28th August, 2018

Capturing the value of Net Revenue Management

Run the hard yards on NRM but not yet capturing the full value? 

Don’t worry you are not alone.

We have come across this problem many times. Net Revenue management has exploded in popularity because of its potential to grow your top and bottom line. But we’re finding that companies are losing out on the full value, despite spending big on building their NRM approach and building a team of dedicated experts.

So, what are the challenges? and more importantly how can these be overcome?

Breaking down the functional barriers is the biggest challenge.

Great NRM means getting the right pack at the right price to the right shopper at the right time. Sound simple? Not when you start thinking about what’s practically involved…

Let’s take pricing… who owns pricing in your business? Some will say the marketing team as your price positioning is a key element of your marketing mix. Some might say the sales team as they negotiate the price to customers, or you might even say our retail customers, as of course they determine what retail price they sell your products at. So, here we can see we are already getting into some choppy waters…before your NRM team get involved and complete some highly sophisticated pricing elasticity modelling.

Of course, the solution lies in making sure you establish who needs to be involved in pricing and then making sure your ways of working and business processes allow a joined-up approach. Again, sounds simple, however, from experience we see this is again causing some challenges. In the end, it requires establishing a revenue management mindset and driving behaviour change in your corporate culture. It’s not easy. But you can do it – if you have the focus from the top and make it relevant to people’s day jobs. You’ll also need to target, measure and reward the right metrics.

Be clear what’s in it for your customers

The second common problem is getting so wrapped up in your data that you forget about your customer’s needs.

It can be a huge problem. Say you’ve done the sums and found you can generate another 2 points of sales growth or 100 basis points of margin. If there’s no value for your customers, it’s not going to stick with your sales team.

This one’s a simpler fix. It again requires cross functional work, to make sure those responsible for NRM in your organisation are spending time engaging with your Sales team to understand the challenges and opportunities their customers have. Then by putting the customer and in turn their customers at the heart of your NRM thinking, you will start to identify the triple win opportunities. Once you articulate your NRM plans as customer selling stories your sales teams will start to welcome future NRM initiatives.

At OxfordSM, we can help you make practical changes to really deliver on your NRM approach. If you’d like to find out more, just get in touch.

Net Revenue management is just one of the themes we'll be discussing at our forum for commercial leaders on 27th September in Amsterdam - Business Not As Usual https://bnau2018.oxfordsm.com

Written by

Annaliese Reeke

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