Technology is essential for revenue development and management, and its use is directly proportional to business outcomes. – Félix Velázquez, Director of Ancillary, Pricing, and Revenue Management at Viva Aerobus.
Based on his extensive experience in Revenue Management, low-cost companies, and Ancillaries, we spoke with Félix to learn about his vision of how technology can be a determining factor in analyzing data, segmenting travelers, understanding the market better, and developing strategies that allow for increasing the profitability of companies.
What is your vision in 10 years regarding pricing strategy in the ground transportation industry?
I believe that the ground transportation industry can transition to three different pricing strategies:
Dynamic pricing (already in the adoption phase).
Unbundled services, such as seat selection or even baggage.
Membership or subscription models.
What do you think are the most relevant challenges and benefits when implementing an ancillary-based strategy, and how does it compare to the traditional approach of ticket pricing?
The most relevant challenges of an ancillary or additional services strategy would be its adoption as a consumption model, its merchandising and execution within bus terminals. I see these three challenges as a cycle that reinforces or weakens each other depending on how it is executed.
Adoption as a consumption model is particularly challenging because disaggregating services can be perceived as “charging for everything.” Customers in the sector are not accustomed to hyper-personalizing their journey. Therefore, there may be initial resistance to adopting this model.
On the other hand, delivering the different components of this service can be a complex task, as different products will be offered at different stages of the purchase. Products such as seat selection and baggage, for example, should be offered digitally during the purchase. These services could also be offered post-purchase but before the travel date through digital means.
Lastly, additional services can be offered at the ticket counter on the day of travel. The complexity lies in aligning the entire organization with this model. Ticket counter staff must be familiar with all products offered digitally to ensure that the customer travels only with what they need.
In contrast, the benefits of this model are the ability to generate more optimal revenue for the company by alleviating pressure on fares, incentivizing occupancy, and allowing the customer to pay only for what they need. It can become a virtuous circle that allows for market growth through low fares and additional trips. Ultimately, the more trips a bus or plane makes, the lower its fixed costs become, which helps to continue offering low fares.
How are revenue management practices and income management adapting in the current context of the passenger transportation industry? What strategic adjustments have been made at Viva Aerobus to address these changes?
I would divide the adaptation of revenue management practices in passenger transportation into two categories: ground transportation and air transportation. Additionally, both sectors are at different levels of maturity in adopting these practices.
Ground transportation is in the adoption phase, where the concept of advance purchase is permeating customer consumption habits. Furthermore, this industry is also shifting a greater share of its sales to digital channels, although ticket sales at counters still hold the greatest relevance in terms of revenue for the ground transportation sector.
Air transportation, which has been using revenue management practices for several years, is transitioning to a phase of greater granularity in pricing and automation. Previously, there were many prices for a single flight; now, we find a variety of prices for additional services such as baggage, seat selection, or travel insurance. Ultimately, the determination of these prices for additional services is based on the attributes of the customer quoting a trip and is executed in real-time.
What is the role of data analysis and traveler segmentation in a revenue management strategy? How are these insights used to make informed decisions and improve profitability?
Data analysis and traveler segmentation play a crucial role in implementing revenue management strategies. The synthesis of purchase data always leads to a demand curve. When we talk about seats on a flight or a bus trip, we are always selling a perishable item. Therefore, knowing at what price we can get a customer to purchase, what additional services they are willing to acquire, and how many seats are still available is essential to finding the optimal revenue for each flight or bus trip.
On the other hand, the observed prices, or price points, in the different demand curves are used at an aggregate level to make profitability decisions. In other words, since there are several price levels at which customers are willing to purchase a flight or bus trip, it is most appropriate to use the average of those prices weighted by the proportion of total customers who paid it to arrive at the average revenue necessary to achieve profitability.
How does technology influence revenue development and management? What should be considered when choosing tools or systems to monitor, analyze, and optimize additional revenue opportunities?
Technology is essential for revenue development and management, and its use is directly proportional to business outcomes. Cost-saving initiatives will always be fewer in number compared to the number of price experiments that can be conducted. No matter how small an operation is, whether it’s a few bus trips or flights, if you have systems that are at least capable of changing prices based on some parameter, there will always be opportunities to improve results by increasing revenue.
When it comes to factors to consider when choosing tools, I believe usability is a more relevant factor than the science behind the decision-making process. Pricing decisions are enriched by the number of data points that make up our demand curve. Therefore, the more prices we experiment with, the more accurate the models will be in predicting at what level we will “close the sale.” Additionally, the ability to extract and organize information on the performance of the offered prices is also indispensable. In the words of Peter Drucker, a scholar in the field of management, “What gets measured gets managed,” so information extraction is fundamental for an optimal revenue maximization strategy.
Get to know all the members of the Reservamos Advisory Board and discover the expert voices that guide our path every day, towards becoming the technological ally for any bus company.
Every purchase made through Costaline’s eCommerce becomes more valuable for their travelers’ wallets and increases loyalty.
At Reservamos SaaS, we are constantly working hand in hand with our partners to offer digital experiences that meet travelers’ needs.
One of the most important stages in the digital sales process is payment. In addition to ensuring secure and reliable sales for both bus companies and travelers, it is also essential to have a wide variety of payment methods and options that help increase user loyalty and provide benefits for their purchases.
With the help of our technology, allied brands like Costaline continuously integrate innovative functionalities into their eCommerce to make it more appealing to users.
One of the functionalities recently integrated by Reservamos SaaS’s development team into Costaline’s eCommerce is the brand’s electronic wallet. This integration allows users to register for the electronic wallet and start enjoying its benefits.
During the digital sales funnel, travelers can see if the selected route has the option to pay with the wallet activated. They can then choose the amount of balance they want to use during the payment process and pay the remaining balance with any other payment method they choose.
At the end of the purchase, travelers can see the details of the balance used from their electronic wallet and deducted from the total cost. Additionally, the travel ticket displays the different payment methods used during their purchase processes.
With the help of Reservamos SaaS’s technology implemented in our partners’ digital channels, it is much easier for bus brands like Costaline to integrate functionalities like their electronic wallet and:
Provide more convenient, easy, and secure purchasing experiences for travelers.
Have data on travelers’ behavior.
Create personalized promotions and loyalty programs.
Increase traveler retention and boost frequent purchases.
Reservamos SaaS empowers bus companies’ innovation capabilities to enhance their brands’ competitiveness in response to travelers’ demands and needs. In this way, we ensure that each solution and integration generates a more significant impact on their businesses.
Analyzing the impact of your pricing strategies has never been so accessible and accurate.
Introducing Dash Center, integrated with BrainPROS, our Revenue Management solution. Its purpose is to provide a centralized hub for analyzing the results and progress of pricing strategies implemented in the eCommerce platforms of bus companies.
Dash Center is available to our partners subscribed to the Pricing Strategies module of BrainPROS, and it serves as the perfect tool for applying intelligent pricing to different routes and monitoring their impact through various charts, making the analysis even more precise.
Through Dash Center, our partners have access to charts displaying the following indicators:
Revenue
Daily revenue for the period
Average ticket price
Daily average ticket price for the period
Sales with advance booking
Average days of advance booking
Tickets sold
Daily tickets sold for the period
Trips
Advance booking
Average revenue per trip
Average tickets sold per trip
ASK (Available Seat Kilometers)
RASK (Revenue per Available Seat Kilometer)
These charts depict the trends of the past 13 months with daily date comparisons.
With Dash Center, our partners have access to key information for measuring the performance of their pricing strategies over time, ensuring results that boost revenue, and occupancy on each route and schedule, and encourage early bookings.
If you want to access the future of intelligent pricing, schedule a free 30-minute demo. Contact us at [email protected].
Greyhound, one of the leading bus companies with operations in the United States, Canada, Australia, England, and Mexico, trusted Reservamos to launch its online sales channel in the Hispanic market, which concentrates on routes between Mexico and the south of the United States.
Smart platforms for smart travelers
Greyhound had specific needs and goals that ranged from generating data intelligence to helping them make decisions, making their online sales channel the highest percentage of total ticket sales.
The Reservamos SaaS technology helped Greyhound analyze user behavior, create advanced sales strategies, partner with other companies to connect destinations, and develop marketing strategies to drive users to its website.
The eCommerce solution allows Greyhound to have an effective service that provides a high conversion rate, an optimized purchase funnel, and a friendly user interface and experience, accompanied by continuous support to achieve sales goals.
Competitive and differentiated eCommerce
The series of modules from the eCommerce solution enabled Greyhound to offer a more flexible, dynamic experience for digital travelers.
Greyhound analyzed user behavior, integrated eCommerce into their loyalty program, and joined the most popular payment methods and anti-fraud functions. And made strategic alliances with the Estrella Blanca bus line to connect destinations.
Another benefit was that by having sales in advance for online purchases, Greyhound used the data generated to understand the traveler better and personalize the experience with the help of our analytical module, which is key to its current operations. Through a better understanding of the traveler, they have refined their strategies in operations, marketing, and communication by providing personalized service.
Personalized innovation
Among the great advantages of Reservamos SaaS eCommerce for Greyhound was to customize it and integrate solutions according to their needs.
Impact achieved:
Fare Classes
An innovation developed by the Reservamos SaaS team together with Greyhound was the creation of fare classes. When choosing a destination and time, each schedule shows three rates differentiated by prices and benefits, divided into Economic, Extra Economic, and Flexible, the last with the greatest benefit for the traveler.
Online sales
The Greyhound bus line has increased the percentage of online sales by +60% in less than 2 years.
Average transaction value
Since the implementation of the online sales channel, the average transaction value has been increasing year after year, with a 5x growth since the start of online sales.
Mobile devices
The mobile web channel has represented the highest growth in sales, thanks to its technology and usability on any mobile device. The Reservamos SaaS team decided to implement Android and iOS applications to migrate their travelers to a higher converting channel. Currently, 50% of online sales are on mobile devices. Furthermore, these Apps have a rating of 4.4 on Android, 4.3 on iOS, and +9K downloads altogether.
Payment approval rate
At Reservamos SaaS, we managed to reach a rate of 96%, maintaining an average payment approval rate of 83% with an upward trend.
Percentage of chargebacks (fraud)
Thanks to our technology, experience, and continued collaboration with Greyhound and the payment gateways, they achieved an average of less than 1% in chargebacks in the last three years.
Implemented strategies:
Use of dynamic prices.
Offer discounts every day, and reduced prices.
Move terminals closer to urban areas with a high residential concentration, avoiding city centers.
Establish a strong presence in digital media.
Guiding the growth and success of the bus lines’ digital channels means working closely with them to innovate and offer solutions that adapt to the digital travelers’ needs. It is essential to understand the users’ interaction when looking for and purchasing their bus tickets to create dynamic solutions that adapt to what travelers require.
With the Panic Button, BrainPROS gives you the agility and efficiency needed to act in real-time.
BrainPROS offers not only a broader vision and answers to the questions that bus companies have about their market but also a solution that provides greater agility to operational teams to manage resources and perform various actions more efficiently.
In addition to the Pricing Strategy module, which allows companies to easily apply intelligent prices to their routes, BrainPROS also features a Panic Button.
The Panic Button functions as a switch that allows bus companies to deactivate the dynamic prices set in their eCommerce through BrainPROS. With this functionality, companies have three options:
General shutdown: Activated by pressing the “Disable Discounts” button on the initial screen within the “Routes” menu. This deactivates all discounts for all routes.
Selected route: Activated by pressing the “Disable Discounts” button to deactivate all active strategies for a specific Origin-Destination pair.
Selected terminal: Found within one of the terminal combinations within a route. Pressing the “Disable Discounts” button makes the discounts disappear only within the selected terminal combination.
This functionality enables operational teams to react in real-time and more agilely to the behavior of travelers and the market, ensuring higher revenues and ticket sales on different routes. Whether it’s a human error when loading prices or during peak seasons when demand exceeds expectations, Revenue Management, Pricing, Operations, and Marketing teams can ensure greater profitability for travelers by modifying strategies according to market trends at that moment.
