Are you ready to adopt Revenue Management into your business? This game-changing approach plays a vital role in managing your day-to-day tasks.
In this article, we’ll explain the importance of adopting a revenue management strategy of your own.
Table of contents
What is Revenue Management?
Revenue management is the application of disciplined analytics that predict consumer behaviour at the micro-market levels and optimize product availability, leveraging price elasticity to maximize revenue growth and thereby, profit. The primary aim of revenue management is selling the right product to the right customer at the right time for the right price and with the right pack. The essence of this discipline is in understanding customers’ perception of product value and accurately aligning product prices, placement and availability with each customer segment.Source: Wikipedia
As stated in the quote above, revenue management is basically a way of predicting customer behavior with detailed data-driven analytics to develop business strategies. With these tactics and strategies, a company can fully achieve its selling potential and maximize revenue.
Revenue management is sometimes referred to as Yield Management, but yield management focuses on price optimization and is only a part of the whole revenue management concept.
A new game-changing approach
Is there a way of applying revenue management principles and dynamic pricing to CRM strategies in some industries? Yes, it can be done!
Today, revenue management processes and systems are implemented in several industries, including telecommunications, energy and utility, media and entertainment, high-tech, car rental, and many more. Companies that ignore this process will be severely disadvantaged in the future. The thing is, the revenue management optimization process helps businesses adjust their approach to meet the total demand characteristics of their markets.
For example, new pricing variants, such as usage-based pricing, may be applied to maximize revenue. By factoring in a usage-based billing strategy, you get the opportunity to grow your income in tandem with increased usage. We have written a lot about this topic, so if you’re curious about which usage-based pricing works the best, you are welcome to read our blog with many compelling cases.
To understand revenue management better, the picture shows five crucial steps that every business should follow in the process:
Why is it important?
Currently, several organizations are utilizing user-friendly spreadsheets for key revenue accounting activities. In specific sectors such as IT, this system is very complex since allocating revenue across elements and the duration of revenue recognition is challenging. The revenue recognition principle requires the firms to document billable time/expenses and monitor project performance to link proceedings back to the contract types.
The capability to establish the technology that simplifies and centralizes the revenue management process could be very critical. Cloud-based technology enables the finance department to link with systems, automate processes, and review business performance with the right analytics. Automating revenue accounting management can deliver substantial results – short period closes and costs control.
That’s why firms must leverage the technology that enables the finance crew to link systems, automate processes, and evaluate the business on time to streamline and optimize the system. Tridens’ revenue recognition solution manages everything! Our core features are built for high-volume consumption-based events for any service, industry, & partner-enabled business model. Above all, we cover the transaction complexity of subscriptions, usage, one-time offers for revenue scheduling, and many other cool features.
Unchallenged Revenue Management solutions for your business
Forecast accurately, price confidently, and achieve greater profitability fast with trusted revenue management software is what every business wants. To earn maximum income, a revenue management system needs to understand what has happened before and is happening now, using this historical data to predict what may happen in the future. So, the revenue management system keeps track of consumer behavior or consumer-related events. These event transactions include data such as product purchases, subscription terms of commitment, and consumption-based events.
Furthermore, a predictive structure can consider all the ongoing terms and durations, enabling future revenue. Our powerful, real-time revenue recognition solution is intuitive for accounting users. It provides powerful automation capabilities to address any recognition pattern through configurable formulas to facilitate timely and accurate financial reporting.
Automate your processes today!
Every organization’s revenue recognition process differs based on distinct business models, products, and market conditions. As mentioned, revenue management systems deliver insight into both existing/deferred revenues by accurately projecting future payments. They enable organizations to evaluate the effect of changes to products and pricing on income by configuring different accounts, account mappings, and general ledgers.
Because manually is not good, it takes a lot of time and even human involvement. Automating the revenue recognition process with automated reports can significantly reduce the workload for personnel, decrease spreadsheet errors, and enhance efficiency.
Streamlining the process eliminates data duplication between finance and other departments, thereby decreasing errors and reducing time. The most optimal accounting systems link critical business systems (yes, that’s what our platform is doing) – CRM and services management to develop a robust ecosystem for revenue management.
To sum up everything
In brief, revenue management is crucial. Agile revenue management platforms offer innovative enterprises the freedom to efficiently monetize and distribute services and products that result in growth and competitive differentiation.
When an enterprise wants to preserve or increase profitability, the ability to manage pricing strategies becomes critical. With our cloud-billing platform, you can automatically assign financial transactions and execute revenue recognition in real time.
Want to get more information about our solutions? Leave a comment below or Schedule a Demo!