Engaging in Yield Management - Exploring What Works
Yield management is a common practice in various industries, especially in the realm of car rentals. However, deciphering what truly works and what doesn't can be a challenge. In this article, we delve into the intricacies of yield management and offer insights to help you navigate this complex landscape.
Yield management is prevalent across the board, with car rental companies employing pricing strategies that often include seasonal variations. We'll provide explanations to help you grasp the concepts and structure your yield management approach at your own pace.
Why should you invest your time in reading this article?
We at WeYield are pioneers in assisting and transforming organizations in the field of yield management for rentals. Our unwavering dedication to car rental companies sets us apart, and we bring over a decade of experience to the table. Additionally, we offer a comprehensive range of services, extending beyond mere management tools to include weekly coaching sessions. Yield management is a multifaceted endeavor involving technology, data, and more. Let's try to demystify it.
Is Yield Management the Same as Pricing?
It's essential to distinguish between yield management and pricing. While pricing is a fundamental aspect of any business, yield management goes beyond setting prices. Yield management entails a systematic approach to optimizing revenue by offering different products to different customers at various times and under different conditions.
The Origins of Yield Management
The concept of yield management dates back to the 1970s and 1980s when American airlines pioneered its development. The primary goal of yield management is to maximize the utilization of available resources, such as cars, seats, hotel rooms, or event tickets. It aims to capture demand and filter it to select the most profitable customers, ensuring the highest possible prices.
The Challenges of Yield Management
The complexity of yield management arises from a combination of factors. To succeed, you need accurate and plentiful data, which includes tracking reservations, cancellations, and no-shows. It's also essential to forecast expected revenue from future transactions and have up-to-date information on available capacities.
Moreover, data quality is critical.
To effectively manage yield, you need robust processes for handling reservation statuses, identifying upgrades, and monitoring future vehicle arrivals and sales estimates. Additionally, your operational system should seamlessly connect with third parties, such as data providers and distribution channels.
Monitoring competitors' prices is another crucial aspect of yield management, as you need to stay informed about market trends and adjust your strategies accordingly.
Implementing Yield Management
If you have the right data and historical insights, you're off to a good start. However, to fully implement yield management, you must extract, structure, and integrate this data into management tools. WeYield offers valuable expertise in this area, providing you with analysis tools and data visualization to streamline the process.
To excel in yield management, it's vital to adopt a systematic approach. Regular, even daily, monitoring of your operations and market conditions is crucial. WeYield's tools offer data visualization and alerts that empower you to identify future trends with minimal effort, giving you the upper hand in controlling your business.
Key Steps for Implementing Yield Management
- Evaluate your internal operations and identify areas of improvement.
- Define your business strategy and objectives. Consider whether you aim to maximize utilization or focus on higher average prices.
- Assess what you truly want to achieve. Envision the ideal scenario for your organization, free from constraints, and identify areas that need immediate improvement.
Choosing the Right Solution
Selecting a service provider for yield management requires a strategic approach. It's essential to partner with a company that combines data expertise with operational experience in car rental businesses and yield management. Moreover, technical mastery is crucial to execute inventory management decisions and price modifications flawlessly.
WeYield offers an array of web-based tools designed to help you understand your business, control market prices, and forecast future trends. Collaborations with industry leaders like ForwardKeys and Data Seekers enhance the depth of our insights. Furthermore, our partnership with Rate-Highway, enables automated management of public prices, streamlining your operations.
In summary, implementing yield management is a multifaceted endeavor that demands a structured approach and the right tools. WeYield's extensive experience and cutting-edge solutions can guide you toward effective yield management practices.
Published by
I am CEO and founder of WeYield with 25 years of passion about revenue performance acceleration in the revenue management field (hotels, theme park, car rental), I created WeYield in 2012.I am here to help car rental operators who want to change in piloting their business with more agility and freedom while improving their performance. I like being able to participate in the transformation of the organizations. Working with WeYield's revenue managers and engineers gives me a lot of energy to create new features and approaches.