's time to shake it up, and find new approaches to optimizing revenue and profits.
Over the last 25 years, Aspire has studied non-traditional approaches to revenue optimization, focusing on "non-red sea" strategies. Here are few ways to capture low hanging, non-budgeted, highly profitable "fruit."
Proactive Catering Sales
In the past, catering was primarily considered an order taking function versus a proactive go-out-and-hunt team. In fairness to catering pros, they are frequently considered 2nd class sales people (insanity!) and are rarely given customized training that helps them optimize opportunities in their market place. Most catering training is some half-baked adaption of a group sales training platform.... if there is any training at all.
In our experience, catering leaders are outstanding at painting a customer-focused picture. This serves them in 2 essential ways: first, they can create strong buying environments as they are naturals at customizing and envisioning an event experience that aligns with the decision maker's vision, and second, they can optimize any function's revenue potential.
Talented catering sales people love to create and when given the opportunity, they can take a "catering function" and make it into an event, regardless of the budget. And for the record, would you prefer to attend a catering function or an event? Time to change our language… catering professionals are event producers.
Event Producer Opportunities:
- Optimize revenue per event attendee through upselling (experience enhancement offerings)
- Integrate client retention and referral strategies
- Train catering sales professionals the skills and processes of pipelining and for new business and design-oriented upselling (more on that later!)
- New business development revenue goals (no goal = no focus)
New spaces. Most of us look at our catering spaces and see them as they were intended. Go for a walk around your property and you will find at least 2 new spaces that can be repurposed for ad hoc meetings, dining spaces or a place to add a tent.
Conference Services Revenue Optimization
The insane worker bees of our industry, the conference services team does everything from organizing, coordinating, and communicating with every department as they bring events to life. Honestly, when they start this job, they should be given a super hero cape!
The sale may start in the sales office, but it ends with the conference services team. They have the greatest opportunity to optimize revenue in 2 priority ways:
- They ensure client retention through delivering a unique and compelling event experience (making meeting planners look awesome and having your brand stand out from the clutter of "functions").
- They optimize the revenue per event attendee (offering one-of-a-kind added value experiences, such as turning a coffee break into an inspiration break or enhancing table presentations into Instagram-worthy moments as well as capturing upsell opportunities).
Rarely are these professionals provided with training beyond applicable technology, operational processes and rules around room and meeting space issues. Based on our thousand-plus hours of study, conference service pros tend to be experts in reacting to client needs vs. proactively creating extraordinary moments and events which is where both revenue and profitability are optimized.
In our study of over 40 high performing conference service professionals, we found that the best of the best had skills that went beyond their organizational ability (a clear must have). Of all skills identified, proactive creativity was the most important differentiator for high performing, high profitability conference service managers (CSM). This study also identified a clear Event Experiences Profitability Formulaä (EEPF) that integrated thoughtful imagination, strategic recommendations and high-value experiences. The results of these performers consistently demonstrated high revenue per event attendee.
Stand Out from the Clutter…Your Best Client Loyalty Strategy
There are many inexpensive, creative ways to make your events stand out. This allows you to thoughtfully create added value, which is key to client loyalty and retention, and overall event profit optimization.
Here are 6 suggestions to get you started:
1. Do it differently
The way we have always done it seems to be the way we will always do it. I say, "No More!" For example, rarely do I see a coffee break that inspires me. The purpose of a break is to re-energize the brain. An easy, inexpensive approach is to gather inspirational quotes from your favorite source (or ignite pride and solicit your banquet team's favorites). Print the quotes on cards to be placed around the break.
2. Have at least 5 clearly defined upgrade strategies
For example: "Mr. Smith, we can add soft seating to make the event feel more relaxed with a 'bar lounge feel' verses a traditional reception." This suggestion adds experience enhancement value and can increase the set-up fees. Or suggest a gourmet popcorn station "for an additional $10 per person". Giving the client a per-person upgrade versus the entire upgrade cost changes the buyers mindset and makes the added-value less expensive.
3. "Starbucks" it
Show different types of room set-ups. Some can be standard room sets and others are upgrades. For example, turn a break area into a "Company named" coffee house with cozy chairs, event theme signage and charging stations. Create a vibe that people want to hang out in and make connections. The more connection event guests feel for one another the better their experience and evaluations.
4. Good choices matter
Add food facts and/or calorie counts to all food items. Caramel popcorn is cheap and can be marked up 400% but is it worth people falling asleep, becoming less engaged or dragging? This impacts both your and their meeting experience! When people see that sugar is likely to slow down their brain, they may go for a healthier choice. Healthy choices directly affect meeting effectiveness.
5. Channel your inner Martha Stewart
Small touchpoints go a long way. Have interesting serving dishes and fun center piece options. Next time you need new salt and pepper shakers, use something that is unexpected. Have logoed thank you notes on the tables with pens, and suggest people share some gratitude with one another or maybe a loved one who is stuck at home with the kids! Experiences and gratitude create memories. Memories are the CSM's greatest asset.
6. Involve your supporting cast
Get your banquet team (soon to be called your event team) involved. They are your best client retention strategy. Teach them how to engage. Make sure they know the menu and its important elements around allergies and quality. Show them how to approach a "banquet" table the same way a great waiter approaches a guest at a restaurant.
Reservation Sales Strategies
Although many say the voice channel is dying, I'm here to challenge that - particularly in four- and five-star niches and within resorts. Our extensive Zappos & L.L.Bean research, two of the best "online retailers", supports their belief that the voice channel allows them to increase revenue per customer and drive loyalty and retention. This coupled with the fact that voice reservations are more profitable than most 3rd party channels, it's unfortunate that this key area often lacks a dedicated strategy.
The voice channel is endlessly overlooked and immensely important in these key ways:
- When people call, they are no longer "shopping around," so conversion rates are higher.
- The voice channel is a proactive opportunity to consistently upsell a room, easily through an alternative close.
- The cost of a reservation through the voice channel is far less than the cost through a third-party channel.
- Individual rates are generally higher than group rates, yet we pay our reservation/call center people on average 40% less than our group sales people. Some reservations people are driving $1 million in sales a year. Is your channel focus aligned with their profitability impact?
- Simple math. You can improve your sales conversion (and this applies to both reservations and group sales teams) by 5 points of conversion with no additional new costs. For example, if you have 100 calls per day at a 25% conversion (25 calls equate to 50 room nights at an average length of stay of 2 nights) and you increase conversation by just 5 points, you have 10 additional room nights (5 rooms times 2 nights). At $100 a night (easy math for me…thank you!), you made $1000 more per day. If you did that only 200 days…that equals $200,000 and you had the same amount of calls, staffing, and marketing spend…you get the picture.
If you want to drive real revenue, you must impart a process in every call that allows alignment within your brand and your unique experience touchpoints to create exceptional value. Value is key to conversation, including the five-star experience. No one wants to feel ripped off!
And if that isn't enough, let me add two more opportunities:
- Outbound reservation sales efforts provide huge low hanging fruit through capturing those callers you didn't get on the first attempt.
- Pre-arrival planning is a measurable way to optimize revenue prior to arrival. If you are a resort or destination hotel and don't have an outbound, human, pre-arrival revenue optimization strategy, you are leaving hundreds of thousands of dollars on the table (well…on someone else's table). Guests are going to spend, and you want to be positioned as their primary choice!
Ready to Harvest?
It's time to take a new look at revenue management and where real profit optimization opportunities exist.
Go daringly and disrupt the status quo. Nothing changes unless human behavior changes. And human behavior changes when you provide your team with the tools, time, training and resources that allow them to pick that low-hanging fruit and optimize both revenues and profits.
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