The East Riding of Yorkshire Council’s culture and customer service was looking for skills, capacity and expertise to review commercial operations, including income, pricing and marketing of a range of leisure and tourism services offered in the East Riding, with a focus on leisure, coastal and foreshores. The aim was to provide capacity in developing pricing and marketing strategies and to identify new income generating opportunities. This case study forms part of our productivity experts resource.
"The application process and selection of Peopletoo was very easy and efficient. Once work began the process worked really well and stimulated effective discussion throughout the team involved. Feedback was relevant, clear and concise and resulted in real opportunities for improvement," says Ian Rayner," head of culture and customer services said.
The challenge
Like most local authorities, the East Riding of Yorkshire Council has had to deal with significant budget reductions for several years. To-date this has been managed through a combination of service transformation programme work, service economies, increased charging and trading and the use of reserves. The council still needs to make further significant savings and this will require more challenging service transformation and higher degrees of commercialisation to minimise reductions to service delivery.
The savings required of Culture and Customer Services to help the council meet target savings amounted to: £2.777m. (2018-2021). It was decided that to support this, a forensic review of commercial operations was required to identify additional income / productivity initiatives. This review would look at:
- Income lines across different elements of culture and customer services
- Commercial operations in leisure and tourism services including pricing, sales and marketing strategies
- Development of strategies for increased income generation. For example, consider pricing policies such as differential pricing; consider new markets.
- New commercial opportunities in the services
- Any further service economies and efficiencies
The solution
Culture and Customer Services established a project team and commissioned an LGA funded expert to undertake a high-level review to identify commercial opportunities in three specific service areas:
1) Pricing and marketing approach at South Cliff Holiday Park
2) Current and potential retail activity in Leisure Centres
3) Commercial opportunities for foreshores and coastal activities
The review involved stakeholder interviews, site visits, analysis of strategies, budgets and performance information provided by the Council, and desk top research. The review was undertaken between April and July 2018 and a final report was presented later that year (see beneath for the executive summary).
The impact
The review recognised that the culture and customer service has a clear commercial ambition and has created a commercial environment for the services within the scope of review. There is a good focus on revenue, costs and profitability/net contribution before overheads and social value creation is a positive strategic driver.
Additional income expected as a result of the project was £910k over two to four years. To date the 2018/19 target of £310k has been achieved. The 2019/20 target of £300k is on track and a further £300k is anticipated over the next two years (2020-22) which is hoped will be exceeded.
The work has assisted in ensuring that income is sustainable and targets are increasing above inflation across the board.
The main recommendation from the review was to develop a strategic commercial framework to support the further development of the commercial approach. A model of commercialisation is to be used which considers operational, supply chain, collaboration and trading activities (see beneath the model of commercialisation diagram).
In addition, it identified the following key potential opportunities to further commercialise the services reviewed:
- South Cliff Caravan Park – focus on marketing to drive up volumes, differentiate prices with new extension, review of pricing after first full year of extension, consider a cloud based booking system, invest in web site development, consider additional marketing opportunities, sub leasing and operation of the entertainment venue
- East Riding Leisure – develop a consistent approach to pricing and stock management, do a detailed cost analysis and review pricing options for members and pay by visit, consider price differentiation across centres, look at procurement of supplier partners and contracts, extend the activities offer and develop business cases for further capital investment to develop certain leisure centres and retail units
- Foreshores and Coastal – review chalet hire seasons and prices, hire of additional equipment, review current schemes such as All Ride Scheme and land Train, consider paid for beach events and investment in additional play facilities and fairground rides.
How is the new approach being sustained?
The outcomes will be sustained through the training of managers in commercial strategy, pricing and marketing and the development of action plans from the report recommendations.
Whilst elements are already in place in some services, there needs to be a more structured overarching approach that will then facilitate the next stage of growth in each service. The next phase of growth, which will build on the successes to date, requires an enhanced overarching commercial framework and approach that is applied to all services in scope and could be applied to other commercial services in the council.
How will the assignment be evaluated?
Through existing project process and monitoring – i.e. council project management principles – a project evaluation report will be produced to include benefits, impact, risk and any lessons learned.
Lessons learned
The council engaged positively and proactively with the review and staff were committed to providing excellent services for the customer and a financial return and contribution to the Medium Term Financial Strategy.
It was important to have focused project support in place to enable the productivity review to run smoothly and be as effective as possible, particularly in terms on ensuring that the expert was able to access all of the data and people they needed to see in order to complete the review. As a result, feedback was that the council had engaged positively and proactively with the review. It was also recognised that staff were committed to providing excellent services for customers as well as improving the financial return of their services and contributing to the medium term financial strategy. This ethos will enable a more commercial approach to be adopted more easily in the service.
The council needs to provide clear direction on the ambition and outcomes required from the services and then provide the autonomy and support within a controlled framework to enable the management team to deliver the future growth plans.
The council needs to build on the success to date and develop the next phase of a business growth strategy and develop common commercial functions and disciplines in sales and marketing; customer sourcing and retention; creating brand and financial management. Skills will be developed through continual personal development and training linked with constant review, performance monitoring and target setting.
The service already appears to have a commercial culture and environment, and this could be further enhanced. The council is to establish a commercial skills and expertise programme to develop further current managers and staff and also ensure that sufficient capacity is employed to support the longer-term revenue growth ambition; this is being taken forward by the commercialisation board and will include consideration of training available through the LGA and other providers.
There is no clear price and costing framework and these principles are not consistently applied and reviewed continuously given the competitive nature of the market in which these services operate.
Contact: Ian Rayner, Head of Culture & Customer Services (email [email protected])