What iteration of your revenue growth management (RGM) strategy are you at in your current business? 1.0, 2.0, 3.0 or maybe more? The more clients I speak to, the more I see failed RGM strategies. Why are they failing and how can you make sure yours succeeds? Read on to find out more.

Revenue growth management teams are not a new concept. In recent years there has been a renewed focus on leveraging this function to maintain margins and reduce costs. The rise of RGM is not solely a consequence of COVID-19, though the pandemic has certainly played a part, but with more granular data now available RGM teams can provide a focused analysis of consumer habits within a competitive market. Increasingly, companies are integrating the role of RGM teams into their overall customer strategies to maintain and grow profits. A key aspect of this integration is ensuring that RGM teams work closely with sales teams.

Where it can go wrong

RGM teams are heavily reliant on data, whereas commercial sales teams may not be as proficient in this area. While this may sound generalized, it highlights a key factor that differentiates the two functions and contributes to the disparity between them. However, this is not the only challenge when integrating RGM into commercial plans.

Introducing new perspectives into a customer business plan can face resistance from those opposed to change, whether it is a long-established team seeing their work being altered or an individual who finds the change challenging to their current status. Building negotiation skills within these teams can help bridge the gap. Other constraints include a lack of RGM expertise, a discipline that not all companies have mastered or understand how to utilize effectively.

To be effective, RGM roles cannot work in isolation. They need to collaborate with other commercial roles, including those that impact profitability and corporate strategy implementation. Overcoming these barriers requires fostering an organizational environment that embraces change positively and is willing to adopt new or different approaches.

Perhaps the reasons why the role has not fully taken off in all organizations has been down to the above factors inhibiting the integration of the function. Research into failures of the RGM role has seen it as a “quick win fallacy.” The idea that a new concept will be adopted by the entire organization and achieve impactful success in the short-term is picturesque but unattainable.

Just like a negotiation, a short-term approach may bring about a win but will not achieve long-term success. Any win as a part of an RGM strategy should be celebrated but business executives should not allow the immediate successes to create complacency amongst the commercial team. Long-term changes in strategy require consistent effort across the board, involving negotiation consulting or training.

Another failure amongst RGM strategies is the idea that just because it looks good to us means that the customer will agree entirely. This is not always the case. Akin to negotiation, we need to understand what the counterparts’ interests are, the interests that drive their behaviors and their positions in any meeting. Without this understanding, our new and shiny strategy that will bring about success for everyone will miss the mark for the customer. All the hard work you have done in the background, aligning the strategy amongst the commercial teams in your organization and building a rollout plan, will hit a brick wall if all you have is a myopic focus on the benefits from your perspective.

A critical part of implementing any new strategy with a counterpart in mind is remembering that it is the individuals opposite you who will say yes or no to the strategy being adopted by them. And that is where negotiation plays a role, enabling you to get to a yes both internally and externally.

When it works

Negotiation is crucial to the setup and implementation of an RGM strategy, to ensure teams work harmoniously in their planning. Without collaboration, the process can strain customer relationships and create internal conflict. The traditional siloed approach is no longer effective in driving profitability.

To combat misalignment between teams, companies can:

Co-create customer strategies. Develop a unified approach with input from all relevant teams.

Align, offer and design. Conduct internal sessions to gather ideas from multiple functions.

Establish rules of engagement. Create decision-making matrices that provide flexibility while maintaining key guidelines.

Include RGM in customer visits. Demonstrate a growth-focused mindset that benefits both supplier and customer.

Demystify data. Create an environment where data is accessible, analyzed and presented in a user-friendly format for commercial roles.

Design a negotiation framework. Develop a process that considers multiple functions, outlining cost structures, promotional guidelines and decision trees.

Collaborate on annual business planning. Work with RGM teams to segment customers and develop bespoke negotiation strategies and goals.

There are numerous ways to integrate RGM teams productively within an organization. Failing to provide this environment can lead to misalignment, miscommunication and unmet targets. The key to a successful RGM strategy lies in viewing it as a long-term initiative rather than a quick fix, understanding the customer, and ensuring seamless integration with other commercial functions. By doing so, organizations can unlock the full potential of RGM and drive sustainable growth in an increasingly complex market environment.

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About the author

Adam Frampton leads the strategy and management of Southeast Asia at The Gap Partnership. He provides negotiation support to clients, helping them refine their strategies and commercial effectiveness. Adam seamlessly integrates negotiation philosophy and methodology into organizations, enhancing their negotiation culture.