COVID-19: Executing Crisis Revenue Management Strategy

As the COVID-19 health crisis continues to develop, we’ve watched as massive disruptions change the way we live, work and do business—the coronavirus economic impact is at the forefront of everyone’s business planning.

The Importance of Business Continuity Planning

For many businesses, COVID-19 has highlighted the need for business continuity planning (BCP), to enable ongoing operations during and through the uncertainty of a disaster/emergency of this calibre. As part of BCP, we believe pricing and revenue management teams also need to prepare a pricing and revenue strategy that addresses coming uncertainties.

For most companies, there are two typical kinds of uncertainty that we focus on trying to understand and quantify:

  • Competitive Uncertainty: Not knowing what the competitor performance will be
  • Preference Uncertainty: Not knowing what criteria buyers are evaluating or what the customer preference is

There are many methods through which we help estimate and quantify these two challenges for businesses. Unfortunately, the value of quantifying competitive and preference uncertainty becomes diminished in a time of crisis.

Take, for example, companies that sell toilet paper. Are consumers currently debating if the extra cost for quilted or two-ply is warranted?  No. As we’ve seen, shelves are bare. The focus is on getting the product to retailers and ensuring shelves are stocked rather than understanding the market and granularity of customer dynamics.

Traditional approaches to revenue management being out the door, we have a few tips to keep pricing and revenue management professionals prepared as we continue to navigate the COVID-19 crisis in the coming weeks:

1. Analyze Demand Forecasting Models Daily

During a crisis, changes that previously may have taken weeks are now happening in a matter of days or even hours. The accelerated speed of change requires that demand forecasting models be updated as frequently as possible, to respond to a highly dynamic landscape.

We recommend getting into a cadence of updating your forecast daily as a way to keep up with changing circumstances. Understanding up-to-date demand will ensure that vital spending decisions are made with the most accurate information.

2. Wise Discount Pricing

Study after study has shown that trade spend and discounting rarely break even on the investment made. Many companies see discounting as a must-have and focus on spend efficiency, but in times of crisis, the breakeven can be even harder to come by.

We recommend that companies take time to evaluate what discounts are in the market and consider what discount pricing is absolutely essential. After all, plans that were prepared months ago (pre-crisis) may no longer be applicable. For example, does toilet paper really need to be on sale at this moment? Probably not.

3. Focus on Execution

At this moment, many organizations are focused on keeping the lights on and business moving. Price promotions, shopper programs and incentive selling take up far too many resources that are better utilized, ensuring the business is moving.

Take, for example, grocery stores. At this moment, they are focused on keeping the shelves stocked with product, do they also have time to execute promotions and programs? Unlikely.

4. Be a Communicative Partner

Communication and honesty are paramount during times of uncertainty.

Keep your customers and suppliers at the forefront of communication. They should know what they can expect from you in the product, service and execution standpoint.

Note, however, that some customers might take advantage of this time and try to delay aligned actions for months (such as a price increase). You should be a partner in the truest sense of the word, but also be vigilant of your business’ ability to thrive through this challenging time.

5. Invest in Social Good

Finally, consider the impact your company can have on society as a whole. Yes, revenue management’s goal is to drive maximized revenue and profit; however, now is not the time to put this goal above social good.

There will always be individuals taking advantage of a difficult situation by selling $60 rolls of toilet paper from the trunk of their car. However, companies looking to profit from a crisis this way need to re-evaluate their social responsibility. After all, consumers are more vigilant and informed than ever before, and they will not forget your actions when life returns to normal.

ABOUT THE AUTHOR  Michael Stanisz is a Partner at Revenue Management Labs. Revenue Management Labs help companies develop and execute practical solutions to maximize long-term revenue and profitability. Connect with Michael at

Avy Punwasee


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