Navigating the Technical Stages of Implementing Revenue Growth Management (Part 1)

In a VUCA world, businesses looking to maximize their revenue should take into consideration the technical stages of implementing Revenue Growth Management (RGM) best practices and approaches. Businesses that fail to adopt a clear RGM methodology are more prone to spending more money without a clear and tangible ROI. Thus, it is crucial for businesses looking to maximize their revenue to take into consideration the technical stages of implementing Revenue Growth Management best practices.

In this blog, we will discuss the technical stages of implementing RGM, the key strategies for RGM, and how to assure the right implementation of RGM best practices.

What Is RGM (Revenue Growth Management) & Why Is It Important?

The web is filled with plenty of definitions of RGM. But what is it exactly?

To give you a clear depiction of RGM, imagine a Formula 1 race. You have:

• The driver (Sales)

• The engine (Finance)

• The aerodynamics (Marketing)

Each one of those serves a distinct purpose. Usually, they are all screaming in different rooms.

Given this analogy, RGM is the “Race Engineer” on the pit wall. RGM focuses on five levers, which are:

• Pricing

• Promotions

• PPA (Price Pack Architecture)

• Trade Terms

• Distribution

Within the same context, think of these levers as the car’s fuel mix, tire pressure, and wing angle. The purpose of RGM is to look at all the data and tell everyone exactly when to “pit” and how to drive. This results in not only driving fast, but also winning the race with the best margin because there was neither fuel wasted nor tires (profit) wearing out.

RGM is beneficial because it helps businesses win a fierce race (a competitive market), and by the best margin too.

What Are the Technical Stages of Implementing Revenue Growth Management?

To implement a successful RGM strategy, there are plenty of technical stages to consider to assure the success of your strategy. These stages include:

Choosing the Right Pricing Plan

Businesses looking to maximize their revenue need to have a clear pricing strategy in place. This is due to the necessity of choosing the right price. The right price gives businesses the best of both worlds by providing the utmost profit while, in parallel, assuring customer satisfaction.

Additionally, setting the right price helps businesses grow at a steady pace. The right price also prevents you from pushing customers away or setting a price too high or too low in comparison to competitors.

There are several pricing strategies that would aid you in setting the right price. To note a few:

Do Not Compete on Price Only

Though this might sound counterintuitive, setting prices based on the perceived value of your product enables you to charge more by highlighting unique features of your product, resulting in overall more profit.

Benchmark Against Your Competitors

Another point to consider is benchmarking your price against competitors. By benchmarking, we do not mean setting the same price; we mean staying within the frame so that the price is competitive, but also not so low that it would cost you profit.

Do Not Rely Only on Price Reductions

Price reductions alone might not result in the profitability you are aiming for. Hence, it is essential to prominently highlight the product’s unique features, reputation, or any edge of your product to set the right price.

Do Not Stagnate on Prices

Stagnating on prices might cost you a lot of profit or even competitive edge. Relying on a one-size-fits-all pricing approach is costly because it is critical that you adjust pricing in real time based on factors like market demand, competitors’ prices, seasonality, and market conditions.

Different Segments Require Different Prices

To set the right price, it is important to consider different segments and the different prices you need for each group. You need to set a price that caters to different segments’ purchasing power and capability.

Choosing the Right Communication & Distribution Channels

When implementing the technical stages of Revenue Growth Management, it is crucial to choose the right and best channels to boost income and maximize reach. It is paramount to conduct a plan that decides the best channels to pick that would maximize your profit.

An efficient strategy is one that helps you enter the market efficiently while keeping costs to a minimum and assuring customer satisfaction. To do this, there are certain strategies that are beneficial:

Varied Sales Channels

Selling your products across varied channels is crucial, as it enables you to reach more customers and increases the probability of them purchasing from you. When selling your products, consider selling them through different channels like online sites, physical stores, and direct sales to reach more customers.

Consider Selling Online

Selling your products online enables you to reach a wider audience, connect directly with customers, and gather valuable insights about consumer preferences and likings. Additionally, selling online makes it easier to reduce physical store costs and maximize overall profit.

Establish Good Relationships With Retailers

It is essential to establish good relationships with retailers to place your products in good locations, making them more visible to shoppers. Another advantage of establishing good relationships with retailers is that they can assist you with promotions and store displays.

Adopt (Direct-to-Consumer Strategies)

Adopting direct-to-consumer strategies allows you to control your brand and pricing while, in parallel, maintaining control over your relationships with customers by gaining an in-depth understanding of their needs.

Employ Data Analysis & Prediction Methods

Data is the difference between making your product fly or die off the shelf. Data is essential for businesses looking to translate insights into action. By employing data analysis and prediction methods, you give yourself a chance to foresee future trends and make smart changes to improve overall results.

There are several revenue and forecast techniques available that would aid you in maximizing your overall profit. These methodologies include:

Predict Future Earnings

By predicting future earnings through analyzing large chunks of data, market trends, and performance, it becomes easier to take action proactively.

Align Production, Inventory & Sales

By aligning production, inventory, and sales—and understanding customer needs while reducing wasted resources—businesses can assure supply matches market demand.

Use Data to Untap Hidden Opportunities

Another technical stage of implementing Revenue Growth Management is to untap hidden opportunities. By doing so, you detect risks, such as growing product categories and segments that would not result in the profit you are aiming for.

Real-Time Dashboards

Dashboards and visualization tools can help you get an overview of data and simplify complex information. In fact, our real-time dashboard allows you to make decisions based on data in real time without having to be a data expert. Simply talk to your data without friction or complications.

Conclusion

All in all, the technical stages of implementing Revenue Growth Management are plenty. To maximize profitability, it is essential to consider all these stages in your approach to maximizing your revenue and adopting RGM best practices.

The analogy discussed earlier in the article gives you a clear look into the role of RGM. It is crucial to think of RGM as an engineer who helps you win the race by making sure all parts of your car are ready to take off and overcome other cars (competitors).

We discussed what Revenue Growth Management is, the technical stages of implementing Revenue Growth Management, and how to win the race. To restate, we have discussed that:

• Choosing the right pricing plan

• Choosing the right communication channels

• Employing data analysis and prediction methods

are key to optimal Revenue Growth Management.

This is the first part of the technical stages of implementing Revenue Growth Management. Wait for part two soon.

Below is a table concluding what we actually noted to make it easier for you to get an overview of what we discussed.