An automation strategy can help reduce price variability and achieve sustainable increases in total revenue, but most TV sellers have yet to introduce one. The status quo for updating rate cards is using Excel to apply across-the-board percentage increases every year—or every quarter, at best. This leads to inventory being undervalued because pricing doesn’t reflect continuous shifts in supply and demand.
Furious has found that sellers can achieve a 10% revenue lift from automating their rate card process and using data-driven pricing methodologies, assuming that governance is in place to improve adherence by sales teams. To achieve this, programmers and operators should develop a strategy for the planning, implementation and operation stages. Here’s what each one entails.
The project should start with identifying the people in an organization who use and view rate cards, set prices, and have the authority to change rates and approve discounts. This will probably include pricing analysts, yield managers, sales planners, inventory managers and finance team members, but no two organizations have the same pricing management structure. Given the importance of effective pricing to financial success, executive buy-in and sponsorship is also essential.
Workflow mapping comes next, which involves documenting how rate card creation and updates are currently handled in the organization—and how the various people who’ve previously been identified work together. Next, sellers need to design optimized workflows for improving their rate card processes, which includes putting governance and controls in place to encourage adherence to recommended rates and establishing business rules for rate changes.
Sellers should also identify the systems that need to receive each new rate card, such as APIs and exported templates, and determine how the integrations will work.
Sellers must first identify the data sources that methodologies for calculating rates will draw from, such as ratings data and historical sales and performance data, and then define calculated fields, such as sellout and capacity.
From there, they should establish the frequency of data refresh and the frequency of rate cards. The latter should ideally be weekly, but monthly is still a considerable improvement over the typical status quo of quarterly or annually.
Next, they should establish business rules for monitoring and notifications pertaining to core revenue management metrics, such as sellout thresholds exceeded or percentage of bookings below rate card. Then they should define and configure key reports that can help managers to monitor rate card adherence.
Finally, sellers must develop training materials and plans for key users identified in the planning phase and then monitor early usage and establish regular check-ins with those users.
Implementation and deployment are important milestones worthy of celebration, but happy users who reap the benefits of long-term, sustainable performance improvements are the true hallmark of success.
Sellers must anticipate that their new rate card system will be an ongoing project. Markets, stations, zones and programs will be added, deleted and adjusted over time, and new functionality and reports will be requested. Training materials will need to be kept refreshed. But unlike so many operational support systems, active attention to rate cards and pricing is a gift that will keep on giving.