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Asking an Expert: Q&A with RGM Leader Patience Mutiso

6 minute read

In today’s dynamic consumer landscape, Revenue Growth Management (RGM) has become a critical discipline for companies in the food and beverage (F&B) and consumer packaged goods (CPG) industries. As inflationary pressures, shifting consumer behaviors, and competitive intensity reshape the marketplace, businesses must adopt smarter strategies to sustain profitability.

In this Q&A, we met with industry leader Patience Mutiso to discuss the current state of RGM, its growing importance, and emerging trends that will shape its future. From the latest in data-driven insights to optimizing revenue, this conversation offers valuable takeaways for companies looking to thrive in an increasingly complex business environment.

Q: What are the most significant challenges companies face in implementing RGM strategies, and how can they overcome them?

A lot of companies don’t have an RGM or even a foundational strategic pricing team. Additionally, RGM is not widely represented in leadership. RGM needs agency, and that comes from the company’s leadership. Agency and representation will enable everyone to work together to ensure strategy is the top priority.

Once a company adopts the principles of RGM and implements them into their processes and mission, that will lead to sustainable growth and profitability in addition to driving value for their customer.

Q: Similarly, what’s a common mistake companies make when it comes to RGM?

In addition to not understanding value and how it relates to customers, another mistake I see is organizations thinking RGM is only about pricing. Even worse is the thinking that it’s intended only for price increases.

RGM is not just pricing and the number. It’s more nuanced and bigger than most companies realize. It’s about value.

Q: How can companies create value in the F&B industry, where consumer behavior and trends are ever-changing?

Organizations need to be able to understand if trends are fleeting or if they are creating sustainable long-lasting value.

While studying people and understanding customers, you’ll notice most consumers will repeat a purchase. This means they’ll go back to where they experienced the best value. How they determine that value can include quality, taste, service, and environment.

So, determining consumer value comes from truly understanding customers and bringing that to your strategy. Combining what the customer values with what you sell becomes your revenue. Think of price as the statement of the customer and value as the willingness to pay.

Q: Can you share an example of how RGM has improved profitability in your organization?

I’ll use an example of one of the previous organizations I worked for. In building out our RGM team, over six or seven years, we were able to drive 150-200% growth in revenue.

By transitioning from cost-plus pricing to an RGM model that considered the entire organization, we were able to go from a one-person department, which was me, to about 20 employees working on RGM, or the revenue managers. For reference, studies show that one revenue manager is required for every $100-150 million.

We were also the first business team at the organization to have a data science team within it. The data science team built models that could be fed into a pricing tool, which helped the company reach a point of major revenue growth. Additionally, we implemented a Revenue/Pricing Center of Excellence (RCoE) to enable collaboration between the entire organization.

When we measured the value of that transformation, it came out to about $2.2 billion, and about 45-55% came from the pillars of revenue management.

Q: What is the importance of consumer insights in effective RGM?

Consumer insights are critical because that’s how organizations determine the value they provide to the customer. Insights tell us what consumers want and what they’re willing to pay for it, then we execute in alignment with that.

For example, at one organization I was with, we did a value study amongst our customers, which helped us realize we were charging too little. There was a big gap between what the customers were willing to pay (for value, as they defined it) and the prices we were charging, at every junction of what the category was. It was only through consumer insights that we identified that gap and determined how to close it—both with value definition and creation and ultimately with price and strategy.

Q: How do you align different departments to enable cross-functional collaboration?

With RGM, thought patterns, practices, and values must be adopted across the organization. It can’t be done in isolation or silos. This is where the RCoE comes in.

A RCoE allows the entire organization to provide input into that process and how RGM fits within supply chain, marketing, finance, and so on. The RCoE can be considered an internal consultant because it gets feedback from other departments and has the organization’s best intentions at heart, which enables collaboration and sustained growth at optimal profitability.

Q: What tools does a company need to transition from basic RGM to more sophisticated approaches?

First, it’s important to understand what role tools play.

With RGM, there are essentially four pillars. The first is pricing, which includes strategic pricing and trade or discount optimization. The second piece is resources, so that’s people, company, pricing value strategy, and the ability to create a value statement and put it together with how you’re executing that strategy. The third piece is data and analytics, which is critical so you can make data-driven decisions. The final piece is how you work with the rest of the organization to roll out the strategy and pricing value, so your customers get the value they need and for which they’re willing to pay. This is where the RCoE comes in.

With this view, the organization can think of tools as enablers of strategy execution and measurement. Companies that don’t have RGM or are in the introductory stages will often use Excel to calculate pricing and manage margins. As they mature on the RGM/value-based spectrum and their strategy grows, they acquire or move to more sophisticated tools that can address the below questions and topics.

Competition and economic landscape
– What is the competitive data and the who, how, and why related to it?

Historical trends
– What prices have you managed to achieve in the past?
– What do the waterfalls look like?
– Where are the different categories landing on the price?
– Is the price differential too big in one category with similar items?
– Is there too wide of a gap between the highest price and lowest price?

Customer value and willingness to pay
– Is the gap tied to value?
– If so, what value parameters need to be measured?

Ultimately, as organizations become more sophisticated in the revenue management space, they’ll begin to see that it’s less about the tools and more about the strategy to drive value for their customers and having what they need to execute it.

Q: What advice would you give to a company starting its journey from basic RGM to advanced strategies?

First, they should prioritize creating a baseline of their existing status. In my experience, organizations that have been the most successful have hired an RGM leader or at least established a RCoE to take stock. This may mean taking a year or a specified amount of time in the beginning to understand where they are and what they’ve done in the past.

The RGM leaders help organizations draw out a nascence to maturity road map. This gives the organization quick wins as they journey because it takes time and patience. Someone with RGM experience will be able to build on the foundations the company already has instead of starting from scratch.

Q: What do you believe will be the next frontier in RGM, and how should companies prepare for it?

I think the next frontier is already here. RGM is a somewhat young discipline, but it’s going to continue to grow, likely faster than other disciplines since it drives greater tangible results. It may be called something different, like strategic pricing or revenue management, but it remains a journey from cost-plus to dynamic value-based pricing that encompasses every aspect of the business.

This includes what the customer values, what they are willing to pay, how we get the product/service to them, and how much gets to our bottom line. It’s a journey to maturity, a way of thinking or worldview, that is self-sustaining. Once the principles are part of the company’s process, systems, and procedures, the organization can easily flow between cost-based and dynamic from elementary to complex value drivers.

Because of this, organizations will need more RGM professionals to help them transcend that complexity. The consumer is also getting more complex, so more data is needed to understand consumer behavior and even influence it.

Different generations are also thinking differently from each other, so determining how to sell your products and considering categories and niches is going to become increasingly difficult.

Q: Anything else around RGM you’d like to share your insight on?

I think that learning and growing in RGM is going to be less about theory and more about action. RGM will continue to be more and more its own department/team like traditional ones such as marketing, finance, etc.

Need help with your company’s RGM initiatives?

Catena Solutions supports food and beverage organizations, leveraging our expertise to drive growth, optimize operations, and navigate industry challenges. Learn more about our Revenue Growth Management solutions.

About Patience Mutiso: Patience is a seasoned RGM strategic veteran with 25+ years of experience within numerous large CPG and supply chain companies. With a mission focus of ‘Getting Value Right,’ Patience enables businesses to thrive in the delivery of value and quality products to customers and consumers, while remaining relevant and supporting long-term growth by sustainable value driver optimization.