Manufacturers face stagnant growth and are cutting costs to manage short-term performance, which can be harmful. Instead, they should invest in revenue-generating activities to navigate economic uncertainty. The revenue cycle—from lead generation to sales and account growth—is often siloed, creating inefficiencies and limiting effectiveness and competitiveness.
Enter Revenue Growth Management (RGM)
Revenue growth management (RGM) aligns all go-to-market processes and teams—marketing, sales, service, product development, finance, and others—and equips them with consistent, timely insights. This creates a data-driven revenue engine that improves customer understanding, experience, and responsiveness.
Optimizing RGM across teams helps manufacturers sell more efficiently, increase revenue predictability, and tap new revenue sources. For example, a beverage manufacturer saw a 10% revenue lift over five years, and a consumer eyewear client achieved a 25% revenue increase from existing accounts within months.
Once cutting-edge, RGM is now standard across industries. Gartner predicts that by 2025, 75% of high-growth companies will use this model. Manufacturers not adopting RGM risk falling behind.
Challenges in Adoption
Despite growing interest, progress in implementing RGM principles can be slow. A Forrester study revealed that while 86% of executives view revenue operations as critical for achieving goals, only 41% are confident in their understanding of it. Challenges include:
• Disconnected technologies and processes leading to a lack of strategic approach towards revenue sources.
• Immature data and analytics capabilities forcing decisions based on historical views rather than current data.
• Lack of trust or confidence in data.
• Growing complexity of customer and product portfolios.
• Strategies and processes built from an internal perspective rather than the customer's viewpoint.
Traditionally, the industry has prioritized investments in operations and supply chain improvements over those in front-office/commercial teams and technology infrastructure. Additionally, the strain of recent issues has limited the appetite for further change and internal disruption.
Overcoming Obstacles
These challenges are not insurmountable, and the process of change need not be all-consuming. Organizations that realize the greatest value from their RGM programs focus on and build maturity in four key areas: customer insight, people and organization, data and measurement, and technology.
1. Understand Your Customers
Many organizations hold the view that all sales and customers are "good," with rewards and incentives reflecting this. However, serving all customers the same way is rarely effective or efficient. Optimizing revenue operations should begin with a thorough understanding of current customers and accounts—their journey, buying behaviors, expectations, and current and potential value to the organization. This data-driven insight helps determine where to focus resources and investments.
Segment customer accounts into groups that reflect their priority to the organization's vision and growth strategy. This insight aligns marketing, sales, services, and other revenue-generation activities. For example, emphasize high-touch personal contacts for profitable customers with high growth potential and more efficient digital connections for smaller but still-valuable customer segments. This step is essential to managing the cost of revenue generation and ensuring staff spend their time effectively.
2. Build a Dedicated, Cross-Functional Team
Various functions impact the efficiency of revenue generation, but they often operate independently, limiting growth and increasing costs. Successful manufacturers adopting an RGM model prioritize internal alignment to break down silos. This doesn't require a full reorganization. Establishing a cross-functional governance council to share information and improve coordination is effective.
Some leaders form a revenue growth team led by a chief revenue or commercial officer, who guides all go-to-market teams towards sales efficiency and effectiveness goals. This role takes a broader view across functions compared to senior sales leadership.
3. Measure What Matters
Optimizing revenue-generation efficiency and effectiveness requires clearly defined goals aligned with the overall strategy and metrics that all functions support. Accurate and consistent measures focusing on relevant metrics drive predictability and agility by providing timely insight into changes in customer behavior and opportunities to bring innovations to market.
Establishing common metrics and measuring against them requires data and analytical capabilities. Develop the ability to collect and access timely, accurate, and comprehensive data from internal and external sources, share data and insights across teams, integrate systems to assess revenue performance drivers, and provide operational analytics for deeper insights into key processes.
4. Employ and Integrate the Right Technology and Tools
Collecting, understanding, and sharing data is challenging without the right technology. A modern revenue generation model for manufacturing needs multiple systems like ERP, CRM, marketing automation, analytics, and e-commerce solutions. Ensure these systems use a centralized data source for better collaboration and decision-making.
Evaluate which systems impact revenue generation and look for integration or upgrade opportunities. Investing in a well-integrated digital platform can reduce the cost per sale and let staff focus on more productive activities.
Conclusion
If revenue generation management is new to your organization, start by building cross-functional consensus on a vision and measurable goals. Assess your current status and identify necessary changes in customer insight, people and organization, data and measurement, and technology.
This is an ongoing process, not a one-time project. The market and technology evolve quickly, so plans must adapt. Seek quick wins through better team coordination, like reassigning administrative tasks or realigning incentives for growth. These successes build confidence and support for larger investments.
For most manufacturers, adopting a cross-functional RGM model is a major shift. Consider outside expertise in data analytics, technology selection, or change management to equip your team efficiently and accelerate your revenue generation engine.
Randal Kenworthy, Senior Partner, Consumer and Industrial Products
Randal, West Monroe’s Consumer & Industrial Products leader, drives agility and innovation. He defined a new product segment, cutting R&D time by 30%, bringing offerings to market four months faster. His IoT expertise fosters trusted advisor relationships, optimizing corporate functions
Jeff Pehler, Managing Director, Consumer and Industrial Products
Jeff, brings his passion for continuous improvement to his client work. He has driven over $20 million in annual sales growth and improved EBITDA by 4% through market-leading strategies. His expertise spans data analytics, growth strategy, portfolio lifecycle planning, pricing strategy, and manufacturing process optimization.
