How can you measure the effectiveness of yield management strategies?

1 Revenue per available unit

One of the most common and straightforward metrics to measure yield management is revenue per available unit (RPAU), which is the ratio of total revenue to total available units. For example, if you are a hotel owner, your RPAU is the total revenue from room sales divided by the total number of rooms in your hotel. This metric gives you an idea of how well you are utilizing your capacity and pricing your units. A higher RPAU indicates that you are selling more units at higher prices, while a lower RPAU suggests that you have excess capacity or underpriced units.

2 Occupancy rate

Another metric that can help you measure yield management is occupancy rate, which is the percentage of units that are sold out of the total available units. For example, if you are an airline operator, your occupancy rate is the number of seats sold divided by the number of seats on your flights. This metric shows you how much demand you are generating and satisfying for your units. A higher occupancy rate means that you are attracting more customers and filling up your capacity, while a lower occupancy rate indicates that you have unsold units or low demand.

3 Average daily rate

A third metric that can help you measure yield management is average daily rate (ADR), which is the average revenue per unit sold. For example, if you are a theater owner, your ADR is the total revenue from ticket sales divided by the number of tickets sold. This metric reflects how much you are charging for your units and how much value you are creating for your customers. A higher ADR means that you are selling your units at higher prices and generating more revenue per unit, while a lower ADR suggests that you are discounting your units or offering low value.

4 Segmentation analysis

Besides these quantitative metrics, you can also use segmentation analysis to measure yield management. Segmentation analysis is the process of dividing your customers into different groups based on their characteristics, preferences, and behavior. For example, you can segment your customers by demographics, location, booking channel, loyalty program, or purchase history. By doing so, you can understand how different segments respond to your yield management strategies and tailor your prices and availability accordingly. For example, you can charge higher prices to segments that are less price-sensitive or more loyal, and offer lower prices or incentives to segments that are more price-sensitive or less loyal.

5 Competitive benchmarking

Another method that can help you measure yield management is competitive benchmarking, which is the comparison of your performance with that of your competitors or industry standards. By doing so, you can identify your strengths and weaknesses, and adjust your yield management strategies accordingly. For example, you can compare your RPAU, occupancy rate, and ADR with those of your competitors or industry averages, and see how you are performing relative to them. You can also monitor your competitors' prices and availability, and see how they are responding to market conditions and customer demand.

6 Customer feedback

A final method that can help you measure yield management is customer feedback, which is the collection and analysis of your customers' opinions and satisfaction. By doing so, you can evaluate how your yield management strategies affect your customer experience and loyalty, and improve them accordingly. For example, you can use surveys, reviews, ratings, or social media to gather customer feedback, and see how they perceive your prices, availability, value, and service. You can also use customer feedback to identify and resolve any issues or complaints, and enhance your customer retention and referrals.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?