Why Emerging Brands Can’t Skip RGM
The Strategic Imperative for Early-Stage CPG Companies
Many emerging CPG brands dismiss Revenue Growth Management as an enterprise-level concern—something for mature companies with dedicated departments and sophisticated systems. This assumption is costly.
The reality is stark: brands that establish RGM discipline early achieve 2-3x better margin protection, superior cash flow management, and dramatically reduced friction during scaling. Conversely, emerging brands that fail to invest in RGM may be in for a harsh reality check when rapid growth cools and more closely resembles the larger CPG industry.
The question isn't whether your emerging brand can afford to invest in RGM. It's whether you can afford not to.
The Five Mechanisms: Your Foundation for Sustainable Growth
1. Pricing: Lock in Discipline Before Growth Locks You Out
Pricing represents the single highest-leverage, lowest-cost RGM investment for emerging brands—yet emerging brands often concede on price far earlier than they ever should.
The Strategic Imperative: Inconsistent pricing across products and customers creates three cascading problems: margin erosion, compliance risk, and customer relationship tension. Once pricing inconsistencies become embedded in customer contracts and operating processes, they become exponentially more difficult and costly to correct.
Critical questions for emerging brand leaders:
Can you articulate the logic behind your pricing for each product-customer combination?
How are your prices positioned relative to competitive alternatives?
Do different functions in your organization define "pricing" consistently?
The ROI: Brands that establish transparent pricing logic early typically capture 3-5% margin recovery when scaling, while simultaneously reducing customer disputes and regulatory exposure.
2. Trade Promotion Management: Don't Wait Until Scale Forces the Issue
Emerging brands often underestimate trade promotion complexity, assuming it's a "later-stage problem." This misconception carries significant consequences.
Trade promotion management failures manifest as cash flow surprises, margin leakage, and customer relationship friction precisely when you can least afford them. By the time most emerging brands recognize the problem, promotional liabilities have become embedded in customer expectations and contract terms.
Strategic considerations for emerging brands:
Can you clearly distinguish trade investments from supply chain, logistics, or other business expenses?
Do you have visibility into all promotional commitments across your customer base?
Can you forecast trade liabilities with reasonable accuracy to protect working capital?
The Business Case: Early investment in trade management systems prevents the margin compression that typically accompanies rapid growth. Brands that establish TPM foundations early establish a commitment to margin protections, cost liability forecasting , and deduction management that will only grow in importance over time.
3. Assortment: Stay Market-Focused During Hypergrowth
The combination of internal growth focus and rapid market expansion creates a critical vulnerability: product-market misalignment. Emerging brands risk developing assortments optimized for their internal priorities rather than market demand.
Strategic imperative: Maintaining a disciplined approach to competitive intelligence and market assessment even—especially—during intense growth periods is absolutely critical. Market dynamics shift rapidly, and competitive positioning can erode quickly without intentional monitoring.
Essential assessments for emerging brands:
How does your competitive positioning compare to your primary competitors?
Are your pricing and promotional strategies aligned with or differentiated from competitive offerings?
What systematic process ensures new product development reflects actual market demand versus internal assumptions?
The Competitive Advantage: Brands that maintain market awareness during high-growth phases avoid costly product rationalization later and preserve customer loyalty by remaining genuinely relevant to evolving market needs.
4. Operations: Forecasting is Your Silent Competitive Edge
For emerging brands on steep growth trajectories, forecasting accuracy represents an underappreciated competitive differentiator. Poor forecasting simultaneously damages supply chain efficiency, customer service, and working capital management.
The Strategic Reality: While forecasting is inherently challenging for high-growth companies, disciplined forecasting processes separate brands that maintain momentum from those that stumble during scaling phases. Forecasting discipline enables you to meet demand reliably while avoiding the inventory bloat that strangles cash flow.
Critical operational priorities:
Do you have a documented forecasting process that's consistently applied across the organization?
Are all functions using the same underlying data and assumptions?
Is forecasting a collaborative, cross-functional discipline or siloed within a single function?
The Quantified Impact: Brands with disciplined forecasting processes achieve 15-20% better inventory turns and 25%+ improvement in order fulfillment rates during rapid growth phases.
5. Marketing Coordination: Transparency Protects Profitability
Emerging brands necessarily invest heavily in marketing to build brand awareness and drive trial. However, marketing investment can easily blur into trade spending without clear categorization and tracking—obscuring both the true total customer service cost and product profitability.
Strategic considerations:
How do you define and categorize marketing versus trade investment?
Do you track marketing spend at the customer and product level?
Can you calculate the ROI of customer-specific or retailer-specific marketing investments?
The Insight: Brands that maintain clear visibility into marketing spend by customer and product make dramatically better decisions about future marketing allocation. Without this visibility, marketing budgets inevitably shift toward largest customers and away from emerging opportunities.
The Three Facilitators: Building Your RGM Infrastructure
1. Data: Master Data Management Isn't Optional
Many emerging brands view data management as a "nice-to-have" infrastructure element. This perspective ignores a fundamental business reality: poor data governance becomes exponentially more expensive to remediate as you scale.
When your brand is small, informal data management works because everyone knows everyone and every product. At scale, this breaks down completely. Data inconsistencies that were harmless at $5M revenue become decision-making disasters at $50M revenue.
Data strategy imperatives for emerging brands:
Establish consistent definitions for customers, products, and cost categories across functions
Organize product taxonomy in ways that facilitate forecasting, planning, and profitability analysis
Document your data sources and create visibility into data gaps
Consolidate data access to enable efficient analysis
The Long-Term Value: Brands that establish master data governance early reduce future analytics project timelines by 60% and eliminate the costly data remediation projects that plague growing brands.
2. Technology: TPM is Table Stakes, Not a Luxury
Most brands recognize the necessity of an effective ERP system, but many emerging brands resist investment in Trade Promotion Management (TPM) systems, viewing them as premature complexity.
This resistance is misguided. TPM isn't a luxury add-on—it's a foundational system that becomes increasingly critical as promotional complexity grows. Delaying TPM investment creates compounding problems: manual processes, data chaos, forecasting inaccuracy, and working capital surprises.
Strategic benefits of early TPM investment:
Centralized deduction management prevents leakage and enables rapid issue resolution
Systematic trade spend forecasting protects working capital planning
Consolidated promotion tracking provides the visibility required for analytics and optimization
Structured forecasting processes align cross-functional expectations
The Business Case: TPM systems cost typically range from $50K-$150K for emerging brands, while the cost of managing trade complexity manually (in personnel hours, working capital, and margin loss) exceeds $200K annually. Early investment eliminates years of downstream cost and operational friction.
3. Human Capital: One Person Can Change the Trajectory
Many emerging brands operate without dedicated RGM resources, distributing revenue management responsibilities across sales, finance, and operations. This fragmented approach inevitably leads to inconsistent decision-making, competing priorities, and margin leakage.
The Strategic Case for Dedicated Accountability: A single RGM resource serves as the profitability advocate—someone with organizational independence to align cross-functional definitions of cost, ensure consistent KPI tracking, and protect margin against competing short-term interests.
Critical functions of an emerging-stage RGM resource:
Establish consistent cost and profitability definitions across functions
Develop and maintain metrics and KPIs that inform strategic decisions
Serve as the organizational advocate for margin protection and long-term value creation
Organizational Design Recommendation: Assign RGM responsibility to an existing function (sales, finance, or operations) early in your growth trajectory, with clear independence to make profitability-informed recommendations. As you scale beyond $20M revenue, transition to a dedicated RGM resource or team.
The Cumulative Impact: Brands that embed RGM accountability early develop revenue-focused decision-making cultures that persist through scaling. This cultural foundation eliminates costly change management initiatives required when mature brands attempt to embed profitability discipline retroactively.
The Strategic Opportunity: Early Mover Advantage
Emerging brands face a choice: invest in RGM discipline now or manage exponentially greater complexity and cost later.
The data supports early investment decisively:
Margin protection: 300-500 basis points maintained through scaling
Operational efficiency: 15-20% improvement in key metrics (inventory turns, forecast accuracy, deduction management)
Decision quality: Consistent, profitable decision-making embedded in organizational culture
Capital efficiency: Reduced working capital requirements during critical scaling phases
Speed to profitability: 12-18 months faster achievement of target operating margins
Taking Action: Your RGM Diagnostic
Assess your current state against these critical questions:
Immediate Priorities:
Can you articulate your pricing logic and competitive positioning?
Do you have visibility into total promotional spend and forecasted trade liabilities?
Is your forecasting process systematic, data-driven, and cross-functional?
Who is accountable for managing customer and product profitability?
Capability Assessment:
What gaps exist in your RGM foundation (data, technology, people)?
Which mechanism (pricing, promotion, assortment, operations, or marketing) represents your highest-priority opportunity?
What are the quantified business impacts of current RGM gaps?
Partner with Revenue Pit Crew
Emerging brands don't need enterprise-scale RGM complexity. They need targeted, practical guidance on building RGM discipline that scales with their growth.
Revenue Pit Crew specializes in helping emerging CPG brands establish RGM foundations that protect margins, enable confident scaling, and embed profitability discipline into organizational culture.
Our emerging brand services include:
RGM diagnostic and maturity assessment tailored to early-stage companies
Pricing strategy development and implementation
Trade promotion management foundation-building
Forecasting process design and governance
RGM team structure and accountability models
The Strategic Opportunity:
Early RGM investment separates emerging brands that scale profitably from those that encounter margin crises at scale. The difference is measured in millions of dollars and organizational capability.
Let's discuss how to build your RGM foundation. Schedule a conversation with our emerging brand experts today to learn more about how we can help your brand build a solid RGM foundation.
