Revenue / 05.10.23
Protect Group’s Franks on How Dynamic Pricing Protects the Bottom Line and Boosts Revenue
Teddy Durgin
David Franks
David Franks, Finance Director at London-based Protect Group, was an Inspiration Stage speaker at the recent INTIX 2023. His area of focus? Dynamic pricing and how it has been shaping our everyday pricing world. The experience is still very fresh in his mind.
“INTIX 2023 was an eye opener for me personally, as it was my first time at the conference,” he says. “We launched our dynamic pricing model in 2022 and were seeing much better conversions with increased revenue, albeit at lower average prices. Dynamic pricing for entertainment and sporting events is more challenging because of the interaction with fans who get very cross if any prices are hiked. On the other hand, for theatres, trips, tours, mass participation, and various events, dynamic pricing can ensure your venue is sold to capacity at optimal prices. I think attendees realized that their pricing strategies now have the ability to maximize revenue through programs which react very fast to changing conditions, whilst still maintaining complete control over prices.”
Judging from the wealth of information Franks was able to impart on those who attended his session, the event was a real “eye opener” for INTIX members, too. He advised ticketing professionals that the biggest reason for them to use dynamic pricing is “greater revenue by maximizing sales opportunities, resulting in higher profits to reinvest within the ticketing business and its people. It is not unusual to report 20% plus increases in EBITDA [earnings before interest, taxes, depreciation, and amortization] after dynamic pricing has been introduced. Our dynamic pricing centers around the cost for the refundable option and relevancy by providing tailored customer messaging and does not affect the price of the underlying ticket. The product is always optional [and] aims to provide a price to the customer that is often lower than the traditional fixed price model.”
Franks speaks from the voice of experience. He qualified as a chartered accountant — the U.S. equivalent of a certified public accountant (CPA) — before earning his MBA at the Wharton School of the University of Pennsylvania. He joined Chase Bank in New York on the lending side. “I had always wanted to own my own business, and when my American-born daughter was two years old, we returned to London where I set up an accounting practice from my spare bedroom,” he says.
This led him to write several books on business and tax, including a best-seller for The Economist. From there, he formed a partnership with Bill Blevins, and together they built a wealth management business with $1.5 billion under management, 150 staffers and 20 offices throughout Europe. They sold the business, and Franks tried unsuccessfully to retire.
He says, “After a few years, I met the dynamo known as James Hastie who had set up a refundable bookings service for booking agents and event organizers in ticketing, travel, mass participation, etc. In 2018, I invested in his business in order to roll it out globally and became the CFO for a year. I’ve liked the business so much, I’m still here! My responsibilities include finance, legal, governance and supporting James.”
The Protect Group today consists of approximately 200 employees specializing in sales, distribution and servicing refundable bookings. “One of the things I have always liked about our business is that we are not a cost center for our clients,” he says. “On the contrary, we generate profits for them as soon as they integrate in the booking flow with our platform, and the time to value is very short by the use of some clever software. Our clients’ Protect revenue goes straight to their bottom line and often leads to a significant increase in their revenue per ticket and overall EBITDA.”
It is with Protect Group where Franks has become well-versed on the ins and outs of dynamic pricing. So, what are some common variables that factor into dynamic pricing, particularly with regards to live events? His reply: “Dynamic pricing for live events has to be handled sensitively because of the possible adverse reaction of genuine fans, which can lead to the politicians getting involved as we have seen from hearings in Washington and laws introduced in many states and countries. There are standard strategies revolving around different services — seat position, in-house entertainment packages, VIP benefits — which enable dynamic pricing to play a more active role. The refundable option with dynamic pricing always leads to increased revenue.”
He continues, “Note that we do not promote CFAR [Cancel For Any Reason] as our experience is that it leads to empty seats and an exorbitant price with a very small percentage of customer adoption because of the high cost to purchase. Refundable bookings instead offer security to the end customer to buy tickets early, in the confidence that in the event of illness, transportation problems, family issues and so on, they will get the entire ticket price refunded including all fees.”
Franks went to discuss how dynamic pricing has become an even more valuable tool post-COVID. “Any additional revenue is coveted, and customers are far more interested in refundable options than ever before,” he says. “It is worth noting that dynamic pricing relies on dynamic API, which is a superior system enabling many more live changes during the booking flow to be made beyond just changing the price.”
Looking ahead, Franks anticipates many more businesses will adopt segmented dynamic pricing as they realize that it achieves maximized revenue instead of leading to higher prices. “It is a myth that dynamic pricing always leads to higher prices,” he says. “Dynamic pricing is not new. Airlines and hotels have been leveraging dynamic to provide better value for customers for decades, and we see this becoming more widely adopted within the ticketing industry. It will also evolve into tailored sales messaging in the booking flow. For example, you may include live news reports such as ‘Runners World reported yesterday that 15% of all athletes pull out within 7 days of their event because of injury’ just before the check-out. This will highlight the relevancy of the purchase to the consumer and lead to higher customer adoption.”
You May Also Like
Want news like this delivered to your inbox weekly? Subscribe to the Access Weekly newsletter, your ticket to industry excellence.
Tags: Revenue , Inspiration Stage