A strategic approach that unites marketing and commercial strategies around the goal of profitable business growth. Over the last 50 years it has grown from a niche airline technique into a standard for consumer goods, banks and telecom.
RGM – Revenue Growth Management, or managing profitable revenue growth (a loose translation that captures the meaning rather than the literal words) – emerged as a concept around 50 years ago.
The “pioneers” of the idea were airlines and hotels, with dynamic pricing (the familiar price adjustments around holidays or periods of weak demand), loyalty programs and other attempts to tailor their offers to different buyers and their needs.
In parallel with the development of a segmented approach to the assortment of products, services and prices, companies worked on efficiency tools – calculating the payback of promo campaigns, channel-specific price lists and pay-for-performance schemes, where a client’s discount depends on volume and other parameters.
In the early 2000s, RGM began to be actively adopted by all major consumer companies, banks, telecom and other industries. Gradually RGM transformed into a widely accepted strategic approach that unites all marketing and commercial strategies around the goal of profitable business growth.
Dynamic pricing, loyalty programs, price adjustments around holidays and demand slumps. The first systematic attempts to adapt the offer to different buyers.
Segmented assortment, channel-specific price lists, pay-for-performance with volume discounts, and calculating promo payback. RGM moves beyond the travel industry.
Major consumer companies, banks and telecom adopt RGM as a widely accepted strategic approach. It unites marketing and commerce around the goal of profitable growth.
Three areas considered the core of RGM today – what sets apart companies with a systematic approach to growth from those that act on intuition.
Identifying specific, high-potential demand segments to launch new products into. Not a “target audience in general,” but concrete segments where demand is growing and there is a willingness to pay.
Depending on the buyer’s needs in the channel and their willingness to pay more in certain situations. The same SKU works for margin where it can, and for volume where that is needed to hold share.
Marketing tools and sales systems are kept under constant efficiency review, for maximum return on investment. Every promo campaign, every channel and every activity is measured.
And even targeted adjustments to assortment or prices “in the spirit of RGM” have a proven impact and make the business more competitive.
10 RGM tools cover the entire profitable-growth cycle: Vector – where to grow, Tactics – how to grow turnover and profit, Pulse – what is happening right now.
Six short questions about your management practices. We’ll show an RGM maturity index of 0–100 and compare it with the industry benchmark.
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