Business is the meeting of numbers and art – and a data-driven pricing strategy can help inform the more creative aspects of marketing. Pricing is all about finding the right balance between supply and demand. It accounts for variables such as consumer demand and time of purchase to increase conversion rates, grow yield, and ultimately, drive more predictable revenue.
A modern, intelligent pricing strategy works best when marketing teams understand and embrace the business’s pricing philosophy and, therefore, can better communicate it to customers. For example, if a pricing strategy is designed to always increase in price as a trip date approaches, the marketing team knows to send a strong message to consumers of “Buy in Advance & Save!”.
While marketing and revenue management teams might seem like two discrete functions inside an organization, aligning these two departments around pricing strategy has a measurable impact on the success of a ticketed attractions business.
Offering the right price at the right time improves return on marketing spend; therefore, if the pricing team—whether internal or external—is doing their job well then the marketing team can spend fewer dollars to drive the same or an even greater return. The pricing strategy bolsters the marketing efforts.
Businesses with better pricing strategies end up with more empowered marketing teams while keeping marketing and revenue teams siloed leads to less collaboration, wasted budget, and potentially contradictory efforts.
Let’s look further at the benefits of aligning these two areas and how to best create cohesion and collaboration for optimal results.
The evolution of marketing & revenue management
Consumer behavior has changed greatly in the past decade and, as a result, given business leaders much more insight into their audience. Data on demographics and path to purchase are now considered table stakes by most marketing leaders.
Rather than relying on billboards and newspaper ads, where it is difficult to measure the impact on sales, businesses can now see the direct impact that their digital marketing campaigns and e-commerce booking platform have on sales. The role of marketing has also evolved from simply coming up with slogans or product placement to measuring and analyzing the efficacy of campaign performance as it relates to e-commerce conversion rates and ROI. In a digital world, the role of marketing has become a more quantitative role.
On the other side is revenue management. Revenue management refers to any strategy that adjusts prices for admission based on demand, season, day, time of entry, or customer purchase behavior to improve online sales efficiency and maximize revenue. Sometimes referred to as the ‘commercial team,’ the revenue management team not only selects prices and price variations, but uses this data to project capacity, sales, and overall profitability.
Many times in the past, these two departments worked separately – but that can no longer be the case. Today, marketing and revenue management teams must work together and take a more unified, cohesive approach towards the same goals of revenue growth, profitability, increased conversion rates and visibility in the market.
For example, the marketing team needs to understand the business’s primary pricing strategy so they don’t unknowingly sabotage it by offering deep discounts or limited-time promotions that might erode long-term consumer confidence. The revenue management team needs to be aware of customer behavior and demographics and, to a lesser extent, the marketing campaign calendar, so they can use it as inputs in their dynamic pricing model.
How to align departments
To put it more simply, revenue management is where marketing meets sales. So, many times, the most effective way to align these teams is by creating the role of a Chief Revenue Officer versus a separate Chief Marketing Officer, or head of marketing, and VP of Sales type role. This way, the data-driven pricing strategy can be supported and its impact strengthened through aligned marketing efforts. Marketing, sales, and pricing can work together to design an e-commerce strategy, communicate it to consumers, and measure the impact on e-commerce conversion rates.
The CRO usually sits on the senior management team and leads marketing and sales toward collaboration. It is a multifunctional role in charge of sales strategies, marketing and demand generation, and customer acquisition and retention. CROs can also be involved in product development, operations, finance, business development, and people operations. By lending these two roles into one, a win-win is created—by offering the right price at the right time, marketing spend becomes more efficient and streamlined.
While this leadership tactic has become common in the software industry, leisure, travel, and tourism companies are also catching on. Here are a few early adopters who have seen success.
The Hornblower Group — a global leader in marine hospitality offering city and overnight cruises — has Kristina Heney as the Chief Marketing and Revenue Officer of their City Experiences division, where she oversees all aspects of marketing, guest experience, and brand communications across 111 countries. Kristina has been blending the marketing and revenue management roles for longer than most — she previously served as SVP Marketing for Madison Square Garden Entertainment where she oversaw brand development, strategic positioning, marketing and revenue management for over 3,000 events annually across 7 MSG venues.
Roger Harris, Amtrak’s EVP of Marketing and Revenue and Chief Commercial Officer, joined in April 2019 to lead all of marketing, loyalty, e-commerce, product development, and pricing and revenue management functions.
Newly-opened New York City observation deck, SUMMIT One Vanderbilt, tasked Jason Hackett with overseeing the 30-person ticketing, digital, sales, and marketing team as SVP Sales and Marketing.
Xanterra’s Chief Marketing Officer Betsy O’Rourke oversees the company’s revenue management, reservations, advertising, public relations, websites, e-commerce, and regional sales offices. In addition to working with each brand to achieve their revenue growth goals, she drives the cross-brand and enterprise-wide marketing.
To be sure, these are not small roles.
Each of the individuals featured above are tasked with creating the synchronicity between sales and marketing teams that are needed to scale quickly and sustainably in a modern business world. Keeping these once-siloed departments in lockstep means these leaders host weekly team meetings to ensure KPIs are understood by all.
Cross-departmental data sharing is integral, and these teams will be creating easy-to-consume dashboards that can quickly showcase how a given business or product is tracking towards goals.
Further, marketing is transparent in how they are using their budget, showing individual channel performance and ROI. Revenue management can use data from marketing to understand how changes in pricing strategy impact ROI for specific marketing campaigns. This in turn simplifies budget approval processes and efficient use of funds going forward.
By aligning marketing strategies with revenue performance goals, ticketing businesses can move all their team players in the same direction and ensure that they’re communicating a single, unified message to consumers.
Ready to learn about how Catalate’s modern e-commerce and dynamic pricing strategy can help support your online revenue goals? Get in touch today.
Catalate is a full-service SaaS solution that offers customized pricing strategies, an e-commerce platform, and opportunities for enhanced distribution. It has processed more than $1 billion in transactions and manages 50 million price points for customers.