Confidence Amid The Chaos
Revenue Management Analysts Must Have Confidence And The Proper Training
Well-trained analysts are key to staying above a confidence crisis in revenue management.
Since the beginning of modern airline revenue management (RM) and the subsequent widespread use of respective technologies to forecast demand, set inventory and overbook flights, some degree of contention has naturally existed between RM and other departments within an airline, notably operations, sales and marketing.
Large-scale, cross-departmental dependencies tend to be built on a certain level of expectation that RM will either “get it right” (i.e., forecast accurately and set inventory true to passenger demand) or otherwise deploy a competent and efficient team to manage risk and, over time, build and sustain trust.
When trust deteriorates between departments, confidence at the analyst level can wane in revenue management. When left unaddressed, analysts’ confidence can quickly deteriorate, impacting internal department performance. This is referred to as a confidence crisis, and an RM department that is experiencing any of the following could be in the midst of one:
- An environment of “analysis paralysis,” or over-thinking business decisions,
- High attrition rates,
- Inconsistent or slow decision making,
- Low staff morale,
- Consistently ineffectual results.
Analyst Learning Curve
Every revenue management leader should aim for some measure of highly skilled, highly productive RM analysts, but how is this achieved? By classifying the RM analyst team against productivity and ability to learn or absorb information and then reinvigorating a steady training regime, airlines can achieve a high point (shaded box within green area) in the collective confidence curve of the department.
Getting to the root of these problems is key to running a robust RM department. In addition, building and maintaining the confidence levels of a team of RM analysts is vital to maintaining a positive work environment.
Building a confident RM team starts at the individual level with a focus on the RM-analyst position. Successful management and consistent fostering of this employee group is an often-overlooked but imperative element for maintaining a high overall confidence curve, as well as excellent performance.
Confidence Crisis Drivers
Though airline passenger demand is highly seasonal and predictable, assessing any level of RM productiveness (i.e., analyst-level influence on flight/market/origin-and-destination results) across people and technology is often a murky and inconsistent activity that can easily become a primary driver of a confidence crisis within the department.
Revenue management, in practice, is quite commonly seen as a “fuzzy” intersection between academia and business operations, particularly from the viewpoint of other functional departments within an airline.
This dynamic leads to fervent daily discussions between departments in terms of both planning and execution. But in a practical sense, one of the most significant outcomes from such discussions is often a high degree of pressure on RM managers and analysts to gain and maintain trust that the primary driver behind inventory decisions is overall revenue maximization for the airline.
Whether caused by communication breakdown, a financial downturn or persistent operational challenges, blame is quickly assigned. And without well-trained, diligent and highly confident RM analysts “owning” their respective markets (i.e., demonstrating a clear understanding of passenger demand tendencies), the ugly result can often be a loss of confidence in the RM department.
Once this happens, such a crisis can persist for an extended period, often precipitating a leadership change in middle management or even somewhere near the top of the organization.
Every executive team seeks consistent results, and given a general level of uncertainty about the specifics of how RM operates, a lack of direct cause-and-effect business understanding further complicates things when evaluating performance.
When such a negative environment persists, only large-scale, structural changes can improve the dynamic and return the business to normal. As such, there is significant value in preventing the development of a confidence crisis in the first place.
How, then, does an RM department leader best arm himself or herself to minimize the risk of lost confidence? By understanding the value of frontline RM analysts and fully committing to formal, informal and recurrent training as the airline changes and people, processes and technology consistently evolve over time.
Avoiding A Confidence Crisis
Looking at the respective four analyst learning-curve profile descriptions and noted tendencies, an airline can assess the current position of its revenue management team. Only by adhering to a consistent business-training process will an airline align to curve B and arrive near optimal with low susceptibility for a confidence crisis evolving within the department.
The Learning Curve
All RM leaders expect top-notch performance from their analysts. In essence, they want to hire analytically strong and infinitely curious people who can handle steep learning curves and emerge as highly productive, effective decision makers and revenue achievers.
Such edicts look good on paper. But it’s never that simple because some mix of the organizational factors — specific departmental dynamics, as well as analyst skillset and willingness — collide in a delicate matrix that requires precise attention, support and confident leadership to successfully navigate.
RM-analyst quality can be measured by evaluating individual performance according to his or her ability to absorb information quickly and efficiently make course corrections in complex technologies amidst the constant strain of daily business issues that otherwise distract from the core mission.
The ideal target zone strikes a perfect balance: an analyst successfully climbs the inherently steep RM learning curve effectively enough to then be able to combine his or her knowledge to generate productive efforts within the department.
Any directional shortfall from that ideal target zone fundamentally represents an ineffectual situation with regard to the company’s profit/loss statement, the RM organization, the analyst or quite possibly all of the above.
Ineffective and less-than-confident RM departments can range from the innocently ineffective to being directly harmful to network-level RASK (revenue per available seat kilometer) depending on leadership’s willingness, ability and commitment to constantly hedge against falling to the level of any of these less-than-desirable conditions.
Shortfalls in ability to absorb or willingness to participate are typically the leading contributors to lost confidence at the analyst level.
Additionally, a highly productive analyst who has a less-than-average skillset is equally dangerous, as this situation would lead an outsider to question how seriously the business is being impacted from a poorly skilled, albeit highly productive, person.
Layer in an operational shortcoming or two (i.e., recurring instances of severely overbooked flights that lead to over-sale scenarios or perennial spoilage and low load factors on certain flights), and it doesn’t take long for internal reputations and trust to be diminished and the stage to be set for onward conflict.
Training Enters The Equation
Experience validates that RM crises in confidence are often fostered, if not driven by, a breakdown in the training and support paradigm.
As a best practice, airlines should commit to a strict training regimen, ensuring that analysts start off on the right foot within their role under aligned senior analysts and managers, followed by recurrent training. The learning, absorption and productivity of a team of RM analysts are critical elements to get right and continuously support. However, cost cutting, lack of resources, change management or de-prioritization by leadership frequently trump all in importance, setting the stage for a confidence crisis to develop.
Beyond absorption and productivity, avoiding a confidence crisis in RM (or at least considerably lessening susceptibility to one) requires reviewing the analyst learning against a third dimension: effectiveness.
Only by creating and committing to maintain a highly effective core of RM analysts does an RM leader best hedge against a drop in confidence whether at the individual or group level.
The practice of revenue management demands a keen analytical skillset. From there, some measure of a steep learning curve is expected to get analysts quickly into the game. What happens from this point on will determine all around outcomes, such as productivity, effectiveness, financial or overall quality, as well as the level of risk that a confidence crisis could develop.
Causes Of Subpar Performance
There are a few primary reasons why the best of training commitments within RM derail and drive lost confidence:
- Higher-than-expected staff attrition and poor long-range staff planning. Even in a slower-paced job marketplace or in geographies that feature lower job mobility overall, a revenue manager should plan on keeping analysts no more than two to three years. Although this type of thinking is often met with skepticism, the intense and analytical nature of the position, combined with the dynamic nature of the business from a commercial perspective, validate this statistic. More importantly, once staff shortages occur, even less of a spotlight or priority is often placed on training, which leads to the second reason.
- Daily RM operations consume too much time and energy. At the very hint of a crisis, who has the time or can afford the commitment for proper training or reinforcement when simply meeting daily department priorities frequently stretches all employees beyond the limit?
- A corporate culture that fosters the “blame game.” This type of organization suffers from a broad lack of information-sharing and breeds an environment in which individuals frequently keep their guard up. This is less obvious but is often an underlying contributor to lost confidence.
A series of difficult cross-department dialogues, conflicting decisions that ultimately prove less-than-optimal to the airline, or even directional differences across leadership can all lead to a confidence crisis.
With or without a larger corporate commitment to training, an RM department must have an intensive training program in place to ensure analysts are well qualified to produce optimum results.
Given this, it becomes more of a qualitative exercise to align departmental practices with a standardized path of individual learning to achieve expected growth and a medium- to long-term productive return in pursuit of revenue maximization.
Any path short of this level of commitment leads to delayed learning, as well as suboptimal work effectiveness curves that indicate a high susceptibility to a loss in confidence at any level. A lack of recurrent training leads to staleness and complacency and, therefore, to higher levels of susceptibility to crisis.
Finally, a buddy-oriented training system is really only as good as the buddies who are assigned and is inherently less formal and of poorer quality. In other words, when this approach is deployed, department leaders should appoint stronger members across the team (e.g., lead analysts or managers) to serve in the capacity of fulfilling the buddy system with new hires to best foster the desired outcome.
Given the intersection that RM occupies between academia and business, “fresh” ideas continually emerge to foster innovative thinking, development of technological advancements that address recent market or passenger trends and, therefore, present new opportunities to promote continual learning within the RM group.
When it comes to motivating people to learn, this concept stands out because it is notoriously difficult to keep positive momentum going amid great results, as opposed to the lesser level of difficulty involved in steering a team in climbing the learning and performance curve the first time as part of a turnaround or organizational restructure.
In other words, committing to recurrent training and motivational pursuits is as important as any new-hire training within RM.
In the book, Confidence: How Winning Streaks and Losing Streaks Begin and End, Rosabeth Moss Kanter says, “… former Continental Airlines turnaround CEO Gordon Bethune said, ‘It’s a lot harder to keep things going great than to get them going great in the first place. People who have put in long hours willingly during the crisis can start to relax a little, enjoy the success, and maybe figure that they’re good enough, unless they get more motivation to keep getting better.’”
With concerted commitments to training content and active participation in place, any onward loss in confidence across the RM organization can be prevented by successful execution of a well-thought-out training and support framework.
Such execution could well center on these tenets of success:
- Measured — Progress must be measured against a traditionally steep and technical learning curve or taken in reasonable steps that are effective to the business and suitable to skillsets individual new hires bring with them. Whether by testing during training or setting individual target key performance indicators with each analyst, a steady culture of goal attainment, active thinking, dialogue and a “can-do” spirit permeates. The best way to accomplish tedious tasks that require consistent review is via a measured approach.
- Mixed: In the end, both formal and informal training and activities within the department become the best “glue” to ensure the department never lulls into a less confident state. RM staff members, including senior analysts and managers, are key to fulfilling the mixed approach to learning. Rushed training and information dumps at the point of hiring are not sufficient. It becomes incumbent on the mid-lower-tier level of experienced RM staff to champion ongoing follow-up training.
- Maximized: The obstacles are many on the path to RASK improvement or revenue maximization. By maximizing efforts in hiring, training, motivating and otherwise fostering confidence in decision making for an analyst team, a confidence crisis can be avoided and airline revenue can be maximized on a consistent basis.
In the end, the revenue management function requires performance at a high confidence level to deliver excellent results.