CPG executives should ask themselves: Are we getting full value from RGM? Strategic RGM requires some investment in data and analytics, which can typically happen without a major step-up in talent in this area. While that development has allowed CPGs to reliably capture value, the landscape has shifted, and the bar is rising. The insights can also help a CPG company prioritize investments in capital expenditures and operating expenditures. It used test-and-learn approaches to design the offers (flavors, pack sizes, and promotion types) that would be most attractive to each segment: nonusers, light users, and potential switchers. This may be a "compound framework" problem requiring you to use a general market analysis framework. The proper revenue strategy aligns marketing, sales, and customer experience teams around a singular goal: drive profitability. Revenue Cycle Management (RCM) Market Growth Framework 2025 : Epic Systems Corporation ReleaseWire San Francisco, CA -- ( SBWIRE ) -- 01/30/2020 -- Global Revenue … In this episode, Ed Fry, Paddle’s growth ops, shares his five-star growth framework that describes how Paddle achieved 2,475% revenue growth. After emergency measures, adapt to the new reality. These are volume and unit price. If done well, the CoE influences local RGM teams through the value it delivers and the pull it creates, rather than requiring direct reporting lines. Il y a longtemps que je n’avais pas publié d’article sur les KPI (Indicateur Clé de Performance). Revenue growth management (RGM) helps companies increase profit and margin by targeting shopping and consumption occasions. Learn the right framework and see how it is applied from ex-McKinsey consultants. our use of cookies, and Some of the results Bob has achieved by applying the principles underlying SVC’s Framework for Growth: • Increased software sales run-rate from $4MM to $16MM in three years and repositioned company to support sale • Reversed declining software business unit, growing sales from $20MM to $30MM in one year by focusing value delivery and market offer together • Saved and rebuilt crash+burn software … collaboration with select social media and trusted analytics partners By Yaroslav Lehenchuk 20 min . Example: The formula for calculating revenue growth is: Amounts shown in thousands (000’s). It does this by getting the functional strategies of sales, pricing, marketing, product management, and human resources into alignment with the CEO’s strategy and the external marketplace. If you would like information about this content we will be happy to work with you. Good growth not only increases revenues but improves profits, is sustainable over time, and does not use unacceptable levels of capital. This requires effective central coordination, often through a global “center of excellence” (CoE). In this article, we describe the three paths, how they add value, and how CPG companies can decide which one is right for them, enabling them to generate several additional percentage points in return on sales. Phase 1: Stabilize. The company’s in-market RGM capabilities were lacking: each market used ad hoc tools and analytics, data were limited, and there was only a handful of fully dedicated RGM resources. Growth strategies can focus on a product, a division, or on the company as a whole. Good growth not only increases revenues but improves profits, is sustainable over time, and does not use unacceptable levels of capital. In reality, some promotional events were effective—convincing certain consumers to try the product and then become loyal consumers, for instance—while others were value destroying, providing lower prices to loyal consumers who would have been willing to pay the full price. How does the client’s sales growth rate compare to that of the competitors in the market? cookies, McKinsey_Website_Accessibility@mckinsey.com, Visit our Consumer & Shopper Insights page. Recognizing the success others had achieved through RGM, the company decided to expand its RGM capabilities into a key lever for company-wide transformation. We'll email you when new articles are published on this topic. TOPO’s three-phase strategic framework for revenue growth helps companies come back from a crisis event with a plan to scale for growth. Revenue Engine Performance Checkup helps you assess revenue growth chokepoints using a 26 yes/no questionnaire based on our Tuning Your Revenue Engine management model. What are the client’s marketing and sales channel activities? With your best customers identified, and your Decision Making Unit mapped, I focus on increasing my client’s average transaction value. TIM MORNINGSTAR: Pricing and revenue growth management, more broadly, is one of the most powerful, yet simultaneously difficult, capabilities for consumer product companies to master. Something went wrong. by selling them add-on/bundled products. This empowered them to identify RGM opportunities and develop detailed recommendations and execution plans. The categories can further be organized using an Ansoff matrix. This revealed not just the impact of the promotion but also its drivers. The process of identifying profitable growth opportunities most often begins with the Core Business1, that is, the products, services, customers, channels and geographic areas that generate the largest proportion of revenue and profits. Another popular web-based revenue model is the affiliate revenue model, which works by promoting links to relevant products and collecting commission on the sales of those products, and can even work in conjunction with ads or separately. Revenue cycle management implies the refinement of a billing process. An ID-led revenue growth strategy guides the building, test, launch and evolution of your company’s integrated revenue program, including: Program goals, KPI’s and other impact measures Target audience definition including market segments, ideal account(s), buyer personas and customer journey maps Success in RGM capability building at scale depends on top-team commitment, consistent communication, and a well-supported central team to coordinate and drive adoption globally. What is the state of the respective industries? We call this path strategic RGM. Evaluate their effectiveness. Advanced capabilities in pricing, promotions, assortment, and trade investment will only increase in importance as competition intensifies in the CPG industry. Depending on the answers, companies should then commit to one or more of the three paths toward RGM differentiation today, to position themselves well to become the commercial winners of tomorrow. Revenue increased $9.0 billion or 12%, demonstrating growth across our consumer and commercial businesses, primarily due to higher revenue from server products, Xbox Platform, Commercial Cloud, and Surface. Recognize the severity of the crisis and respond. Where do you go from here? The key success factors for strategic RGM include a shared vision and cross-functional ownership across the sales, marketing, supply-chain, and RGM teams, as well as support from top management. The key applications of the framework include cases dealing with declining revenue, stagnant growth, and strategy change. Kevin Bright is a partner in McKinsey’s Denver office, Josef Kouba is a partner in the Vienna office, Sheldon Lyn is a partner in the Southern California office, and Pieter Reynders is an associate partner in the Brussels office. REVENUE GROWTH STRATEGY FRAMEWORK BY FORMER MCKINSEY INTERVIEWER. Over the past decade, many consumer-packaged-goods (CPG) companies have mastered the fundamentals of pricing, promotions, assortment, and trade investment—revenue growth management’s four main elements. A global CPG company, with a large product portfolio spanning all price tiers and a broad range of market types and channels, was struggling in the face of volatile regulatory, foreign-exchange, and economic conditions. They help standardize RGM processes, approaches, systems, and tools, resulting in higher speed and consistency of decisions, while the “answers” remain market specific. View a new case interview Revenue Growth Case Framework video exclusively in the Subscriber section. Phase 3: Grow. To address this problem we created The Revenue EquationTM. Increase your share of wallet with your existing customers e.g. This product has grown to occupy around 15% market share in the organic milk market, however growth is slowing in the market overall. Please try again later. A framework for distinguishing good from bad growth is a crucial element in generating revenue growth. Global Benchmarking AI Framework Market Revenue, Growth Rates, and Industry Challenges 2025 Qyresearchreports include new market research report Global Benchmarking AI Framework Market Size, Status and Forecast 2018-2025 to its huge collection of research reports. Improved insights are generated in each of the following areas: With regard to consumers and shoppers, for instance, strategic RGM calls for an in-depth understanding of “purchase structures”—how a shopper navigates the category, what occasions the product is used for, and how the shopper makes trade-offs. Strategic RGM thoroughly equips the company for joint business planning and negotiations with retailers by clearly demonstrating and quantifying business and shopper benefits to the retailer. of Transactions’ within the sales formula. Having RGM teams in those markets during the implementation phase will be key to sustainably delivering impact and building capabilities. Providing seasonal discounts and purchase timing discounts is another way to incentivize conversions through reduced pricing. If the product is a commodity, then customers are likely to be. Strategic RGM is built on a foundation of deep insights, enabling a CPG company to derive more granular choices about where to play (Exhibit 2) and how to win. Phase 1: Stabilize. Use it to rapidly evaluate your entire operation to see exactly what obstacles stand between you and revenue growth! Furthermore, the company was also able to provide a new suite of insights to some of its retail partners, significantly strengthening those relationships. How should they go about it?” Gather the necessary information about volume and price to … The New Framework For Revenue Growth: Stabilize: Organizations realize the severity of the pandemic and economic crisis and take emergency measures to stabilize business. Thus, he didn’t have a way to learn and adapt to new inputs. Revenue growth is the increase (or decrease) in a company’s sales from one period to the next. In short, a revenue stream represents one of the specific ways you’re making money (i.e. Do we adapt our RGM approach to online? Duration: 18 mins A revenue growth management framework is a key unlocking # ROI and creating better customer experiences. Home / Revenue & Growth / AARRR Framework: The Best Startup Metrics for Pirates; AARRR Framework: ... he created this framework first and foremost for startups. The result was a significant increase in sales and household penetration for the category. In sales, I love authors like Jeb Blount, Larry Levine, and Lee Salz. Global Biogas Market Future Trends, Revenue Growth, Profitability & Leading Players, Forecast To 2026 : Bebra Biogas, Schmack Carbotech, Mt-Energie, Pentair Haffmans; Omega-3 Supplements Market Key Player Analysis By – Vitafusion, Nature Made, MegaRed, 365 Everyday Value, L\’il Critters, Spring Valley, GNC, SmartyPants & more Many have embraced new data and technologies, and in doing so, have leapfrogged over manufacturers in their knowledge of what, how, and why shoppers buy. Learn about how Revenue Growth needs of the organization feed the customer journey, the first part of The Revenue Ecosystem Framework by DemandLab. More companies are realizing that net revenue management is a critical capability that offers a more sustainable route to growth. SBI’s Revenue Growth Methodology allows you to accelerate your rate of revenue growth. The report offers a … SBI’s Revenue Growth Methodology allows you to accelerate your rate of revenue growth. The company also invested resources in RGM enablers such as data, centralized sets of tools, and performance tracking. Because the demand is high and remains high. Which product segments have the biggest potential? One path toward greater RGM impact is to elevate RGM to shape the company’s commercial strategy rather than just enable it. Pilots in a few markets are required to demonstrate the potential impact of RGM and build the company’s RGM approach. What is the lifecyle of each product? of Transactions = Total Income. TIM MORNINGSTAR: Pricing and revenue growth management, more broadly, is one of the most powerful, yet simultaneously difficult, capabilities for consumer product companies to master. 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