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For many FMCG manufacturers it’s budgeting season, which means functions across the business will be competing for investment from business leadership in the coming months. For commercial and revenue management teams, this investment is critical in order to deliver the forecast for the next financial year and safeguard initiatives that will support profitable growth.
As the economic downturn has led to inflation, consumer goods manufacturers must work harder than ever if they're going to achieve profitable growth. This is where revenue growth management comes in, introducing tools and approaches that ensure effective analysis of promotion, pricing, trade terms and mix, to ensure that all are driving ROI and not losing the business money through old or inefficient practices, required to maintain margin.
But in order to carry out best practice revenue management, investment is required. Whether this be in the form of resource (new heads in a team), investment in essential projects such as PPA or trade terms optimisation or in an integrated piece of software such as TPM, RGM will require ringfenced budget. The most effective revenue managers will make the effort to fight for this now, rather than proposing it later.
As all other teams will have persuasive arguments as to why they require the biggest portion of the budget, those responsible for revenue management initiatives will need to put forward a compelling case. The initial battle is therefore one of internal stakeholders, so how can you put forward the most compelling case for RGM? What’s best practice when it comes to securing the budget you need?
Here, we outline our top tips for securing budget for RGM initiatives:
1. Whatever you request, ensure it has a positive ROI
It’s crucial to demonstrate the value that your new initiative will bring. The best way of doing this is including some sort of statistic or number that demonstrates the short or long term value that can be achieved. With all the intricacies of your approach, it’s easy to get lost in the details and forget the main reason you are doing it. It is useful when planning to include a section or slide titled ‘How will {initiative name} generate ROI for {business name}’ so you know that this is included from the very start. Utilise work from previous projects and gather some statistics from previous initiatives to provide a forecasted return on investment.
2. Explain how all areas of the business can benefit
RGM is a "team sport" and many departments such as Marketing, Sales, Finance and IT can all benefit from it in some way. Because of this, one of your arguments can be that your initiative crosses many functions and therefore warrants more investment. Perhaps you can collaborate with other departments and propose initiatives alongside them. For sales teams, also outline how the initiative will benefit your customers and consumers. Stress how outcomes here are win-win and demonstrate the value expected ($, ROI, relationship, etc). Thinking bigger, RGM initiatives must support delivery of the wider business strategy. Link your initiatives to the overall business plan and make this clear.
3. Whatever you do, make it deliverable
Many plans outline the benefits well but don’t share how it will work in practice. What are you asking for investment for? Is it a project, a software tool, more resource in your team? If you have a complex approach, bucket your ideas into people, tools and processes so your audience understands you well. Ensure you make clear the tangible benefits, make it easy to understand, and outline when it will deliver results. A thorough timeline that has been well-thought through is a critical element to any proposal.
4. Secure a senior sponsor
Having an advocate or sponsor on-side is a huge advantage. In order to make this work, its key to know what your stakeholders want out of a project, both in the short and long term, as this can greatly affect your ability to help them influence your cause. As well as their aspirations, it is also useful to know what personality profile they are and what drives or inspires them so that you can influence them most effectively. Communication skills are key to influencing here.
5. Brand your project approach correctly
Get into the minds of your audience and understand what might make them excited by your idea. Create a compelling brand for your project proposal, position it correctly, even giving it project name. Senior stakeholders will be looking to ensure your project will appeal to the wider business too, so get creative and come up with some ideas to boost engagement.
6. Highlight the risk of inaction
Resistance to change is likely when presenting your case, as change requires effort. Be clear on why you need budget to deliver an optimal outcome versus making do with the current status quo and why this poses a risk to the business. Though it requires some research/ upfront effort to calculate, backing up your case with numbers (forecasted lost revenue etc) here can really help highlight the risk of not taking the proposed course of action.
We are a revenue management consultancy, helping consumer products companies make smarter, more profitable decisions through a combination of pricing, promotions, and mix management. Speak to one of our consultants here to find out how we can help your business make more profitable decisions.