Introducing a new system into a yield management solution portfolio

As an expert in revenue management and pricing solutions, Yield Tactics supported the projects of several partners in addition to communicating with a dozen potential customers.

We can classify our customers and prospects into two groups:

IT solution providers who wish to expand their product portfolio: they either have a reputation in pricing and revenue management solutions on a vertical (e.g., airline, hotel industry) and wish to conquer a new mode of transport, or they want to enrich their offer with a system for which a market already exists, with established competitors (e.g., price benchmarking system, inventory management, Revenue Management System, Customer Relationship Management, etc.).
Consumers of solutions (e.g., airlines, airports, transport operators) who need specialized software packages to meet their commercial, revenue management, pricing, or distribution needs. In this case, we can intervene at different stages of their project (e.g., prospective study, drafting of RFI/RFP, project management, injection of skills, etc.).

We are regularly approached on subjects that are of great value to the prospect, but which have little chance of being validated internally because they are engaged on unstable bases.

Let's review the strategic thinking that should take place before launching any project to introduce a new system.

In contrast, revenue management allows you to achieve more turnover with the existing infrastructure, to increase average spending per visitor in high season, and increase your occupancy in off-peak periods.

Yield management embeds your sales teams in a universe where your income increases independently of physical constraints, with limited investments in specialized software packages and consulting services.

Let's review the easily operable levers to significantly increase the profitability of your leisure park.

Option 1: External Acquisition

Identifying and comparing the existing solutions on the market should always be the first step during reflection for business solutions customers before considering a custom development.

It should also be a routine step for technology companies that want to add a new product to their portfolio.

Considering an external acquisition has three main advantages:

An existing software base on which to create iterations
An established clientele
Time-saving, which leads to a faster return on investment

Many entrepreneurs or competitors have already invested an unreasonable amount of time (and their investors' money) to create revenue management solutions that they have never been able to sell.

If you have other similar products in your portfolio, marketing will be your strong point for building on your brand awareness and existing customer base.

If you are a consumer of solutions, several contractual schemes allow you to capture the value already created for a fraction of its development cost while offering a welcome way out for entrepreneurs at their wit's end.

In other cases, the target company could have a large customer base but the product is technologically outdated and cannot fit seamlessly into your solution portfolio. It may be a product developed by a start-up that will not withstand the load increases or the security requirements of your most demanding customers. An external acquisition allows you to buy revenue and finance the complete redevelopment of the solution (which is the strong point of your technology company), thus minimizing the risks of commercial failure.

Other alternative solutions to acquisition are sometimes possible, such as white label resale of a solution in the geographical area where you are dominant.

Yield Tactics< Senior Consultants participate in due diligence operations by delivering an objective and impartial opinion on commercial, revenue management, distribution, and pricing systems.

Yield Tactics supports you at all stages of your implementation project: prospective studies, solution comparisons, RFI and RFP, project management, etc.

Option 2: Create from Scratch

Our recommendation will almost always favor an external acquisition.

However, internal development (or outsourced from a specialized service provider) can make sense when:

External acquisition is not possible
External acquisition is excessively expensive
The system carries a strong innovation
The internalization of business systems is the chosen business strategy
There is an opportunity to transform technological expenses into intangible fixed assets which can generate recurring or exceptional income (SaaS model commercialized or resale of the software to a technological company)

The major drawbacks are the technological and commercial risks that you bear, which should be shared with a partner before launching the project:

For solution providers, by having a customer who finances all or part of the development
For solution consumers, by working with a partner who shares the risks in exchange for part of the value (e.g., temporary exclusivity, transfer of knowledge, joint venture, etc.)

The associated risks that materialize most often are:

A lack of experience regarding control of the external development service (or the internal team), whose costs and deadlines are slipping
Lower quality levels than expected when the project was launched
The obsolescence of the system before it reaches maturity
The underestimation of maintenance and continuous evolution

Next steps

The global travel market is worth trillions of dollars, with tech companies capturing a growing share of the revenue. However, the travel industry remains difficult to disrupt with software packages due to the complexity of its distribution, its dynamic price offers, and the monopolies of well-established technology providers on a global level. Yield Tactics brings valuable insights to technology companies and saves project and development teams thousands of hours of work.

For example, in 2022, Yield Tactics supported two clients in the creation of their inventory and RMS.