Revenue Analytics' CEO Proposes Solution for Auto Industry Incentive Woes

ATLANTA--May 2, 20054, 2005--Robert G. Cross, Chairman & CEO of Revenue Analytics, Inc. and author of the New York Times Business Best Seller Revenue Management, appeared on Autoline Detroit with host John McElroy Sunday morning. Autoline Detroit is streamed here on TACH. Cross discussed the fact that the use of vehicle incentives such as customer cash back and subsidized interest rates are almost out of control, with potentially devastating consequences for the automotive industry.

"The average incentives are approaching $3,000 per vehicle. This year, over $50 billion will be spent by manufacturers to entice purchasers. Managing the incentive budget clearly will mean the difference between profit and loss for most manufacturers."

He then discussed the potential use of Revenue Management techniques, which have generated tens of billions of dollars in revenue for travel and transportation firms, as a solution to automotive manufacturers' incentive woes.

Revenue Management, also known as Revenue Optimization, is the science of predicting customer demand and optimizing the price and availability of a product so that the right product is sold to the right customer at the right time for the right price.

Revenue Optimization techniques can accurately measure customer sensitivity to incentive programs. By avoiding discounts in markets where they are less effective and discounting more aggressively in more price sensitive markets, firms can build market share without increasing total incentive spending.

"Most manufacturers use incentives in a 'carpet-bombing approach.' They have broad incentives that apply across-the-board. The more savvy ones are beginning to use Revenue Optimization to target incentives to precisely where they are needed. More like a laser-guided smart bomb."

"Incentives shouldn't be viewed as a trade-off between volume and margin. With Revenue Optimization, automotive manufacturers can have both."

The appearance can be viewed at www.autolinedetroit.tv.

About Revenue Analytics

Revenue Analytics is a business consulting firm that assists global enterprises in bringing science and discipline to decisions that impact revenue. It was founded on the notion that great companies are skilled at creating value for their customers, but often fail to fully extract the value created. Using sophisticated business analytics, the firm assists clients in optimizing revenue by quantifying customer perception of value in each micro-market segment. Revenue Analytics' principals have used these techniques to help more than 100 previous clients uncover over $10 billion in additional revenues. For more information, visit www.revenueanalytics.com.