THE REVENUE GENERATION MANAGEMENT MODEL

For many years, White Rock Associates have worked with B2C and B2B companies to uncomplicate how they measure and manage their revenue-generation activities. In our view, marketing & sales should be as measurable as, e.g., procurement and production. If not, the company will never reach its true revenue potential.

The aim of the RGM model the efficient conversion of market opportunities to profitable transactions. The starting point of this process is the Market Potential, and the end point is Sales & Profits.

MARKET POTENTIAL

Market Opportunities

A market opportunity consists of the panned or unplanned purchase decisions by consumers or companies with an evoked category need.

Inactive Market Potential

In addition to the decisions being made, there is an Inactive Market Potential that consists of potential purchase decisions based on needs among consumers or companies without an evoked category need.

OPPORTUNITY TARGETING

Need Applications

Each market opportunity can be classified as belonging to a need application, i.e., the driver for the intended/unintended purchase.

Opportunity targeting

The company chooses which market opportunities to target by deciding which of the need applications it’s going to pursue.

LEAD GENERATION

Lead Sources

There are two main sources of lead contacts: the company’s customer database and the market. Any company will find it easier to target the former as both contact and usage information is already available – and as the company is already know by the potential customer.

Lead Generation

The company needs to generate one or more flows of lead contacts from each of the applications it is targeting. Lead Generation consists of all activities intended to create a contact with potential buyers.
Examples of Lead-Generation activities are marketing communication, tradeshows, distribution channels, etc.

BUSINESS PRIORITISATION

In this step the company needs to translate the generated lead flows to business opportunities by finding the intersection between what THE POTENTIAL CUSTOMER WANTS/NEEDS and what WE CAN/CHOOSE TO DELIVER.

SALES CONVERSION

In this last step the company converts a business opportunity to a transaction through sales conversion. In reality, this happens when a proposal is accepted, a contract is signed, or when a customer makes the first order.
Important to note is that ALL SALES are NEW SALES, i.e., there are no givens when it comes to revenue generation.

SALES & PROFITS

As we have seen, efficient RGM requires that management prioritises business opportunities and that this prioritisation controls both generation and conversion. For this to be possible, the company’s financial data must be structured in such a way that one can follow which business opportunities build profitability, and how this changes over time.

A starting point to start working efficiently the company’s revenue processes is to establish what the company actually makes money from today: what leads/business opportunities generate profitable revenue? What combinations of products/services and segments generate profitable sales?
It is only when we have these answer that we can relate the costs of generating and converting these leads to financial outcomes and decide how to prioritize our potential business opportunities.

USING THE RGM MODEL IN DIFFERENT SALES SETUPS

Depending on sales setup, the terms used in the RGM model will take on slightly different meanings:

IDENTIFYING YOUR WEAK LINKS

Using the RGM model, you can easily identify your weak links in the chain from Market Opportunity to Business Transaction. In many cases you will probably be surprised by the result: symptoms seldom occur at the same level as the root causes, e.g., is the reason for your sales force’s inability to hit their targets a question of closing or of weak lead flows?

WORKING WITH THE RGM MODEL IN YOUR SALES SETUP

White Rock Associates has a long experience of structuring and uncomplicating clients’ revenue generation using our RGM Model. If you are interested in how this approach can be used to help YOU: contact us and we’ll come by and tell you more about what we have achieved for other clients and what we can do for your company!

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