The cornerstone of any successful revenue management journey lies in establishing a strong organizational foundation with the right team members. These individuals will be responsible for implementing revenue management strategies and executing various components throughout the journey, including process alignment, consultant engagement, and software evaluation. They will also help cultivate a revenue management culture within the organization. This crucial step is essential across all industries, whether in hotels, parking facilities, amusement parks, movie theaters, or beyond. Without the right team, your journey is at risk of veering off course.
Identifying Decision Makers and Influencers
Understanding the distinctions between revenue decision makers and revenue influencers is vital, as both groups play important yet different roles in the revenue journey.
Revenue Decision Makers are responsible for setting prices, deciding on inventory allocations, and either accepting or rejecting business opportunities. They create the overarching strategy for driving revenue, and typically include roles such as the Director of Revenue, Director of Sales, and General Manager.
Revenue Influencers can be divided into two categories: direct and indirect influencers.
Direct Influencers are those who help generate demand, such as sales managers, reservation agents, and personnel managing electronic distribution channels.
Indirect Influencers comprise operations team members. Their primary responsibility is to ensure a positive customer experience, ultimately leading to favorable online reviews. Positive reviews are essential components of any successful revenue strategy.
Regardless of whether they are decision makers or influencers, all team members have crucial roles to play during the revenue journey.
Team Roles
At the helm of the revenue journey is the Director of Revenue or Revenue Manager. This leader coordinates the team, keeps the agenda on track, and ensures consistent progress toward goals.
Team navigators, such as the e-commerce manager, marketing manager, sales manager, and business analyst, bring their expertise to the table. They stay attuned to market trends and can validate insights derived from data analysis, helping the leader make informed decisions about the direction of the strategy.
The Executive Sponsor, typically the General Manager or a CEO/Chairman at the corporate level, sets the strategic direction and provides support to the team throughout the journey. They help eliminate obstacles and resolve conflicts, ensuring that the team can move forward cohesively.
Determining Team Size
A common question arises about when to hire a Director of Revenue. As a guideline, businesses generating R1 million or more in revenue should consider hiring a Revenue Manager. If revenue exceeds R10 million, it is advisable to have both a Director of Revenue and a Revenue Analyst. At the R30 million mark, an additional team member should be added.
As business size and complexity increase, the team may require further expansion. For companies with multiple business units in close proximity, such as within a city, appointing a Cluster Director of Revenue can be beneficial. This role focuses on maximizing opportunities across the entire cluster rather than optimizing individual properties.
Experience Matters
Another frequently asked question concerns the experience required for revenue management positions. A successful Director of Revenue should possess a strong analytical understanding of the business and be able to formulate and communicate a clear revenue strategy.
Typically, this role requires a master’s degree, preferably in Business or Statistics. The Director must communicate effectively with various stakeholders, including senior company management, board members, and owners.
The distinction between an average revenue manager and a great one—capable of fostering a revenue-driven culture and effectively optimizing revenue—can lead to a significant impact on revenue performance, potentially varying by 5% to 15% in either direction. Therefore, selecting the right candidate is crucial for success.
In Part 4 of the Revenue Journey, we will explore the creation of your distribution infrastructure.
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