Consumer goods companies are embracing revenue growth management (RGM) as an opportunity to manipulate their most powerful levers—pricing, promotions, assortment, and trade investment—to shape revenue and margins in a way that historical approaches to analytics seemed unable to achieve. According to McKinsey & Co., companies that do RGM well typically see gains in annualized gross margins of 4% to 7%.
Results like those have sent RGM to the top of many consumer goods executives’ priority lists, and it appears on the way to becoming an essential core competency. Indeed, at Kraft Heinz, “we're trying to position revenue growth management leaders as future leaders of the organization as a whole. So we think about the RGM function as a trampoline to future executive roles,” Maksym Roshchyn, Kraft Heinz’ global RGM lead, told CGT in a recent webinar.
Despite the widespread enthusiasm, however, Gartner still calls RGM “emerging,” perhaps because of its 5% to 20% penetration of its target audience. But the research firm predicts adoption will become mainstream in two to five years.
How can CGs ensure they’re among the leaders reaping the substantial upside of effective RGM use? Consider these five steps, and learn from companies like Kimberly-Clark and Kraft Heinz.