On-the-fly tactical adjustments, dynamic pricing models, continuous offers, and new retailing engines – while everyone is talking about the potential benefits of new retailing capabilities, not many discuss the challenges of figuring out how they actually impact the bottom line. But the thing is – when you try something new it might *fail* at delivering on its promise.
In fact, studies have shown that only about 20-30% of initiatives actually make a positive business difference, while around 33% show negative impacts and a third have no impact at all. When you think that even small relative revenue improvements or yield dilution can have a significant, cumulative business impact over time – it is a profound realisation.
In their workflows, airline Pricing and RM (PRM) teams measure impact but some evaluation practices have not kept pace with retailing advances. By using only traditional measurement practices, the majority of airlines are ‘flying blind’ and have outsourced their faith to external suppliers instead of challenging assumptions. The truth is that retailing transformation demands a similar overhaul of value measurement.
Some visionary commercial leaders get it and are using advanced experimentation at the core of their value measurement capabilities to accelerate and de-risk innovation. These methods overcome the challenges that often frustrate established practices.
Ask yourself, can your team statistically confirm the following:
- Tactical Pricing Intervention: Did a tactical intervention generate the expected uplift in yield, or was it a natural shift in demand? What was the exact uplift?
- Ancillary Bundle Composition: Does the introduction of a new product inclusion drive meaningful incremental bookings and customer satisfaction?
- Dynamic and Continuous Pricing Strategies: Does a new pricing strategy outperform the old one?
- Personalization: Do personalized offers drive revenue growth?
If you answered ‘not sure’ to any of the above questions, it might be time to explore next generation value measurement with advanced experimentation for pricing and revenue management.
Next generation value measurement and advanced experimentation enable organizations to evaluate the outcomes of decisions, such as new pricing, customer segmentation, and technology choices, to determine their effectiveness. So the airline doesn’t waste time and resources while protecting revenue performance.
Curious to learn how advanced experimentation practices from digital-first leaders like Uber, Airbnb, and Expedia can be adapted for the airline industry, alongside groundbreaking research from academia? Dive deeper into our articles or connect with our expert team today to explore actionable strategies.
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Why acmetric
- Proven Track Record: Successfully implemented measurement frameworks for industry leaders like LATAM Airlines, a Tier 1 European airline group and tech-giant, Uber.
- Exceptional Academic and Scientific Credentials: At the epicenter of the “Experimentation Revolution” defined by Harvard Business School, our team combines world-class expertise with rigorous training from institutions like the National Defense University, Harvard, VU Amsterdam, and Cambridge. Strong ties to elite research bodies keep us at the forefront of innovation.
- Deep Airline Domain Expertise: Profound understanding of both theoretical and operational aspects of building large-scale experimentation capabilities tailored to the unique needs of airlines.
