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Marketing or Ancillary Revenue Managers: Who's Bag Is It?

26 April 2016 on Ancillary Services, Mozio at work

 

Maintaining passenger satisfaction is essential to keeping an airline business stable. But when it comes to sustaining the branding and image of an Airline within the industry, while ensuring profits continue to surge, who’s responsibility is it to source, manage and market new ancillary products?


The changing roles of Ancillary Revenue Managers and the Marketing department in an “Airline as Retailers” New World.

Ancillary Revenue managers have an essential role in the airline industry, particularly in seeking additional revenue not within the inventory allocation process. This has saved the airline business by driving billions in revenue and profitability over the years. Meanwhile, the Marketing department has traditionally focused on the core 4 P’s of marketing: Product, Price, Promotion and Place. Their overall planning, including the business’s marketing plan, helps in establishing the image and branding of the airline and defines the product or service being sold, as well as setting the price for the core products or services.
However, conflicts may arise between these two entities. Ancillary revenue managers are the main participants in increasing unit-revenue whilst the sales and marketing department measures its metrics based on the sales volume of the core products. In simpler terms, Marketing is effective when bookings are made while Revenue Management is more effective when they turn away bookings that may cannibalise or dilute revenue from core products to push for higher rates. This might cause interdepartmental friction when goals are misaligned. This can also leave the shared customer satisfaction vision in jeopardy when both teams work in silos.

Unifying the Customer, Ancillary Revenue team and Marketing in product selection

It is ultimately important that buyer personas are not ignored when selecting a new ancillary product. Customers are the core beneficiaries from using the new services and their needs should shape the portfolio of products on offer. Ancillary revenue management together with the marketing department should be able to step into the shoes of their prospective market to determine what products to sell, be it hotel accommodation, tours, transfers, travel insurance etc. Buyer persona buying behaviors should be taken into account to build powerful marketing strategies with the so-called ‘new school’ marketing that focuses on gearing the right offer to the right customer at the buyer’s convenience.

When New Products are Introduced

The combination of a very skilled Marketing and Ancillary Revenue teams can efficiently drive every possible revenue and profit to the business. When introducing new products, ancillary revenue managers should work with marketing departments to ensure that all aspects of the products match the overall strategic vision. Instead of simply leaving the job to the ancillary revenue department to tackle, the marketing department should also take part in strategically selling these products. Both parties should have shared kudos to ensure that they are getting the business on the right track.

Tim Murungi

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