Over the past decade, many companies have mastered the fundamentals of pricing, promotions, alliances, assortments and trade investment —revenue growth management’s five main elements. While that development has allowed Companies to reliably capture value, the landscape has shifted, and the bar is rising.
Constantly shifting global dynamics, changing consumer behaviors, advances in data and analytics, channel shifts, and higher expectations from investors such as activists and private-equity firms have created new challenges.
In addition, large retailers have embraced new data and technologies, and in doing so, have leapfrogged over manufacturers in their knowledge of what, how, and why shoppers buy.
Core Revenue Growth Management (RGM) capabilities have hence become indispensable - companies can’t operate effectively in the market without them, but they’re no longer a competitive advantage as well.
To stay ahead, Companies must pursue at least one of following three paths towards building next-generation revenue-growth capabilities:
· Strategic Revenue Growth Management – A longer term and more integrated approach built on the foundation of deep insights, to build better & more detailed / nuanced Pricing Strategy, Pivoting towards Higher-Growth Revenue & Profit Strategy, Focussed & Sharper Customer Reach-out & Activations.
· Precision Revenue Growth Management – A data & advanced analytics-based approach enabling the Company to get radically more granular in identifying opportunities and precisely delivering on them.
The increase in data availability (click-stream data, mobile-phone location data, longitudinal purchase history, for example), combined with advancements in analytics such as machine learning, can yield previously inconceivable insights. Companies can now understand shopper-level activities at particular retail outlets, identify microsegments within their consumer base, and zero in on granular profit pools in specific locations and channels. These capabilities can then allow Companies to deliver tailored, dynamic, and continuous omnichannel activities, such as store-level strategies and promos that target specific microsegments.
· Revenue Growth Management Capability Building at scale – Developing this organization-wide capability is dependent on broad capability building, achieved through rigorous & institutionalised training and certification across related team members and the broader marketing and sales organization.
This requires effective central ownership & coordination, often through a “Center of Excellence” (CoE) model. The CoE consists of a group of Expert practitioners who own and champion ‘Revenue Growth Management’ within the company, disseminate best practices, build capabilities, and partner with Revenue owners in each market and business unit to support them in building in-market Revenue & growth strategies. They help standardize processes, approaches, systems, and tools, resulting in higher speed and consistency of decisions, while the “answers” remain market specific.
If done well, the CoE influences local teams through the value it delivers and the pull it creates, rather than requiring direct reporting lines.
Success in Revenue Growth Capability Building at scale depends on top-team commitment, consistent communication, and a well-supported central team to coordinate and drive adoption globally. Pilots in a few markets are required to demonstrate the potential impact of this model and build the company’s Revenue & Growth approach.
Subsequently, Revenue Growth Management capabilities can be rolled out to all markets over a period of one to three years, depending on the size and complexity of the business. Having teams focussed on Revenue Growth in those markets during the implementation phase will be key to sustainably delivering impact and building capabilities.
Conclusion –
Advanced capabilities in pricing, promotions, assortment, and trade investment will only increase in importance as competition intensifies.
Executives should ask themselves:
· Are we getting full value from our Revenue Growth plans & Strategies?
· Is our net revenue realization outpacing inflation?
· Are our capabilities improving faster than our competitors’ and retailers’ capabilities?
· Are we integrating Revenue & Growth Planning into our overall strategy?
· Are we sufficiently leveraging data and analytics to grow our revenue?
· Do we adapt our Revenue Growth approach to online / social platforms?
· Are our Revenue Growth capabilities in all our markets and teams at the same level?
Depending on answers, companies should then commit to one or more of the three paths mentioned above toward Revenue Growth Planning & differentiation today, to position themselves well to become the winners of tomorrow.
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