the next frontier of revenue management · last modified 2/26/2018 9:06 pm central standard time...

WORKING DRAFTLast Modified 2/26/2018 9:06 PM Central Standard TimePrinted

The Next Frontier of Revenue Management

FEBRUARY 27, 2018

Last Modified 2/26/2018 9:06 PM

Central Standard Tim

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2McKinsey & Company

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In which of these areas does your company have the most sophisticatedapproach?

Survey responses% of respondents

Promotions before or between trips

Personalizing product offers to specific customers

Core product pricing

Ancillary up-sell or cross-sell

Ancillary product pricing

Communications between booking and travel

Communications during travel or on-trip

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In which area do you think your company has the largest or most leveraged opportunity?



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3McKinsey & Company

For whatprice

Whatto sell

Howto sell it

Every customer

Every trip

The future of revenue management will require multi-disciplinarycoordination and a more holistic approach



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4McKinsey & Company

57%of US travelers feel that brands should tailor their information based on personal preferences or past behaviors

Source: “Customers Frustrated With Brands that Fail to Personalize,” Loyalty 360, Feb 2016;Google/Phocuswright Travel Study 2017, Base: Leisure Travelers: U.S. n=857;http://www.olapic.com/resources/the-impact-of-social-media-on-travel-inspiration_blog-p1aw-f1tr-v1th-t1sm/; Google/Phocuswright, “Leisure Traveler” study, base: U.S. leisure travelers, n=930, Oct. 2015.

36%of US travelers would pay more for more tailored information & experiences

…and travel suppliers are uniquely positioned to provide that customization

Know the channel through which each customer purchased

Operate a physical space they arein for extended period of time

Control the WiFi network they use

Can use apps and/or Bluetooth beaconsto track customer locations to within a foot

Can know customer habits(e.g., drink, meal and entertainment preferences)

Travelers are beginning to expect more customization from suppliers…

Engage with customers on social media more than any other industry



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5McKinsey & Company

We imagine a world in which travel suppliers apply the same or more dynamism to thefull customer journey as they do to core pricing today

StayTravelPurchase Planning



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6McKinsey & Company

Planning

Trip history

Browsing history

Credit card data

Social engagement



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7McKinsey & Company

Purchase

On-property purchases

Browsing history

Credit card data

Loyalty profile

Trip history

Social engagement



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8McKinsey & Company

Travel

Location data

In-airportpurchases

PNR details



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9McKinsey & Company

Stay

Loyalty profile

Location data

On-property purchases



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10McKinsey & Company

In our experience, companies that win at customizationachieve huge impact

10-15% Uplift in revenue and retention

10-30% More efficient marketing costs

3-5% Increased customer acquisition

5-10% Higher satisfaction& engagement



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Our approach to building this vision

Deliver marketing and experiences across channels and create feedback loop to data foundation

Agile War room to manage a backlog, test execution,

drive throughput

4. Distribution

1. Data foundation

3. Design

2. DecisioningAdvanced analytics,

and machine learning to create customer scoring

and real time triggers

Create Customer Data Platform to provide a 360 degree customer view



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An effective data foundation requires sourcing data from acrossthe organization and from second- and third-party sources

Search history

Survey Data

Multichannel Transactions

Loyalty Profile

Operational data

1-to-1 Marketing History

Second & third party data



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Dependencyon legacy technology

Our clients face several common challenges to getting started

What often hold companies back Key challenges

Data is available from disparate sources

• Unique data comes from multiple stages across the customer journey• Need to leverage second -and third- party data to supplement

limited first-party data

• Legacy infrastructure often reliant on partners

Organizational silos• Key functions typically not unified under single leader• Conflicting objectives / incentives across stakeholders

Conflictsin funding decisions

• Costs are centralized while transformation benefits multiple functions and levels of organization

Distributedor franchised operations

• Dependency on frontline execution, often bythird-party employees

Complex distribution landscape

• Lack of visibility into key customer data• Content and pricing parity requirements



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But the best way to get started…is to get started

Driving short term impact will prepare you to scale for the future

Hack your way there with existing technology and optimized workflow

Prove the value, and use successes to break down barriers and begin the change management process

Develop potential use casesand prioritize 1-2 to get started

the next frontier of revenue management · last modified 2/26/2018 9:06 pm central standard time...

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