Focus on Revenue Control - Creating a System for Revenue Control

January, 2002

Can you spot the difference between a system for revenue control and a Revenue Control System? Years ago these might have been interchangeable phrases, but that's not the case today.
Revenue control hardware is commonly described as a Revenue Control System. This usage has watered down the term. While hardware plays a vital role in tracking revenues, it doesn't encapsulate a complete system.
A system for revenue control is a process for managing revenues. This process involves measuring, auditing, managing and improving an entire parking operation. These four elements are somewhat cyclical. For every improvement, one must go back to measuring results thus starting over the process.
Stage 1: Measure
Measurement entails the day-to-day tracking of individual sales. For most parking operations this usually involves a large quantity of cash and credit cards, though the fraction and number of different payment methods (and sometimes even currencies) can seem endless.
Equipment -- such as fee computers, ticket spitters, pay stations, parking meters and honor boxes -- forms the critical basic building blocks for collecting and tracking revenues.
Selection of individual hardware and software is vital not just for administering the day-to-day parking operation, but more so for producing the right information needed in later stages of the system, specifically auditing and management. As improvements are made to the system, the revenue control equipment must be flexible enough to alter the output of reports, and collect previously unmeasured results.
Stage 2: Audit
Audit is an intimidating term, and auditors are sometimes intimidating people. The fact is, however, that audit control is critically important to the health of the entire system.
Audit is simply a means of putting checks and balances in place to ensure that the information on record is a precise reflection of actual events. Vendors often include features for control and security of revenues (both physical and electronic) during the data collection stage, as well as after the day's receipts have been closed. These features make the audit job significantly better.
An unfortunate fact is that theft detection is the primary reason for audit control.
But auditing has another benefit. It ensures that the measurements are accurate, and in line with expectations. Regardless of whether the audit is done electronically or on paper (or preferably both), the audit confirms that the measurements of the first stage are correct.
Stage 3: Manage
The third stage involves management.
This is the most important stage, and typically the one where most of the systems for revenue control will fail.
Why might the system fail?
There is a grave misconception in thinking that administration is management. It's not. Administration is the passive activity of maintaining the system in its current state. Management is active: deciding what the system could become if operating conditions change.
Managing a system for revenue control involves converting measurements into true performance indicators. These indicators are called "metrics."
Part of a manager's job is to determine which metrics (the things to measure) truly represent the activities and objectives of the system. This is not an easy task, because activities and objectives vary from operation to operation.
Simple metrics come directly from the raw data. Numbers such as the total revenues, which days of the week are busiest, and which staff members are most accurate in balancing their totals serve only to confirm a "gut feeling."
The manager seeks metrics that are indicators of performance. These metrics are derived from measurements. Such indicators might include the average duration of stay, the turnover per stall, or the revenues per device in the system. These metrics provide true insight into the management of the system.
Now for the true management: what action(s) can the parking manager take in order to affect the outcome of these performance indicators?
Some of the most common questions: How can I make the revenues different? What would be the effect of a cash-only line or credit-only line? What pricing structure is required to fill the garage to capacity? How can delays at gates be minimized?
Stage 4: Improve
The final stage in the system is improvement. Management decisions nudge the system in different directions in order to achieve desired performance.
Improvements should be incremental, so that they can circulate through the stages of measurement, audit, and further management to see if a desired result is achieved.
Multiple, simultaneous improvements actually slow the process, and are less desirable. These result in the entire system being shaken, and significant time may be required for things to settle down so that effective measurement and audit can begin again.
During each round of improvement care must be taken to ensure that appropriate measurement and audit steps are not compromised. Sometimes the vendor's equipment is not capable of providing the required measurement or audit changes for each improvement. It is important to be aware of these limitations and consider equipment replacement if necessary.
Purchasing revenue control equipment is a singular event in a much larger commitment.
Building a complete system for revenue control is a time-consuming process. It takes months to build a good system, and years to build a great system.
Creating a true system for revenue control involves an obligation from the entire parking operation -- customer service staff through management. For the parking organization, the rewards harvested from this commitment are evident in terms of higher revenues and satisfied customers.

Blake Laufer is a dedicated follower of new technology and vice president of Research and Technology at T2 Systems Inc.