Revenue growth management (RGM) is the focal point of centralizing analytical horsepower for CPG companies today. RGM teams serve as the bridge that connects traditionally siloed business units of sales and marketing with data driven insights. As a result, sales and marketing professionals rely on RGM to drive ROI discovery in upstream planning by unlocking account sales activation, while finding ways to counter-balance account investment trade-offs using consumer centric, demand shaping models and forecasting.
For best-in-class CPG companies, leveraging this consumer-centric view is even more critical than before as recent months have challenged go-to-market behavior. CPG companies are now discovering new ways to connect to consumers directly as traditional channels continue to suffer. For many, this involves investing in e-commerce, direct-to-consumer programs, and finding more meaningful ways to make large marketing budgets more effective in ROI as well as driving consumer acquisition, retention and sales growth. Of the three investment areas, marketing accounts for 20-25%of total annual budgets, according to the Wall Street Journal, and serves as the biggest area of innovation.
Traditional marketing teams have heavily relied on media mix marketing. However, the latency of insights coming from agencies; the insufficiency of linear models to explain sales attribution from hundreds of input variables; and the new benefits of engaging more directly with retailers to provide a more granular view of consumer response to marketing investments enables RGM professionals to drive innovation.
More retailers, like Kroger and Walmart, are offering new data sources that explain consumer behavior due to sales activations from marketing investments, down to the store level. Investments like digital incentives, mobile programs, paid social and coupons are providing an insight in marketing ROI like never before to better manage portfolio investments, channel allocation and tactical allocations. This internal capability enhances ‘on-demand’ insights, reducing time to value, involves less reliance on agencies, and maximizes the value of internal analytical investments in RGM.
As a result, CPG companies need to capitalize on three new areas of action to maximize ROI, incremental sales growth and sales activation:
- Tactics in Channel Optimization – Involves deep diving into tactics and event level performance to plan optimal geography and store level activation
- Events in Tactic Optimization - Decomposes brand level ROI across all advertising, trade and shopper activity to evaluate where re-allocation needs to occur
- Store / State Optimization - Measures aggregate account behavior to identify future investments based upon brand/store level performance