9 Things to Consider When Choosing a Revenue Growth Management Partner

Expect a lot out of a revenue management consultant. Starting with industry-specific knowledge, an analytics-driven approach and a willingness to stay with you throughout the go-to-market process.
Business people working in conference room
Be honest, determining how to price an offer can feel like an endless black hole. If prices are too high, you struggle to sell; if they are too low, you leave money on the table and deteriorate category value. When the stakes are this high, it could be in your interest to partner with a Revenue Growth Management (RGM) expert to ensure you price wisely and maximize your revenue.

Unfortunately, selecting the right RGM partner can be a difficult process. Here is a list of nine major points to consider as you make your decision.

1. Career consultants can come with drawbacks

Often, consultants come to the table with limited or no previous industry experience. While they may be qualified to provide high-level support, their lack of experience could make them unable to truly understand your granular operating intricacies.

Industry experience is critical for execution. Without this experience, partners are unable to determine how strategies will unfold in the marketplace, or how to course-correct if problems are encountered. For example, if a customer rejects a price change, can you simply rely on past project slides to mediate the situation? It is likely that you will need an advocate to understand the account, their motivations and your worth to them, as well as someone who has the actual experience of being in front of customers.

2. Take a close look at billing practices

Common billing practices involve charging clients based on the number of resource hours put in, with no dependency on project returns. Instead, it is in your best interest for your partner’s fees to be linked to concrete performance outcomes and be proportional to the ROI that you have achieved or forecasted.

This method of billing ensures that companies do not have to shoulder afterwork and out-of-scope charges that were not anticipated. Finally, billing that is contingent is also indicative of the partner’s confidence in achieving targets and seamlessly aligning objectives.

3. Look for company-specific understanding

Every company has unique needs. The right partner will sit down with clients and work to create a customized solution rather than try to fit a square peg into a round hole.

The right partner will tackle the issues specific to your company and understand which KPIs matter most; they will understand how your organization makes decisions and processes information, deals with customers and responds to competition. A customized plan ensures you can deliver the desired result.

4. An analytics-driven approach leads to solid decision-making

Organizations often have the necessary industry knowledge to make a “guesstimate” or an estimate that uses a combination of guesswork and calculation. Though guesstimates can be “good enough” in many instances, they lack the facts and statistics that are crucial for informed RGM strategy development and decision-making.

For example, when crafting a new service offering, analytical techniques such as segmentation are required to accurately define customer groups with similar attributes (e.g. purchase habits) and needs. These techniques will allow you to respond with real data-driven understanding rather than just relying on a gut feeling.

5. Building cross-functional coordination is critical

At its core, RGM is a cross-functional, commercial discipline where each major stakeholder (i.e. sales, marketing, finance etc.) has an important role to play. Treating these functions as unrelated and disjointed is a primary factor behind ineffective RGM implementation. This disjointed approach also ignores the depth and quality of information that can be uncovered to assist in decision-making. When it is done correctly, revenue management acts as a catalyst to unify these functions.

6. Don’t fall into the trap of a sole focus on price increases

It is common to see partners depend entirely on price increases to grow revenue and margin without considering other RGM levers. Unfortunately, price is usually a very visible lever to customers that can cause substantial pushback.

If the goal is to improve margin, increasing price is an option — however, this desired outcome can be achieved using other levers as well, such as by changing the mix. Examples of other initiatives include selling more of a higher-priced offer, introducing innovation, shifting customer investment, etc. Consider a holistic approach and be aware of how multiple levers can be tweaked to obtain results.

7. Is your RGM partner willing to do the heavy lifting?

When projects are scoped, the majority of the heavy lifting is often relegated to the RGM partner. However, what tends to happen is the internal team ends up compensating and doing more work than the partner to make sure the project is a success. You should never be put into a position where you are forced to compensate for your RGM partner.

8. Make sure the partner stays until the end

Customer implementation does not magically happen with a 100-page PowerPoint deck. A quality partner does not leave the crucial step of going to market up to the client without necessary support and guidance. Aside from providing an execution plan that covers the tasks, resources and risk assessment for all mandates, strong partners have the ability to resolve disputes and handle difficult situations with the client’s customers. An example of this would be gaining buy-in from the sales team as you present a revised pricing structure.

If you don’t have a solid implementation plan as part of your project scope, there is a significant risk that you could be left without a chair when the music stops.

9. Are they willing to facilitate the transfer of knowledge?

There are a few common criticisms leveled at consultants. One is that consultants often focus on completing a mandate without providing the client with the ability to manage future initiatives and close gaps without external assistance. This keeps clients in a constant state of dependence and reliance on outside help.

Helpful partners provide training, ensure knowledge transfer and arm you with the tools and understanding to bring solutions to life, even after they are gone.

In the end, implementing changes to your RGM strategy is a large investment. It is imperative to make sure your partner delivers on their commitment. These are just a few key guidelines to take into consideration as you choose your next RGM partner and focusing on these, will ensure you are headed in the right direction.

Abdullah Calafato is a former consultant at Revenue Management Labs. Revenue Management Labs help companies develop and execute practical solutions to maximize long-term revenue and profitability. For more information, visit revenueml.com.

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1 thought on “9 Things to Consider When Choosing a Revenue Growth Management Partner”

  1. As someone who has been on both sides of this fence, agree these are good points. Some additional advice on ways to confirm the “fit” of the service/analytics approach (a good idea before jumping into larger contracts):

    1. Request a “test run.” This may be feasible without excessive costs/effort. It can shed light on the provider’s approaches and analytics, and whether the pricing recommendations might ultimately resonate.

    2. Ask for reference clients. They can answer questions about how the solution is implemented, including details on some topics listed in the article. Also, note that the provider’s batting average may be more relevant than just looking at their success stories.

    3. As best as you can, understand the provider’s solution and approach, and compare with your alternatives/goals and desires. For example, if you believe price optimization would be helpful in your business, is the solution really looking at elasticities (or is it just a robust, common-sense price matrix)?

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