How to build an effective RGM story
Every good RGM story has these critical steps:
- Align the room. By aligning the room your executive team will understand what you will be presenting, and you’ll show that you (the RGM leader) are also aware of the situation at hand. The situation is both a summary of what is currently happening in the market and addresses the decisions that need alignment. This part of the story should also concisely address any complications that may be faced moving forward.
- Show the options that you have considered. Don’t just go in with a single plan—executives need to know that you have done the work and looked at several options. What is not needed here are the detailed pages that show your work for every option. Instead, include this information in an appendix to your materials. All the executive team really wants to know is that you have thought the problem through and have considered multiple angles of attack.
- Pick the best option to go into further detail. Show why you picked it as an initial recommendation and compare key metrics from each of the options that were considered. Usually, the key metrics need to be in a language that the executive team is familiar with, but they are often similar across companies.
- Discuss change management actions. Focus on the key actions that need to be addressed once alignment happens. Gaining alignment is often a large challenge, but where plans often fail is during the change management actions to get every team involved.
By following this simple approach, you can overcome the communication challenge that RGM leaders face when presenting to your c-suite.
The 7 key metrics of RGM
To help communicate this story, its essential that RGM leaders focus on 7 key metrics that will resonate with your leadership team. If you do not focus on these metrics, you will often be left with surprises to your business or it will be evident that youhave not done their homework.
There is a general assumption that your RGM teams will have the right tools to answer these questions. If they don’t, and they are just relying on Excel spreadsheets or “gut feel,” chances are your organization needs to prioritize an investment in tools that will help them find profitable growth. The 7 metrics include:
- What is the behavior that will be changed? Consider the changes in price points, the frequency of promotions, and the changes in customer mix.
- What is the volume impact of that change? What will happen to your company’s volume of sales? Ask if this will deleverage your factories and if you have operational capacity.
- What is the net price realization? How many pennies per unit will this expand or contract over the duration you are looking at? What percentage growth or decline in price will the plan show?
- What is the net revenue impact on the organization? How many net revenue dollars will this plan drive? After accounting for cannibalization/cross effects, what will the total net revenue impact be for my total business?
- What is the profit implication? Determine if this plan is profitable, what your absolute profit could be, and your manufacturer margin.
- What is the share impact in the market? Will retail dollars grow or shrink? Is this a winning strategy versus competitors or will your organization lag behind your competitor’s growth?
- What is the retailer impact—is it sellable? Determine the projected retailer profit and margin, then ask yourself if the plan follows the retailer’s strategy or does it fly in the face of what they’re trying to accomplish.
When these key metrics are all answered, you will be able to make the right call whether to move forward with the strategy or consider other options. If these metrics are not well laid out or explained, you will be left with more questions.