Every business, including subscription based platforms, needs to scale up to reach new heights. But this growth shouldn’t be haphazard. Instead, it requires a carefully planned approach called Revenue Growth Management (RGM) to achieve sustainable growth.
As a SaaS business, you rely on your existing customers to continue paying for the services you render. This, combined with acquiring new customers, is the path to sustained revenue and profit growth for your SaaS.
So, what exactly is revenue growth management, and how can you leverage it to help scale your SaaS business performance? Also, how can a revenue growth management software platform help you?
Let’s find out.
In simple terms, Revenue Growth Management is the process of driving sustainable and profitable growth of your SaaS business by increasing your customer base, optimizing pricing, finances, marketing, and sales. You do this through a range of customer acquisition and retention strategies by using the right software platform for it.
But guess what?
Revenue Growth Management isn’t a new concept either. In fact, it’s been around for quite some time now and primarily focused on pricing strategy to get more customers to stick with the SaaS or attract new ones.
But now, it’s a more holistic approach to growing revenues by incorporating other elements like product variations, incentives, and more. And revenue growth management software platforms like Younium can help you with it all.
In fact, a global consumer-packaged goods (CPG) firm whose business performance struggled because of failing to adapt to changing market conditions could grow its revenue and realize millions of dollars in profits, solely through the adoption of Revenue Growth Management.
As a concept, Revenue Growth Management started nearly five decades ago. It was used then by the airline industry for optimizing the occupancy levels of flights. Eventually, the hotel industry began using these strategies for optimizing their occupancy levels.
The reason for this was simple—their main offerings had similarities:
And given that demand fluctuations are a reality for both these industries, employing such RGM strategies can help bring in consistent revenue streams.
Over the years, other industries, especially CPG companies (Consumer Packaged Goods), have adopted this tactic. But B2B SaaS businesses have also been quick to adopt this strategy to boost their revenues.
By now, you might be wondering about the applications of RGM—what are the real goals behind this strategy?
Well, some of the main goals of employing RGM are:
Revenue growth management (RGM) software is a data-driven solution that's designed to help you optimize your pricing, finances, promotions, and product strategies to maximize revenue and profitability. It’s a platform that helps you acquire new customers, prevent existing customers from churning, scale your financial operations, among other things.
Such a software platform leverages advanced analytics, historical sales data, and market insights to help you make informed decisions.
And how exactly does it do that?
It does so by helping you analyze pricing models, automate financial operations, giving you detailed insights into subscription metrics, revenue figures, and more. The platform also helps you with forecasting so you can determine if your strategies will translate to results in the future.
Additionally, it could come with other features. For instance, Younium comes with features like accurate revenue recognition and multi-currency support. This helps you get greater clarity into your financial performance and enables you to scale them as your subscription business grows.
In itself, Revenue Growth Management is a complex framework that has loads of moving parts. Here are the three major components that make it up.
Pricing is an important factor for both your subscription business and customers alike. It could prove to be a dealbreaker for many customers when making a purchase decision. At the same time, pricing can play a huge role in the profitability of your subscription business as it can impact your revenues.
What’s more?
Through pricing, you can also determine who exactly can be your customer. Price your service too high and it’ll likely only be accessible to enterprises. On the other hand, if you have a range of pricing options, you’ll have a whole bouquet of prospective customers ranging from new brands to enterprises.
And it’s due to these reasons that your pricing framework has to be optimized. Using AI (artificial intelligence) and ML (machine learning) models paired with existing data on your customer base, you can determine which packages are likely to bring in more customers or help you retain existing ones.
For instance, given that 65% of companies globally are already using gen AI in their businesses, it’s essential that you start doing so, too.
Image via McKinsey
Some of the other things that you can do are:
Case in point—a North American industrial camera company started leveraging pricing optimization to boost their revenues. Using data-driven insights and mapping price versus value, they registered a 79% increase in revenue in their core segment and 21% growth in their enterprise segment.
Here are some pricing models you can consider for your subscription business.
You could also use a mix of pricing models and leverage Younium to track your revenue and subscriptions with those. The reason here is that tracking revenue for these pricing models is difficult due to the unique terms, timing, and contractual arrangements for each. Younium can help you track revenues from the complex models to help you understand which ones work the best for your business.
Here’s how you can use revenue growth management software to improve your revenue by modifying your pricing plans.
Financial operations form the backbone of any subscription business. And that’s why it’s essential to make them scalable. This way, as your business grows, your financial operations will be able to keep pace with your growth and support it too. It’ll enable you to seamlessly grow your customer base, manage the larger client roster, and ensure your revenue increases in the process.
Here’s how you can do Revenue Growth Management through financial operations and how RGM software platforms can help you with it.
Proper revenue recognition ensures that revenue is recorded accurately in financial statements. RGM software like Younium help automate and streamline this process, reducing the risk of revenue leakage or misreporting.
Younium automates revenue recognition, ensuring compliance to ASC 606 and IFRS 15 standards. This serves as an audit proof and enables your auditors to easily navigate your system and verify your compliance. When your revenue is recognized at the right time, it aligns financials with actual performance.
Younium’s invoice automation tools streamline the invoicing process, reducing errors and delays. Timely and accurate invoicing improves cash flow, shortens the payment cycle, and enhances customer satisfaction, ultimately boosting revenue.
Additionally, Younium automates settlements for you and registers payments against invoices it has sent if you’re running AR in it. These entries are placed in segmented journals for ease of accounting too.
Subscription management is crucial for scaling SaaS businesses. And that’s why your Revenue Growth Management software platform has to offer features related to it. From terms to customizations and billing schedules,
Younium can help you manage your subscriptions with ease. Additionally, it takes care of recurring billing by sending timely reminders to customers, preventing churn and driving growth.
In a global economy, subscription businesses often have to transact in multiple currencies. RGM software with multi-currency billing capabilities simplifies international transactions, enabling you to expand into new markets with ease, leading to revenue growth.
With Younium, you don’t just get support for multiple currencies, but also for multiple entities. This way, you can get a detailed insight into the overall financial health and performance of your group of companies.
Accurate revenue forecasting is crucial for planning and decision-making. By accurately figuring out if a certain strategy can bring in the desired results, you can put more impetus behind it.
RGM software uses historical data, market trends, and demand forecasts to provide insights into future revenue streams. This enables you to allocate resources effectively and identify growth opportunities.
With Younium, you get detailed insights into your subscription data. From revenue and subscription metrics to booking metrics, you can track them all.
At the end of the day, your product is the thing that gets people to pay for your SaaS. And that’s why a key component of a Revenue Growth Management software platform is product optimization. This involves improving your product to attract and retain customers. By adapting your product to new trends, you make it more attractive for your customers.
Some of the things that can add up to product optimization include:
Creating a solid subscription product requires you to consistently keep adding new features to it. With each new feature introduced to your product, you make it more attractive for your customers.
You can use the new features to market your product to prospects and existing customers alike. New features also help your customers get more value for their money and keep them hooked to your SaaS.
One of the deal breakers for SaaS platforms are their integrations. Your customers may have a tech stack in place and it’d be a pity if your SaaS doesn’t integrate with the other tools they use.
That’s why it’s essential to have integrations that can help customers improve their workflow. You can look at your target audience and determine which integrations might be the most important for them.
Case in point—Younium offers numerous integrations with leading platforms like HubSpot, Stripe, QuickBooks, Salesforce, and Microsoft Dynamics 365, among others. This helps you build seamless workflows to help scale your revenue.
Younium also offers a well-documented public API that you can use to create custom integrations with your tech stack.
As mentioned earlier, the way you price your products can make or break your revenue growth. You can launch various pricing models for your products and then analyze their impact to figure out which strategies help you grow your business revenue the best.
These are the ones that you can double down on to give your business a boost. Keep doing this consistently to give your SaaS a solid growth.
The ease with which your customers can use your products can play an important role in helping you grow your revenue. A user-friendly product will likely help you retain a lot of your customers. Additionally, it’s a strong marketing point that you can use to attract new customers to your business.
At the same time, if your product doesn’t offer a great user experience, your customers will likely leave your SaaS and head to your competitors. Needless to say, ease of use is an important factor in the RGM strategy to ensure your growth.
One of the factors that goes into deciding whether a SaaS platform would be useful for a customer is the devices on which it’s available. Your SaaS could be available as a web app, desktop app, or even a smartphone app. So, make sure your SaaS can be used on all major operating systems on these devices.
Apart from integrating with other tools in your tech stack, Revenue Growth Management software platforms also help with product optimization in the following ways:
Just the way marketing optimization plays an important role in Revenue Growth Management, you also need to focus on sales channel management. By looking at the sales strategies and channels you use, you can optimize them for better results.
But why do sales channels matter when it comes to Revenue Growth Management?
One of the primary advantages of managing sales channels is that they help diversify your revenue streams.
Relying on a single sales channel can make your business vulnerable to market fluctuations or disruptions. Instead, by carefully selecting and optimizing multiple channels, you can reduce risks and ensure a steady flow and growth of revenue.
2. Targeting Different Customer SegmentsDifferent sales channels might attract distinct customer segments. Effective sales channel management allows you to tailor your marketing strategies and product offerings to cater to these diverse customer groups. In fact, you can even tie these strategies together to drive omnichannel sales.
3. Geographic ExpansionIf you're looking to expand your market reach to new regions or countries, managing sales channels becomes even more critical. Local market conditions, regulations, and customer behaviors vary, and your sales channels need to adapt accordingly to penetrate and thrive in new markets.
So, study the market that you’re expanding to carefully and analyze the results your sales strategy brings. Based on those results, modify the strategy to drive even more sales from that region.
So, how do you go about optimizing sales channels for revenue growth?
Utilize advanced analytics to gain insights into the performance of each sales channel. Monitor subscription metrics such as sales volume, customer acquisition costs, and conversion rates. This data can help you identify which channels are most effective and where improvements are needed to ensure sustainable growth.
Use AI and ML powered tools with RGM capabilities to further improve this analysis and get your sales channel optimization right. It can help boost conversions and drive your revenue growth.
2. Channel-Specific StrategiesTailor your efforts to each sales channel. Consider the platform, audience or consumer segments, and messaging that resonate best with customers in each channel.
Make sure your sales reps know which pricing strategies and messaging are most effective in specific channels. This alignment can improve results, enhance key capabilities, and support growth across all channels, driving overall business performance.
3. Omnichannel IntegrationOptimize sales by integrating multiple channels, creating a seamless experience for customers. Whether customers are interacting via website, mobile app, social media, or email, a unified message increases conversion rates.
This approach allows customers to switch between channels effortlessly, maintaining context and preferences. Centralized management of these channels enables businesses to track promotion effectiveness and drive performance, especially across diverse consumer segments.
4. Performance-Based IncentivesIncentivize sales teams based on the performance of each channel. This approach motivates teams to prioritize high-performing channels and improve lagging ones. With a robust revenue growth management solution, you can track key metrics per channel.
Rewarding performance based on metrics like customer acquisition and sales volume encourages teams to focus on driving sustainable growth through the most effective channels.
5. Customer Feedback LoopsRegularly gather and analyze feedback from customers in each sales channel. This data provides insights into what resonates with specific consumer segments and can guide adjustments in your RGM strategy.
By listening to customers, you can enhance business performance and build lasting relationships.
Now that you know the major factors that play a role in Revenue Growth Management, it’s time to look at how you can implement the various strategies that can drive your revenue growth up.
Data forms the foundation of Revenue Growth Management. Without it, you’d be left directionless as you won’t know the performance of your Revenue Growth Management strategies like sales channels or pricing plans.
In fact, if you don’t collect and analyze data, you likely won’t be able to optimize your revenues.
Here’s how data analytics helps you with Revenue Growth Management.
Data analysis empowers you to make informed decisions. By examining historical sales data, market trends, and consumer preferences, you can better align your strategies with what works best for your target audience. Additionally, forecasting using RGM tools like Younium can help you find the best path ahead.
Such data-driven decisions can help you make an impact on your revenue as you’ll be better placed to improve your pricing, marketing, and sales strategies.
2. Identifying Revenue OpportunitiesThrough data analysis, you can uncover hidden revenue opportunities. This might include identifying underperforming products or high-potential customer segments that can be targeted for growth.
Diving deeper into your subscription business’s analytics can also help you uncover some crucial insights regarding your finances. By seeing churn, renewal, and subscription trends on Younium’s dashboard, you can spot new opportunities.
3. Pricing OptimizationData-driven pricing strategies are a key component of Revenue Growth Management. Analyzing pricing data, competitor pricing, and consumer behavior helps in setting optimal price points to maximize revenue without compromising profitability.
Additionally, by understanding how different pricing plans perform, you can figure out which strategies will work best for your SaaS.
4. Improving Promotion EffectivenessYou can determine which campaigns generated the highest ROI, enabling you to allocate resources more efficiently. Additionally, you can predict future trends more accurately and preemptively change your strategies for them.
To effectively utilize data for Revenue Growth Management, you should leverage various precision RGM tools:
1. Data Analytics SoftwareAnalyzing data, especially big data, is no mean deal. You need to first collect all that data and then make sense of it. That’s where the need to invest in a robust data analytics software arises. These platforms can help you sift through large data sets and analyze them.
Based on this analysis, you can come up with insights that can drive your future decisions. Tools like Tableau, Power BI, and Google Analytics can help you visualize and interpret data effectively. Similarly, you can use Younium for analyzing your subscription, booking, and revenue metrics.
Younium also offers integration with business intelligence platforms which can help with data analytics. Alternatively, you can export data from Younium to analyze on third-party data analytics platforms.
2. Predictive AnalyticsBy leveraging the power of AI and ML, you can predict certain trends that could affect your revenues. That’s where predictive analytics comes into the picture. Predictive analytics algorithms use historical data to forecast future trends and customer behavior. This enables proactive decision-making, such as anticipating demand fluctuations.
For instance, you can figure out if a certain season leads to more users for your SaaS. It helps you plan better for such demand peaks and you can accordingly get more server space for your SaaS. It also helps you with budgeting for any such variations in demand.
Similarly, you can predict how a particular strategy could affect your revenue. With Younium’s forecasting features, you can find the exact trajectory of your SaaS in terms of subscription revenue and churn. Using the insights from these forecasts, you can drive better revenue growth for your SaaS.
3. A/B TestingWhen you’re testing out different pricing plans or features for your SaaS, it makes sense to run A/B tests. These tests essentially help you understand which variation of your pricing or features works best for your SaaS.
You could even use A/B testing for various marketing and sales channels. These include emails, website layouts, landing pages, and more. The key here is to remember that A/B testing isn’t a set-and-forget method. Instead, it’s a continuous process and you should keep running these tests every few months to further improve your growth prospects.
4. Customer SegmentationData-driven insights can help you refine your customer list and split it into segments that you can use to target your customers with more laser-sharp personalized messaging.
And this doesn’t apply solely to marketing or sales. In fact, you can even customize the pricing for various customers. For instance, you could tailor the pricing of your SaaS for each country.
A CRM integration with your RGM platform comes in handy for such personalized approaches. For instance, Younium offers integrations with CRMs like Dynamics 365 CE. It enables you to synchronize customers between both platforms. At the same time, all subscription and invoice data from Younium would be available in the CRM for targeted messaging.
5. Feedback and SurveysCollect feedback from customers through surveys and feedback forms. Such feedback helps you understand what you’re doing right and what needs changing—right from the end users’ mouths. It helps you understand consumer needs better.
By implementing the changes that they want, you can instantly improve your customer experience and meet their expectations. This is particularly helpful in preventing churn and improving your Net Recurring Revenue (NRR).
Now that you know all about the importance of data analytics and insights, and how you can leverage them, let’s learn about creating a Revenue Growth Management plan.
But what exactly is a Revenue Growth Management plan?
In simple terms, it’s a roadmap that clearly outlines the steps you need to take for driving your revenue growth and taking it to the next level. The strategy provides you with a clear direction that can help you reach your goals.
So, why is it important to have such a plan?
Here are the steps you can take to create your Revenue Growth Management plan.
Like every other strategy, you need to set goals for your Revenue Growth Management plan before starting it. It’s only once you’ve got them figured out that you can start planning how to reach them. Additionally, you can determine your KPIs only based on your goals.
So, begin by clearly defining your revenue growth objectives. Are you aiming for a specific percentage increase in revenue? Do you want to expand into new markets or customer segments? Understanding your goals is essential.
2. Conduct Market ResearchConduct a comprehensive analysis of your market. Understand your competitors, customer demographics, purchasing behaviors, and emerging trends. Collect as much data as possible for each of these factors that influence your market. It’ll help inform your Revenue Growth Management strategies and drive better results.
3. Do SWOT AnalysisPerform a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to identify internal and external factors that can impact your revenue growth. Leverage your strengths and address weaknesses.
Expanding to new markets but aren’t able to charge in their local currency? That’s a weakness. With a Revenue Growth Management software platform like Younium, you can solve it.
Identify such weaknesses and see how you can fix it with your RGM platform.
4. Get Segmentation RightSegment your consumer base into distinct groups based on factors such as demographics, behavior, and preferences. Use the data you’ve collected on your existing customer and audience base for this.
Additionally, brainstorm and identify various segments in your audience based on parameters like product pricing, industry, and more. This allows you to tailor Revenue Growth Management strategies to each segment.
5. Strategy DevelopmentBased on your analysis and segmentation, develop specific Revenue Growth Management strategies. These may include pricing optimization, targeted promotions, product enhancements, and sales channel adjustments.
Make sure you A/B test these strategies to ensure that you only double down on those that are driving real results like minimizing churn and growing market share through revenue growth.
When it comes to finances, make sure you automate routine tasks like sending out invoices, revenue recognition, and payment collection. It helps minimize errors and with a platform like Younium, you can easily track them all through the detailed reports it generates. It also ensures you’re compliant with ASC 606 and IFRS 15. By automating these operations, you also create a strong foundation for the execution of your strategies.
6. Resource AllocationDetermine the resources required to execute your Revenue Growth Management strategies. This includes budget allocation, personnel, technology, and any partnerships or collaborations.
Some of these resources, like budget, should also be taken into account before you start implementing your strategies as they will determine the scale at which you can go about it.
You must also select the right software solutions to track your metrics in advance. Determine which metrics need tracking and choose the solution based on them. Younium, for instance, can help you track all important subscription metrics.
7. Create Timeline and MilestonesCreate a timeline with milestones to track progress. Establish deadlines for the implementation of specific strategies and the achievement of revenue growth targets.
Doing so also helps you keep your team on the same page. It even enables you to track your team’s performance in adhering to the deadlines.
8. Continuous Monitoring and EvaluationThis is where those goals come into the picture all over again. You should continuously use the KPIs to measure where you stand in comparison to your goals. It can help you understand if you’re falling short or meeting them. Accordingly, you can plan on tweaking your strategies further to improve your revenue.
You can use a subscription management and recurring billing platform like Younium to track your subscription metrics and churn. Using the insights from this data, you can understand the impact of your Revenue Growth Management approach and accordingly tweak it.
Younium also tracks all subscription events for you, so you can see how they’ve impacted your subscription and revenue metrics. It enables you to find the right strategy to ensure revenue growth.
9. Establish Feedback LoopsEstablish feedback mechanisms to collect input from customers, sales teams, and other stakeholders. Use this to refine your strategies and adapt to changing market conditions.
This is where surveys and reviews come in handy. You can use onboarding, exit, and ongoing surveys to understand how your customers feel about your service. It can help you find issues that need to be addressed.
Similarly, you should look out for customer reviews on platforms like G2 and TrustPilot to see what customers are talking about your SaaS. It helps to monitor your social mentions too. By identifying the common issues mentioned there and acting upon them, you can improve your customer experience.
10. Documentation and CommunicationDocument your Revenue Growth Management plan comprehensively and communicate it to all relevant stakeholders within your organization. Ensure everyone understands their roles and responsibilities. It helps keep everyone on the same page and brings accountability too.
It’s the key to successful implementation of all that you’ve planned.
Additionally, ensure that the Revenue Growth Management software platform you’ve chosen provides you with ample documentation related to subscriptions and business finances.
For instance, Younium provides rich transaction details, ASC 606 and IFRS 15 compliant revenue insights, and booking and subscription metrics. It also features a built-in reporting engine that enables you to create reports on any object. By analyzing these reports, you can determine future steps to be taken to drive your revenue growth.
Younium also gives you the ability to create custom dashboards for your stakeholders on the platform. This way, you can give full transparency to them with accurate and updated data.
Well, so you now have a clear idea of how to go about creating your very own Revenue Growth Management plan. But before you go ahead and start making one, it’s important to take a look at the benefits and challenges of Revenue Growth Management so you can make an informed decision.
Some of the advantages of implementing Revenue Growth Management include:
Implementing Revenue Growth Management is easier said than done. There are several new challenges that you could face.
These include:
Some of the main levers or components of Revenue Growth Management are:
Some of the biggest benefits of opting for Revenue Growth Management are:
The end goal of Revenue Growth Management is to ensure steady consistent growth for a business. It helps achieve it by understanding and optimizing the various factors that affect revenue growth, including the pricing, product, marketing, and sales. It uses data and analytical algorithms to fuel this growth.
4. How does Younium help with revenue growth management?Younium is an end-to-end B2B subscription management platform that helps with all aspects of revenue management. From helping you accurately recognize revenue to automatically generating consolidated invoices, it simplifies the entire process.
As your business grows, subscription revenue management becomes more difficult. Younium can scale with your business and handle complex billing and revenue recognition scenarios to simplify things for your finance team.
What’s more, is that it helps you comply with regulatory standards like ASC 606 and IFRS 15. It also calculates taxes and helps you comply with local tax regulations.
Overall, with Younium, you don’t need to worry about revenue and billing as it handles all the complexities associated with a subscription business.
5. What is the definition of Revenue Growth Management?In simple terms, Revenue Growth Management is the process of driving sustainable and profitable growth of your SaaS business by increasing your customer base, optimizing pricing, marketing, and sales. You do this through a range of customer acquisition and retention strategies.
Revenue Growth Management is a powerful strategic approach that empowers your SaaS business to achieve consistent and sustainable revenue growth. What makes this approach stand out from the rest is the fact that it looks at the holistic optimization of revenue through various factors including pricing, product, finances, and sales.
This healthy approach also ensures that your business consistently acquires new customers and retains existing ones by elevating their experience.
That said, it’s important to have a solid RGM plan in place before you start out. You must also carefully consider the various challenges that you might encounter in the smooth rollout of this strategy.
So, check where your business currently stands and implement Revenue Growth Management to take your revenues and profits to the next level.
And with a subscription management platform like Younium that offers automation features, you’ve got precise subscription and revenue data that can help with better billing and business decisions, leading to improved revenues. Get a demo of Younium today to understand how it helps supercharge your revenue growth.