Revenue leakage is lost revenue from your organization. While it is commonly associated with the sales process, leakage can happen at any stage in the customer lifecycle. Left unchecked, revenue leakage will put a significant dent in organization-wide efforts.
Ultimately, solving revenue leakage requires a three-pronged approach – generate more revenue (new business), safeguard your profit margins (operations), and avoid leakage from customer churn (renewals).
Unfortunately, revenue leakage can be a silent killer, a force that hinders without being noticed. The phrase ‘one step forward, two steps back’ comes to mind; if revenue leakage is an issue, your organization could take one step forward (“closed won” opportunity), but two steps back (ultimately losing revenue).
It’s a troubling challenge for Salesforce Admins, RevOps professionals, and other revenue-generating teams – however, there is one tactic you can implement to start plugging the holes.
What Is Revenue Leakage?
In simple terms, revenue leakage is lost revenue from your organization. Picture a bucket with multiple holes. When you fill the bucket with water, some water will drain out of the bucket, making it impossible to retain all the valuable water.
Apply this analogy to your CRM — you fill up your pipeline with valuable leads and opportunities, yet some disappear (leak) from your pipeline. While revenue leakage will look different by industry, there are some alarming benchmarks, such as:
- 42% of companies experience some form of revenue leakage (MGI)
- 1-5% of realized EBITA* is lost to revenue leakage every year (EY)
(*Earnings Before Interest, Taxes, and Amortization)
You can’t keep your eye on the mass of interactions that every prospect, and customer, generates – especially as communication happens outside the walls of your CRM. One major cause of revenue leakage is data entry and data sync (plus errors) to/from Salesforce with communication platforms.
The human needs some help from artificial intelligence (AI) to understand the complex web of communications happening at scale.
Have you ever considered why your pipeline, healthy with 100% keen prospects in the “Qualification” stage, may dwindle to 20% by the “Negotiation” stage? Capturing activity data could be the missing piece.
1. Activity Capture
This may sound basic, but in fact, very few organizations capture activities into Salesforce sufficiently. Activities include the meetings, emails, and calls that are managed outside of Salesforce, for example in Gmail, Google Calendar, etc.
Activities are one of the few types of data that give you insights across the entire customer journey. By automating activity capture, you’ll be able to centralize your data in a way that reduces the risk of errors.
You fill up your pipeline, yet some leads and opportunities will disappear. Were they neglected by your sales team? Maybe. Were they indicating sentiment that wasn’t picked up by the sales rep? Also possible.
Revenue Grid’s activity capture tool automatically captures and saves customer data from all touchpoints (emails, calendars, and communication tools) to your CRM – no more lost leads or activities.
2. Analyze Captured Activity Data with AI
Now that you’re confident all communications with prospects and customers are stored as Salesforce Activity records, how should you draw meaningful insights from all this data?
Your first answer may be “Salesforce reports”, or “CRM Analytics”, and these options will give you a helicopter view of data. However, communications are becoming increasingly complicated – just like a helicopter flying overhead, you will need supporting technology to identify trends disguised among the masses of data, and to “zoom in” on revenue leaks.
But why are opportunities being lost from the pipeline, right at the last moment?
All these are interesting to inform your business decisions.
With a revenue intelligence tool, such as Revenue Grid, you can use AI to analyze captured data and quickly spot when and why leaks occur – and make a plan to fix them, whether that be to automate certain processes, or coach sales reps.
3. Provide Users With Guidance
So, you’ve identified some causes of revenue leaks – now it’s time to tackle them. Something as simple as guidance and prompts, at the right time, will ensure your team always follows the right steps to keep Opportunities healthy.
For example, if it’s a matter of your reps forgetting to follow up with customers after a key meeting, you can set up Revenue Signals from Revenue Grid that guide reps to engage customers at critical points in the sales process.
4. Measure the Results
Following your revenue leakage audit, and having implemented guidance, you will need to keep tabs on whether your revenue is trending in the right direction, and proving your efforts were worthwhile.
It may not be the time to celebrate – instead, forecasting analytics can shine a light on even deeper-rooted issues. For example, if your committed pipeline and forecast remain misaligned even after fixing the leak, there’s a good chance you need to rethink your entire sales process.
A revenue intelligence platform will visualize the differences in your pipeline and processes before and after plugging leaks, just like Revenue Grid, shown below:
Tips for Tackling Revenue Leakage
- You can’t manage what you can’t measure: Centralize off-platform data (like activities) and invest in robust analytics tools.
- Understand your baseline: Get familiar with your current “as is” status so that you will be able to compare these figures with the results. Tap into Revenue Intelligence experts, who will have a strong indication of industry-specific benchmarks for various measures.
- Close data silos: A major cause of revenue leakages, we’re referring to not only data silos between Salesforce and other platforms, but between teams, too. While this guide has focused on sales examples, these technologies and techniques can be applied across your organization to maintain an excellent customer experience (reducing churn).
- Keep accountable: Teams need to stay accountable to one another. When marketing captures and nurtures leads for sales to then lose opportunities at the last hurdle, it’s frustrating for everyone involved. Similarly, if a customer were to cancel their product/service, or not renew, that’s frustrating for the sales team who won the customer in the first place.
Solving revenue leakage requires a three-pronged approach — it will take time to identify, plug, and prevent leaks. This guide has shown you that plugging one hole can be relatively simple — going forward, you will need to ‘zoom out’ to the lost revenue opportunities pouring out from the other remaining holes across your organization, beyond just the lost pipeline.
We’re gaining momentum, let’s not stop now!