Canopy

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SaaS Revenue Management

by Jenna Hall

Ensuring a steady predictable stream of revenue is extremely important to any company. It allows businesses to anticipate demand and optimize their pricing to make sure they come out with the best financial result.  

What is Revenue Management?

Revenue management can be described as, “selling the right product, to the right customer, at the right time, at the right price, through the right channel, with the best cost efficiency”. All of this information comes from performance data from the sales staff and the company’s sales numbers. Looking back at this data, companies will start to see trends that will help them start predicting demand and their consumer’s behaviors. This will then lead to companies being able to make data-driven decisions regarding pricing and distribution channels which will maximize revenue and profit.

A great way to understand revenue management is to take a look back to where revenue management originated. The airline industry is a great example. They set out to find ways to anticipate their consumer demand. Enabling them to begin charging different consumers different prices based on when they were evaluating tickets. They identified when their peak buying times were when their lowest volumes were and started pricing dynamically. This allowed them to leverage their inventory more effectively and at a higher margin. Today, other industries have caught on to this strategy and have started making informed adjustments to their pricing strategies.

Why is Revenue Management Important?

It is difficult to understate the importance of revenue management in growing companies. Especially in the first few years, it is critical for businesses to make as much revenue as possible and revenue management ensures that revenue is maximized. Revenue management data also goes hand in hand with sales forecasting. These methods analyze past and present data as well as past trends that help anticipate future conditions and events. Having this information allows companies to know if there are quarters where their product is underperforming and it can also give insight into how much their company will grow over the coming months. By combining revenue management and forecasting allows companies to see into the future and make strategic decisions now to help their company, rather than waiting to make decisions once the quarter is already over. A proactive organization will always have an edge over a reactive one. 

How Can I Get Started?

Now that we have seen how useful revenue management and forecasting methods are, here are some tips on how to get started.

  • Keep Accurate Records

Make sure that all of the data coming in is accurate. If the data is not accurate then the company will draw incorrect conclusions and the forecast will be incorrect. Start by collecting data from revenue, sales KPI’s, and the sales team and verify that it is up to date.

  • Look Back at Historical Data

If there is information from years past, make sure to analyze that data. Forecasting relies heavily on past data and assumptions that historical trends will repeat themselves. The more historic data on the company, the better. 

  • Take Note of Events and Holidays

While looking at the data, take note of what is happening to sales during major events and holidays. Those days may be the perfect time to start dynamically pricing products. 

  • Look at Industry Trends

If your company is extremely new and there is no historical data, take a look at similar companies in the industry. See what happens to their sales during events or how much they are charging for their product. This can also be useful to see if your product is priced competitively and if it is marketed differently.

Software Solutions

Analyzing all of this data can be done using Excel or a programming language like Python. However, finding this data, inputting the data, analyzing the data, and drawing conclusions about the output is extremely difficult and time consuming. This is why there are companies that have made forecasting softwares that will do all of the heavy lifting for you. This will save you a lot of time and the data will be updated automatically so the outcome will be much more accurate. Using forecasting software will allow you to spend your time creating sales strategies and planning more detailed next steps for the company instead of spending hours on an Excel document.  Having accurate data is the important aspect of revenue management and forecasting so it is best to have a software that you can rely on. 

Canopy

Canopy has created the only forecasting software powered by augmented revenue analysis so that you can focus on driving revenue and Canopy will do the rest. Canopy helps companies receive more accurate forecasts by including, variance reporting, pipeline snapshots, individualized coverage reporting, and much more in the reports to you. Canopy can even help coach your sales team and help them sell more effectively to your customers. To learn more about how to improve your revenue management and forecasting methods click here or request a demo today!

Looking for more information? Check out some of our other pages!

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