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As growth slows in many large consumer products markets, the importance of revenue management continues to grow. This has led to more and more companies recruiting dedicated revenue management teams to help grow their profitability. But what do you need to ensure success for this team?
Technical skills
This is the easy one, you need numerate people who are comfortable manipulating your data, producing and interpreting analytics, and have high levels of confidence with your company’s key IT systems. You don’t need qualified accountants – though their experience and training can be helpful – an analytical person from a commercial background can be equally well suited to the role.
Objectivity and resolve
You need people who will challenge your commercial teams by using data driven arguments to improve the profitability of your business. Often what they will be suggesting will be challenging to implement, and will require negotiations with your customers. They need to be understanding of the challenges your account teams face, and provide solutions and mitigations while still having the resolve to push for a solution vs ‘going native’ and concluding it’s all a bit too hard…
Ability to engage
The ability to engage your commercial teams around a course of action is key to ensure that your revenue management team is having real impact versus just serving up interesting analysis that never gets implemented. As such, you need people who can influence at the director level and below. They need to be able to structure their arguments well and present a compelling reason for change and provide reasons to believe. If you find you’ve got people always at their desks, and always communicating with their commercial partners via email, then you need to help them change to better influence your commercial stakeholders.
Which function should revenue management sit within?
When speaking to our clients about this, I draw a lot of parallels with 10-15 years ago when most IT teams reported into the finance function. This inevitably led to a huge focus on internal IT ERP projects, and the IT in other areas was given less focus. However, if you look at IT teams today they focus much more evenly on helping all areas of the business, moving out from under the wing of finance has definitely helped achieve this.
It is a similar story with many Revenue Management teams, they typically start with a few people in the finance function having revenue management as an addition to their day job. This results in revenue management being a secondary priority and internal reporting, and forecasting always ends up taking precedence. Even when there is a dedicated team within the finance function we still typically see that their focus is is still too linked to internal reporting and forecasting. Typical finance concerns about hyper-accuracy, consistent reporting and systems end up overshadowing the need to find more profitable solutions with your customers and consumers.
The most effective teams we’ve seen are typically within the commercial / sales function, and have a mix of finance and sales people with the skills outlined above. Their focus will be external and very focussed on the supplier-customer relationship. They will be more concerned with understanding the reality and detail of the deals you have with your customers versus keeping track of accrual balances and releases.
So in summary, what do you need?
Strong technical skills are a pre-requiste including numeracy, commercial and systems knowledge
People who use the data to come to recommendations and have the confidence to see it through
People who can engage a commercial audience around a course of action and who focus on individuals and interactions over processes and tools
The team needs to be within a function that ensures it’s focus is 100% on revenue management