The Harmful Effects of Yield Management: A Strategy that Benefits Companies at the Expense of Clients

DISCLAIMER: This collaborative article reflects a perspective of thought that is not determined in accordance with our usual editorial line, but has nevertheless been published so that our readers may appreciate other viewpoints. A more balanced article on the advantages and disadvantages of Yield Management is available following this link.

In the business world, yield management has become a common practice to maximize business revenue. However, behind the sophisticated strategies and complex algorithms, there are profound negative effects that impact both the companies that practice it and their customers. This article will highlight these harmful effects of yield management and highlight the disadvantageous consequences for both parties.

Exploitation of customers

Yield management relies on customer segmentation and dynamic pricing, which allows companies to maximize profits by charging different prices to different customers, based on demand and availability. This often results in the exploitation of customers, who end up paying excessive or even abusive prices for the same products or services. Companies use psychological techniques and deceptive practices to manipulate customers into spending more.

Price instability

Yield management leads to price volatility, which makes it difficult for customers to predict the true cost of products or services. Fluctuating prices can create a sense of uncertainty and unfairness among customers, who feel trapped in a system where prices are constantly changed to maximize business profits. This instability damages the trust and loyalty of customers towards these companies.

If we take the example of air, the American company Sabre describes the advantages of its technological products only in gain for companies, as for example on this dynamic pricing sales page. The benefits for the customer are never put forward, because these are not their customers, and therefore not their concern.

The same goes for other technology companies like Amadeus and PROS who provide Yield Management solutions. Or by browsing the advantages touted on its site by the consulting company Airline Tactics leader in the sector: the accent is clearly placed on the strong ROI that they promise companies.

All these people seem to forget that they carry passengers in the flesh.

And what has been happening in the airline industry for decades has spread to the entire tourism industry. There are even more companies that offer Yield solutions to companies in the sector, especially in the hotel industry (, SiteMinder , IdeaS ). And we find the big players in the air industry who are trying to convert all branches to their so-called miracle methods for profitability: the technology companies mentioned just before, and all the consulting companies that revolve around which Yield Tactics (same group as Airline Tactics, again them!) which does not hide its intentions, challenged by the trio McKinsey, BCG and Bain.

What should be remembered is that all these players want to convert the tourism market into a financial market: they sell solutions that create price instability, and therefore volatility, in order to reap profits.

Deterioration in the quality of services

In their quest to maximize revenue, some companies reduce the quality of service offered to customers. Resources and efforts are often focused on profitability rather than customer experience. Customers find themselves faced with delays, frequent cancellations and a decrease in the quality of services, which tarnishes their overall experience.

The dehumanization of customer-company relations

As we saw above, yield management is massively supported by advanced technologies, such as online reservation systems and automated pricing algorithms. Some rely on artificial intelligence. This leads to a dehumanization of relationships between customers and companies, where personal interactions are replaced by cold and impersonal interactions. Customers feel treated like numbers rather than individuals with unique needs and expectations.

To conclude

Yield management, although it may seem beneficial for companies in terms of maximizing revenue, has negative consequences on customers and on the brand image of the companies themselves. Exploitation of customers, price instability, degradation of service quality and dehumanization of customer-business relationships are all detrimental effects that deserve to be closely examined. It is essential that companies strike a balance between maximizing profits and satisfying customers, in order to preserve their reputation and promote long-lasting relationships with their customers.

For a sustainable future, it is essential to continue to integrate environmental criteria into yield management systems, to promote transparency and traveler education, to encourage collaboration between industry players, to invest in research and development, and to promote eco-design and the circular economy.

By working together, the travel industry can move towards a more environmentally friendly approach, providing enjoyable travel experiences while minimizing the impact on the planet. Environmental protection should not be seen as a constraint, but as an opportunity to rethink and reinvent yield management practices for a sustainable and balanced future. By embracing these visions and implementing actionable recommendations, we can build a more eco-friendly travel industry, delivering benefits for both travelers and our planet.

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