How Revenue Management Can Deliver Profitable Growth

In an increasingly challenging retail environment, FMCG companies are finding it harder than ever to deliver top-line sales growth. Market consolidation, the growth of e-commerce, the inexorable impact of the discounters and smaller brands taking share from the larger more established brands, are all having an impact on almost every company in the sector.

In addition to these challenges, the level of promotional intensity and pricing pressure continues to grow in almost every category, making it even more difficult than ever for companies to deliver profitable growth.

It’s against this backdrop that many FMCG companies have chosen to focus on Revenue Management to help them to navigate the commercial challenges that they face, and to deliver profitable growth.

Why Revenue Management Matters

At its heart, the discipline of Revenue Management is focused on the use of data and insight to develop and execute a plan to maximise profitable growth through the levers of price, promotion, product mix, and trade investment.

With over 20 years’ experience in Revenue Management, at Sellex we know the positive impact that this focus can have on a client’s P&L. On average, over 20% of gross revenue is spent on consumer promotions alone in many FMCG manufacturers. This is one of the biggest (and growing) costs on the P&L and we often find that return on this investment is questionable.

We work with clients to optimise their effectiveness of their spend over time, giving them the confidence that they’re investing in the right promotions and helping them to make more informed decisions.

We do this through a 3-step process:

1) Diagnose current performance

2) Develop tools and processes to improve performance

3) Ensure clients have the capability to integrate and exploit the revised trade promotions approach

We’ve also developed a set of specific Trade Promotion Management (TPM) and Trade Promotion Optimisation (TPO) tools to support clients in this area.

Our Approach is Optimised to Help You Get Results

In the areas of Pricing, Product Mix and Trade Investment, again our approach has three main stages:

1) Analysis, where we review all available data and develop a full view of the current situation

2) Development, where we use an iterative process of ‘design, model, test’ to develop the best plan,

3) Implementation, where we ensure that the x-functional teams are equipped and capable of delivering the changes required.

We know from experience that the companies that see the greatest benefits from Revenue Management are those who invest time and resources over a sustained period of time (rather than seeing it as a one-off project); those that focus on the putting the right organisational design in place; those that put the right processes in place with the right tools to enable those processes, and those that focus on developing the Revenue Management capability within their organisation.
Revenue Management is one of the critical ways in which FMCG companies can continue to deliver profitable growth, and with over 20 years’ experience in this discipline, Sellex are very well placed to support your company in maximising this opportunity.