Can you introduce yourself and explain your background?
I am a graduate of a major business school (NEOMA Business School, ex. ESC Rouen) and, have now spent 15 years in pricing and revenue management positions in airlines (AeroMexico, Etihad Airways, Air Austral) and more than ten years as an expatriate, notably in the United Arab Emirates. The COVID crisis has profoundly changed the tourism and transportation industries. I saw the opportunity to offer my services and returned to France as a freelance consultant specializing in Yield Management & Pricing. The gamble paid off because with the recovery of the travel sector there is a lot of demand for expertise in this field which offers companies a very high return on investment since it is directly correlated to their profits. Today I work in collaboration with several world-renowned consulting firms, mainly on IT and organizational projects, internationally for large transportation and travel companies.
What is Pricing Yield Management? How is it applied in business? What impact does it have on an organization?
In the early days of Yield Management, it was about maximizing revenue by leveraging pricing. Today, we speak more of Revenue Management, which consists of maximizing revenue by finding the right optimum between price and volume, with optimization strategies that take into account total revenue, by applying dynamic pricing techniques, demand forecasting, price elasticity, and a well-calibrated distribution policy.
Pricing Yield Management is the art of selling the right product, at the right place, at the right time, to the right customer, and at the best price to achieve maximum revenue according to market constraints: level of demand, competition, customer willingness to pay. Depending on the company size, it can be applied very simply with Excel spreadsheet models, or with the support of complex IT systems such as Inventory Managers, Revenue Management Systems, and automated price comparators.
Yield management-enabled organizations that do not apply these models can expect to increase revenue by up to 20%. Companies are already using Yield Management and want to strengthen their Yield Management capabilities can increase revenue by 2-5% by implementing more effective revenue management models and systems, or by upgrading their staff through training or recruiting talent to their team.
Is Pricing Yield Management relevant to all industries?
Yield Management is primarily for industries have large fixed capacities and perishable inventories. The best example is a hotel that cannot vary the number of rooms available according to the seasonality of demand, and cannot "store" unsold rooms from previous days. Yield management is therefore essential for hotels, airlines, railways, bus lines, ferries, cruises, car rentals, events, theme parks, and tourist sites.
But a growing number of industries are beginning to take notice of the high-profit potential of Yield Management Pricing. These include real estate developers, department stores, freight forwarders, and public transportation operators.
In your opinion, which positions in a company are particularly concerned with Pricing Yield Management?
Pricing Yield Management positions are integrated into the sales department. The most advanced companies have a separate entity reporting to the CEO, just like the finance, sales, or operations departments. They are also sometimes attached to an entity responsible for network strategy and planning or capacity to sell. Depending on the maturity of the organization, it will have pricing analysts, demand analysts, revenue/yield managers, and management positions dedicated to revenue management.
What are the essential soft skills in Pricing Yield Management according to you?
In my opinion, the essential soft skills for Pricing Yield Management are strong data analysis and synthesis skills, and good interpersonal skills (especially through listening, teaching, etc.). Also, the ability to question oneself and to manage conflicts intelligently.
How do you measure the results of a Pricing Yield Management test?
It all depends on the position being recruited and the expectations. The test developed in partnership with Maki People can be used to test many different scenarios. For the recruitment of a candidate to join a Yield Management team, for which he/she is expected to be trained in the job, a rate of correct answers higher than 70% in the Basic and Intermediate questions will indicate an excellent capacity to be trained in the job. For the recruitment of a candidate who is already experienced in an analyst position, a good response rate of over 70% to the Intermediate and Advanced questions validates the experience and the ability to integrate, subject to additional training to be provided upon arrival to adapt to the specificities of the sector, the company, and its IT systems. For the recruitment of managers and higher management positions, it is imperative to have a correct answer rate of more than 50% for the "advanced" and "expert" questions to validate their expertise in Yield Management. Note that the Basic and Intermediate questions can also be used to test candidates for sales positions in companies that apply yield management: a response rate of more than 50% will indicate that the candidate has a good ability to understand the strategic and commercial dynamics of the company.
In addition to a Pricing Yield Management test, what are the typical questions a recruiter should ask a candidate during an interview?
For example, he or she may ask questions to understand what competitive pressures the candidate has already faced ensuring that he or she will be aligned with the requirements of the hiring company's competitive environment. Or, questions to understand how the candidate deals with different points of view with other members and departments of the company, to ensure that he or she will behave in a way that is adapted to the company's culture.
What other methods can be used to test a candidate's Pricing Yield Management skills?
For example, it could be a rich discussion during the interview where the candidate can describe the challenges and projects he has faced in his career and how he has handled them, especially in terms of relationships.
Graduated from a Master in International Project Development from the French business school NEOMA, and holder of university degrees in Transport and Logistics, Alexandre Poisson is a professional expert in pricing and yield management. He has held positions of management at the head offices of multinational travel companies in Europe, the Middle East, and Africa within sales, revenue management, and pricing teams. Currently working as Senior Consultant for the international consulting firm Yield Tactics, Alexandre Poisson helps companies around the world to maximize their income.