KREMEX worked with a multinational consumer packaged goods company (FARO) that wanted to redesign its revenue growth management (RGM) strategy, including creating solutions that could flexibly and accurately optimize revenue and profit. The result? Growth of 17% year-on-year, with success now being replicated in new markets around the world.
Data-driven and analytics-enabled RGM is built on a solid foundation of opportunities to drive growth through strategies that put consumers at the forefront. This approach helps decision makers better understand the impact of inflation, consumer behavior, and pricing and trade promotions, which FARO lacked at the time.
Case in point: A recent study noted that 37 out of 45 economies around the world saw their inflation double in the first quarter of 2022 compared to the first quarter of 2020.
Consumer behavior and finances are now more dynamic. Priorities are also changing: 26% of financially flexible consumers use mobile apps to find better deals, while 35% of global consumers choose to shop at discount stores. In the EU, 70% of shoppers surveyed say they look for discounts of up to 30% before they buy.
Against the backdrop of an inflationary market and dynamic consumer behavior, KREMEX’s consumer analysis practice organized FARO’s transformation into three stages, which grouped their needs and challenges accordingly:
| RGM data | Pricing | Promotional optimization |
| – Manual data integration – Lack of data standardization – Infrequent data refresh – Data not readily available | – Manual calculation of price changes – Lack of price elasticity modeling – Inability to answer questions about approach and new strategy | – Inconsistent selection of promotional candidates – Lack of trade cost guidance – Limited visibility of cross-price elasticities |
RGM data integration and dashboard development
For this phase, MyCTO and KREMEX experts built a fully automated, easy-to-use dashboard that covers all relevant KPIs and monitors all market trends and competitors with up-to-date information. Integration and development include:
- Enable automatic integration of data from multiple sources.Enable automatic integration of data from multiple sources.
- Building an interactive Power BI and cloud-based dashboard to ensure high performance.Building an interactive Power BI and cloud-based dashboard to ensure high performance.
- Automatically generate and deliver insights based on defined KPIs.Automatically generate and deliver insights based on defined KPIs.
- Add an alert system that notifies end users if metrics exceed or do not meet thresholds.Add an alert system that notifies end users if metrics exceed or do not meet thresholds.
The types of data integrated for dashboards include the following:The types of data integrated for dashboards include the following:
- Price landscape:Price landscape: Price trends, indices, architecture and elasticity, as well as indicators of willingness to pay
- Promotional Landscape: Promotional Landscape: Promotional Trends, Promotion vs. Base, Deal Volume, Promotional Timing and Promotional Event Analysis
- Customer profitability: Customer Profitability: Growth drivers, trade margin overview, mutual profitability and profit pools
Figure 1. Example visualization of how different types of RGM-related data can be integrated and visualized in a dashboard
Price optimization
In the second stage, MyCTO & KREMEX experts tested and validated all changes in pricing strategies, optimizing sales and profitability, choosing the best scenarios for the company. Solutions developed here include:
- A price elasticity tool that also analyzes what-if scenarios and RGM plans.A price elasticity tool that also analyzes what-if scenarios and RGM plans.
- An advanced forecasting tool that uses Causal ML that includes cross-elasticity studies to estimate the most optimal price points.An advanced forecasting tool that uses Causal ML that includes cross-elasticity studies to estimate the most optimal price points.
- Built-in database writeback function to store and compare individual simulations.Built-in database writeback function to store and compare individual simulations.
Figure 2. Example visualizations of how price strategies can be analyzed
At this stage, the decisions showed:At this stage, the decisions showed:
- Price correlations.Price correlations.
- Price change simulations for all sales and financial metrics.Price change simulations for all sales and financial metrics.
- Comparison of the optimal position and the main competing brands.Comparison of the optimal position and the main competing brands.
- Capabilities to model many products simultaneously.Capabilities to model many products simultaneously.
- Enhances the overall brand/company to capture all cross-efficiency effects.Enhances the overall brand/company to capture all cross-efficiency effects.
Promotional effectiveness
MyCTO and KREMEX experts have also developed solutions to identify the most effective promotions. Those with low impact and reduced sales and transactions were removed from the strategy. These solutions include:
- Create a promotion library that classifies and recommends the most effective promotions for specific purposes (eg lift and ROI analysis).Create a promotion library that classifies and recommends the most effective promotions for specific purposes (eg lift and ROI analysis).
- Providing promotional guidance that reviews deal volume and deal weeks to optimize sales and profit.Providing promotional guidance that reviews deal volume and deal weeks to optimize sales and profit.
- Planning scenarios for various promotional plans, including elasticity and cross-efficiency.Planning scenarios for various promotional plans, including elasticity and cross-efficiency.
Figure 3. Example visualizations of how the effectiveness of trade promotions can be analyzedFigure 3. Example visualizations of how the effectiveness of trade promotions can be analyzed
Results: 17% year-over-year growth in total revenue
With solutions implemented across the business, FARO achieved 17% year-over-year growth in total/combined revenue. By adopting a data and analytics-driven approach to their new RGM strategy, the company:With solutions implemented across the business, FARO achieved 17% year-over-year growth in total/combined revenue. By adopting a data and analytics-driven approach to their new RGM strategy, the company:
- Received consistent revenue and increased profitability by regularly optimizing prices and promotions.Received consistent revenue and increased profitability by regularly optimizing prices and promotions.
- It saves significant time and resources (through automated, regular data refreshes) that were previously spent on manual analysis.It saves significant time and resources (through automated, regular data refreshes) that were previously spent on manual analysis.
- Enables flexible deployment of RGM processes with more duration and frequency.Enables flexible deployment of RGM processes with more duration and frequency.
The success did not go unnoticed. The positive feedback from the RGM teams, in terms of how the solutions are perceived in daily work, allowed the solutions to be further enriched by KREMEX & MyCTO practice for user analysis and to be launched in new markets.
Drive revenue growth with data and analytics
Data and analytics can help bring out the best in business people so that they can enhance the commercial performance of the organization. However, it may come with caveats. Collecting and consolidating the necessary data to cover all key KPIs would be a difficult task, especially for teams that do not have readily available data and the infrastructure needed to process and manage it.Data and analytics can help bring out the best in business people so that they can enhance the commercial performance of the organization. However, it may come with caveats. Collecting and consolidating the necessary data to cover all key KPIs would be a difficult task, especially for teams that do not have readily available data and the infrastructure needed to process and manage it.
Regardless of their digital maturity and acumen, organizations need to establish a baseline and bridge the gap between their realities and aspirations. Companies can start by having data on average channel benchmarks. For price tracking, some price points may not come with sales data so would not be useful for price elasticity, but can be used to validate brand price ladders.Regardless of their digital maturity and acumen, organizations need to establish a baseline and bridge the gap between their realities and aspirations. Companies can start by having data on average channel benchmarks. For price tracking, some price points may not come with sales data so would not be useful for price elasticity, but can be used to validate brand price ladders.
Another alternative is to consider how historical data can be used in line with market trends, although it can be challenging to predict trends given how volatile they can be. On the other hand, tracking market dynamics can be a basis for defining and testing new RGM strategies. Sometimes the right kinds of data may not be accessible or available, but what is critical is being more data-driven. This allows the company to lay a solid foundation from which to build the capabilities required for RGM.Another alternative is to consider how historical data can be used in line with market trends, although it can be challenging to predict trends given how volatile they can be. On the other hand, tracking market dynamics can be a basis for defining and testing new RGM strategies. Sometimes the right kinds of data may not be accessible or available, but what is critical is being more data-driven. This allows the company to lay a solid foundation from which to build the capabilities required for RGM.
Many FARO and FMCG companies learn to create, add and deliver value from managing revenue growth. In fact, nearly half of FMCG companies surveyed are expected to immediately invest in trade promotion management (TPM) and RGM capabilities, including scaling TPM and RGM solutions and embedding AI into their existing tools and processes. Today’s volatile market challenges businesses to rethink their strategy, and advanced analytics can help build new road maps for navigating an inflationary, dynamic consumer landscape.
