What actually is RGM?
Before we describe the success factors of Revenue Growth Management (RGM) we have to clear up a few misunderstandings:
RGM is not the same as NRM (Net Revenue Management). NRM aims to optimise a company’s net revenue by taking into account the combination of selling prices, discounts and other cost factors to maximise profit.
NRM is also not to be equated with a staff position for price management, controlling or net-net and contribution margin optimisation. Thus, in our understanding, managers with these main tasks are not RGM managers.
What are the success factors of RGM?
RGM is a strategically sound approach that deals with the holistic, “cross-silo” optimisation of value creation drivers. (see figure).
RGM develops medium-term benefits for shoppers, retailers and the company itself. The perceived, competitive benefit of shoppers is an essential criterion for success.
RGM will only be successful if, beyond the methodical approach, a change in mindset and the ways of working sets in. This does not end with the brand owner, but involves the customer.
How to introduce RGM?
RGM can only be seen as a transformation task with a time span of 3-5 years. Step by step, however, better results are already achieved from year one onwards. Every investment in RGM is reflected in the contribution margin by a factor of at least 10.
It is not enough to develop beautiful presentations with concepts and then trust that the organisation will implement them. It needs to be accompanied by high-level RGM managers with the support of experienced consultants with implementation experience. Together they keep the concept on track and adapt it to further developments over time.
If you would like to know more, please contact us. On behalf of the international team, Peter Mißner will be happy to be your first point of contact.
Tel: +49 69 505 064 120
Mail: p.missner@global-solutions-europe.com
