Leading Global Travel Distribution System:
Business and Market Share Stabilization
This case highlights our ability to leverage multiple internal and external datasets to build actionable predictive analytic capabilities in helping our client successfully defend its core business market share
One of our principals was asked to review subscriber pricing and distribution strategies for one of the largest worldwide electronic distribution systems for air, car, hotel and cruise reservations and tickets.
The corporate entity that owned and operated this global distribution system (GDS) had recently been spun off from its prior owner and was in the process of building new organizational infrastructure. However, under the terms of its spin-off, it was still obligated by contract to use the US sales force of its prior owner on an exclusive basis. Externally, the company faced new challenges, especially involving predatory pricing practices that three upstart competitors began to engage in, to quickly grab share away from our client’s US business.
On the technology side, the company was widely known for offering a functionally superior product set to its subscriber base. At the time of its spin-off, in an effort to preserve its product competitive edge, the company was in the midst of rolling out a new wave of innovative but expensive enhancements to its hardware, software, and network infrastructure. It hoped to pitch the resulting functional and performance benefits to subscribers in such a way as to offset offers of steep discounts by the upstart competitors, and thereby retain its most productive accounts without resorting to deep pricing cuts of its own. But by relying on an outside sales force that was largely unfamiliar with and not focused on the sale of advanced turnkey information services, it faced an uphill battle in stemming the subscriber share losses it was already facing.
On top of all of this, the company relied on the outside sales force to manually estimate and track its subscriber share. This was a tedious process that was further complicated by the sales force’s lack of attention and conflict of interest in reporting credible numbers back to the company. Further, the company had no mechanism in place to systematically audit the share numbers produced by its outside distributor.
Our principal worked successfully with marketing, sales, customer support, finance, and the outside sales force to help bring a four-year consecutive string of share losses to an end during the company’s third year as a standalone entity. Among the many projects led by our principal that contributed to this result:
- Employed predictive analytics and secured third party sources of market data, to independently estimate the company’s subscriber market share in real-time, at a highly granular and actionable level of detail
- Applied activity-based costing techniques to develop an updated financial model for use by the outside sales force to evaluate the profit impact of new and existing business
- Introduced performance-based subscriber pricing concepts, allowing the company to successfully defend its most profitable accounts
- Created an exception approvals structure whereby deals proposed by the outside sales force that fell below certain financial performance hurdles would require elevated levels of review and approval