What is Revenue Growth Management?

a cylcled system shown in cogs to illustrate revenue growth management
April 15, 2022

In the CPG industry, brands have to find ways of being innovative, adaptable, trend-aware, and sustainable without compromising revenue growth. That’s a tall order! If you’re not careful, your varied and plausible efforts can be the very ones that risk your growth. Because of these challenges, you often have to review and embrace again your concepts of revenue growth management.

What is Revenue Growth Management (RGM)?

Revenue growth management is about using analytics to sell the right product to the right customers at the right price in order to maximize your revenue growth. Static revenue is not going to keep your business afloat in these challenging times. So revenue management must now mean taking into consideration the challenges and still leveraging them towards growth.

Why is RGM Important?

Firstly, a clear, solid system allows you to

  1. understand your customers’ perception of the value of your product and align your offering to the expectations of each customer micro-segment.
  2. develop some dynamism in your product offerings, processes, and price mixes that enhances your decision-making at any one time.

Secondly, with both understanding and dynamism allowed for in your revenue growth management, you should be able increase your income and profit margins despite the turmoil.

However, we acknowledge that changes come rapidly in the CPG world (one minute it’s supply chains, then sourcing issues, then sustainability demands!). If you’re not prepared, it can be difficult to recover revenue growth after one of these challenging moments!

How to Improve Your Revenue Growth Management Practices

These are some questions to help you review what you do.

Do you have a good pricing strategy?

Remember that you need to develop a disciplined pricing strategy that closely follows market conditions and demand, especially at a segmented level. You need to continually review and re-evaluate your price mix, your trade mix, and your product mix in any single channel.

Have you reviewed your discounting and promotions?

Plan ahead for discounts and promotions to sell higher volumes of products at opportune moments and gain market share. But take into account the channels you sell in, where sensitivity to prices varies considerably.

Can you create a revenue growth management culture?

Basically, this is solving the problem at its core. CPG companies must ensure that everyone has a common understanding of what RGM entails and how they contribute. This is where analytic tools and actually using them comes in!

Revenue Growth Management Tools

There are always new challenges in CPG, but also new tools to help you keep ahead with RGM. These three tools work well together.

  • A decent, expandable CRM system that can also link with other tools and departments. This CRM ecosystem leads to more data on sales activity, plus marketing and operational opportunities. Removing departmental silos in your company improves your revenue chances in both regular and new markets.
  • Strategic and precision RGM systems with AI and ML at their core – to harness granular data and analytics in real time. This leads to enhanced decision-making and delivers opportunities more precisely. You can no longer rely on organic growth – the time lag can prove terminal!
  • A pricing tool to identify better price points in a more accurate process. It also offers leeway in pricing – when raising a price will not affect how many items you sell. You do need all stakeholders to align with this tool usage if it’s going to work well! Many will still have old-fashioned ideas about how to assess a good price.

However, revenue growth management strategies are continuously evolving. To learn more on how you can achieve revenue growth with proven current strategies for your CPG business, contact us today!

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Article Name
What is Revenue Growth Management?
We show you the importance of revenue growth management to beat challenges in the CPG marketplace today – and the RGM tools that will help you succeed.

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