Profitability Analysis has been a fundamental part of business analysis since the advent of the Income Statement. However, the topic has become more complicated with the introduction of advanced analytical systems that can slice and dice in multiple dimensions, not to mention the highly marketed concept of big data. So now companies are faced with issues such as disparate data, different levels of margin, managing accruals, and conflicting numbers. Revenue Innovations can help companies sift through the noise and make better profitability decisions.
- Margin Recovery – This offering is focused on analyzing and improving the margins of a company by taking a root cause driver approach. We start with one manageable segment of the business, drive improvements, and then expand to other segments if reasonable.
- Profitability Reporting – We can help companies who are either implementing new profitability reporting systems or struggling with harmonizing multiple reporting systems. Our services range from helping establish key performance metrics to designing the conceptual architecture to assisting with the system implementation.
Pricing is the most powerful profitability lever that a business possesses. Because of the power, pricing is also highly sensitive and unpredictable; pricing decisions should not be made on a whim or based on gut feel. Effective pricing requires an intimate understanding of your customer's behaviors, your own value position, your competitor’s value position, and alignment with the strategic objectives of the company. At Revenue Innovations we appreciate and understand all of the aspects that affect pricing and can guide companies on the pricing path.
- Strategic Pricing Roadmap – Due to the powerful and sensitive nature of pricing, companies are wise to establish a 3 – 5 year pricing roadmap. The roadmap should include market positioning, new pricing capabilities, pricing structure, analytical insights required, and people responsibilities. Revenue Innovations takes a capability-based approach in building out a pricing roadmap and includes the necessary dimensions of strategy, process, organization, and technology.
- Pricing Structure Design – At times, companies need more focused assistance in building or refining the pricing structure or the mechanics of how price is established. Our experience in hands-on, detailed pricing structure design can be a significant asset for companies tackling complex pricing structure challenges.
One of the largest costs hidden behind the revenue line on the income statement is all of the costs associated with incenting customers to buy. Incentives can include trade promotions, rebates, coupons, sales commissions, loyalty programs, and marketing. In some industries, these incentives can amount to 35% of revenue. We have extensive experience in helping companies manage their incentives spend from strategic planning to effectiveness measurements to systems implementation.
The biggest question when it comes to incentives is “How effective are my programs?”. Companies spend millions and in some cases billions on incentives without truly knowing the effectiveness or the return on that investment. To help answer this question, many companies are in the midst of implementing new systems to drive process consistency and data harmonization. We have extensive experience in architecting and implementing incentive-based systems, and can assist companies through this journey to better understand spend effectiveness. We offer services in the following areas:
- Trade Promotion Optimization
- Chargeback/Billback Management
- Rebate Management
- Sales Incentive Management
revenue and margin planning
When it comes to revenue and margin planning, most companies start with the previous year’s plan, add a few percentage points, set the plan for the next year, and then monitor results. This is an adequate start but at Revenue Innovations we believe in the spirit of continuous planning and establishing a cross-functional team to drive effective margin decisions while there is still time to affect the outcome. We can help you develop new planning capabilities and link them to existing capabilities such as Financial Planning and Sales & Operations Planning (S&OP).
- Integrated Business Planning/Margin Council – Integrated Business Planning (IBP) is about establishing a cadence of decision making processes that enable an organization to make decisions with all of the information available and with enough lead time that all options are still on the table. IBP brings together multiple functions of a business including finance, sales, marketing, supply chain, and product development. While Integrated Business Planning is not a unique offering in the marketplace, our approach is focused on establishing a Margin Council that can operate in synch with the IBP process. For companies that are just starting the IBP journey, we can provide a starter kit of a meeting cadence, agenda, attendees, inputs, outputs, and decision making tools.