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What is the Purpose of Revenue Management?

by Adam Cuzzort

Revenue management strives to create the perfect balance of pricing that aligns what a product is priced at and what a consumer would be willing to pay. Revenue management uses analytics that predicts consumer behavior to optimize product availability and price to create the most revenue growth possible. 

How to use Revenue Management

There are many different ways to approach revenue management to help grow your business. Some managers choose to use revenue management to understand where their company lies in the industry. Comparing your pricing versus the competition in the market will help your company stay relevant and appealing to customers. Other managers may use revenue management to ensure cross-departmental alignment. This helps various departments get pulled in the same direction and achieve common goals. The most popular reason managers use revenue management is for segmentation and price optimization. Revenue management will perfect the pricing strategy in order to get the best price from each individual customer. 

Revenue Management Tips 

Revenue management is essential to any growing company, to get the most accurate outcome make sure to remember a few things. Be sure to maintain the most accurate records possible. Records should be updated consistently so that the revenue management software can work properly. One of the best tools for any company is its historical data. Turn on historical data to get a deeper understanding of the historical patterns. Something that is often overlooked in revenue management is holidays and major events. Your pricing strategy might be able to change drastically during these times and revenue could benefit from a different pricing strategy. 

The Three Pillars of Revenue Management 

Successful revenue management can be broken down into three strategic pillars.

Marketing automation: Marketing automation is when you use software to automate the repetitive marketing tasks for your business. Some examples of repetitive tasks are things like sending out promotional emails and making posts on social media. A marketing automation software is used to help nurture leads through customer relationship management and analyzing customer data.

Sales effectiveness: Sales effectiveness is the process of using and finding the best sales tasks to produce the best possible sales outcome. This outcome will look different for every company, but it could be anything like sales of a new product, improved profit, or improved customer satisfaction. 

Analytics: Analytics in the terms of revenue management is the process of using statistical technologies for analyzing historical data to be able to gain insight and improve the day to day decision-making. Business analytics essentially combines business management and computer science to help managers make more informed decisions. 

Wanting to try out revenue management software? Request a demo of Canopy’s forecasting software today!

Interested in learning more? Check out some of our other pages!

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