Carrier TMSs and back-office LTL systems have been functionally structured around three things – 1.) order capture and scheduling pickups, 2.) managing our resources… mostly drivers and equipment in the form of order capture, routing, and dispatch, and lastly 3.) rating and billing. Less commonly integrated or deployed are secondary capabilities such as customer relationship management, dock management / cross-dock automation, and yard management solutions. In recent years, there have been many advancements in technical solutions for integration and visibility, user-interface/user-experience, and optimization. For some reason, all the things related to costing, pricing, creating rate agreements, quoting, and rating engines have been overlooked. Why is that? Why have workflow automation, system integration, and data algorithms trumped the sexiest thing in trucking? That’s right, Revenue Management.
Take the LTL industry, where the complex pricing, contracting, quoting, and rating capabilities are common traumas for industry veterans. Even with capable rating engines embedded within transportation systems, those tools need a near-final iteration of what those rates are going to be so they (TMS) can take action against them. The daunting process of developing those rates, obtaining approval, and onboarding the customer is left to a flurry of manual steps, Excel spreadsheets, and emails. Thankfully, these industry-wide software gaps have opened the door for new entrants to develop point solutions with Revenue Management capabilities to support these challenges, augmenting the process from prospect to first shipment booked and making surprising strides in the last few years.
Nestled comfortably between sales and operations, Revenue Management is a critical element. The ability to create value and speed will go a long way for internal teams as well as customer relationships.
Pricing Design and Margin Analysis
Whether it’s a true new customer engagement or an evaluation of existing business, it’s always important to start with process and outcomes. What do you need to do? How are you going to do it? What do you need to look at or evaluate? These are just some questions that can help define how you initiate the creation of the pricing you need to win. Having your process well defined is also important to many Revenue Management capabilities that will enable you to step away from the spreadsheet chaos. Let’s continue with that LTL example above where the outcome is to produce a satisfying set of rates for your customer to win the business. You’ll need some item or shipment data to indicate where you’re going and what you’re delivering (what is it, how big or heavy is it, special handling, etc.). In addition, it’s helpful to look at some current details on those lanes and what, if any, you are already doing there and how they’re performing. While the initiation of the pricing process is critical, it is arguably more important that pricing is regularly monitored. As costs rise over time, pricing will need to be adjusted to meet margin goals. Within this process context, Revenue Management then becomes an optimization and efficiency opportunity by enhancing this process with software systems and complementing it with additional data insights and opportunities traditionally challenging to see with a manual approach.
Customer Workflow and Proposal Automation
With your pricing and rates developed and ready to share, creating the proposal should be easy, right? Those same industry veterans mentioned earlier are rolling their eyes right now. Although typically a straightforward task at this point, proposal drafting requires time and attention that pricing teams don’t necessarily have. Then comes the approval process and constant back and forth communication with both internal and external parties. Like the points above around Design, extending your process, now with workflow implications, and then optimizing the more manual mundane tasks with Revenue Management offers clarity to an otherwise convoluted process. While it’s easy to assume that at this point a TMS would support the back-and-forth between your organization and customers, typical steps and communication within the pricing response and proposal process should be more aligned with your revenue tools. Very mature and capable TMS vendors such as TMW, Carrier Logistics Inc., and MercuryGate and their robust rating engines are naturally geared to shipments and while likely near-final iterations of those prices as rates are available, the simple fact is we’re not there yet. Conversely, systems such as Dyspach are designed to effectively operate in this space interacting with prospective customers and, when agreements are captured and finalized, integrate with your TMS to generate those rates.
Customer Relationship Management Integration
Customer Relationship Management (CRM) integration for Revenue Management in the market today is an important consideration for both tactical/everyday uses and strategic reporting. The fact is that your CRM system should be the central system for your customers through their entire lifecycle with your organization. Luckily, these newer revenue tools come with a high degree of integration capabilities for easy connections with established systems like Salesforce, Hubspot, Insight and Zoho or for custom integrations. Organizational teams shouldn’t have to succumb to a loss of time and value by having to jump between emails and spreadsheets to report on core CRM capabilities like lifetime value, conversion rate or churn rate. Workflows and data should seamlessly flow back and forward as pricing teams and account reps to actively manage the overall customer experience lowering both the acquisition cost and time within the sales cycle.
While Revenue Management capabilities have made an impact in the market, their integration into everyday processes has still gone largely under the radar. Traditional TMSs and other supporting logistics systems cast a large shadow but awareness and education for how newer systems can better augment what these existing tools do well is growing. Building pricing with a flurry of spreadsheets only to turn around a slog through a dizzying number of emails, phone calls and back-and-forth proposal revisions does not have to be your reality. Take the time to define your process and activate that process with these newer Revenue Management capabilities.
