Taking Control of Hidden Revenue Leakage: Steps Towards Improved Revenue Precision
Discover how to control hidden revenue leakage and enhance revenue precision for robust financial growth.
- September 5, 2023
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Taking Control of Hidden Revenue Leakage: Steps Toward Improved Revenue Precision
Most businesses face the hidden menace of revenue leakage. This unseen challenge silently erodes profits, and it is imperative to address it effectively. Indeed, BCG has projected that businesses collectively suffer an annual loss of over $2 trillion. This staggering figure accounts for revenue that has not been effectively captured, including inefficient practices in sales, marketing and customer success, resulting in diminished enterprise value.
Every revenue-impacting employee should have complete insight into their revenue process in order to be able to manage it and provide results that can be relied upon. This is sometimes referred to as revenue precision. Revenue-impacting employees are those who have an influence on revenue in some form, from sales and marketing to finance and supply chain, and may account for up to half of the workforce in most businesses.
Important factors impacting Revenue Precision
Here’s a look at how certain factors can impact Revenue Precision :
Operational GTM Risks
Human or system induced variability in GTM programs can create operational risks for the business and impact revenue precision. Process inefficiencies or inconsistencies cause revenue leakage, with a percentage of potential revenue left behind, making it difficult to attain revenue targets quarter after quarter. Examples of these operational GTM issues include investment in marketing campaigns with unpredictable returns, ad hoc delays in lead routing and handling, lack of 360 degree account journey visibility, opportunities stagnating due to lack of rep discipline or external factors, missed upsell and cross-sells, etc. The end result of these revenue leakage is opaqueness in the revenue engine causing unpredictable and variable revenue underperformance.
Visibility and transparency
A lack of visibility into business operations for every revenue-impacting employee inhibits quick identification of revenue leakage, preventing prompt corrective actions thereby impacting revenue precision. Data transparency and standardized metrics ensure a shared understanding across the team, fostering collective efforts towards delivering predictable revenue. For sales teams and managers, such visibility and transparency entails a precise understanding of incoming deals and their overall journey, while executives require a comprehensive view of the entire business, necessitating dependable, real-time insights into projected revenue throughout the quarter.
Economic Conditions
Economic fluctuations can significantly influence revenue precision. In periods of economic instability, accurate revenue prediction becomes more crucial as it provides businesses the ability to swiftly respond to market changes by promptly adjusting their strategies. This aids in sustaining financial balance during volatile economic times, thereby decreasing the risk of undetected revenue leakage.
Globalization
As businesses expand across borders, the complexity of managing revenue across different markets, currencies, and tax laws increases and can also impact Revenue precision. Thus it is crucial for maintaining financial control and compliance in diverse markets, preventing discrepancies that can result in losses or legal issues.
Benefits of Revenue Precision
Here’s a look at some of the benefits of revenue precision.
Forecast Accuracy
Gartner’s research indicates that less than half of sales leaders have high confidence in their organization’s forecasting accuracy. Improving revenue precision allows organizations to address the shortfall in predicted revenue and more consistently meet targets. Other benefits include improved data-driven decision making, improving business performance, safeguarding stakeholder confidence and trust in key executives.
Financial Stability
By accurately tracking and projecting revenue, businesses can promptly detect and address any potential revenue leakage, ensuring healthy and predictable cash flows. This proactive management of revenue helps to secure financial stability for the organization.
Competitive Advantage
The ability to access accurate and timely revenue information enables companies to swiftly respond to changing market conditions and implement necessary adjustments to curb revenue leakage. Additionally, this information can inform strategic decision-making, guiding companies to focus on the most optimal GTM channels, customer cohorts, and products/services. In essence, the precision of revenue data becomes a strategic tool to stay ahead of the competition.
Investor Confidence
Lastly, revenue precision is paramount for boosting investor confidence, particularly when it comes to preventing revenue leakage. Investors seek assurance of sound financial management and healthy returns on their investments. Precise and transparent revenue reporting can provide such assurance, demonstrating that the business is not only effectively managing and preventing revenue leakage but is also poised for sustainable growth.
Strategies for Enhancing Revenue Precision
Let’s look into the strategies to improve revenue precision:
Building End-to-end GTM Visibility
To improve revenue precision, it’s essential for companies to have an accurate understanding of how their end-to-end revenue engine is performing – from marketing to SDR to sales to product and customer success. They need to have this visibility on an on-demand basis both from a top-down and bottom-up perspective. Ad Hoc reports or dashboards are not able to provide this kind of visibility at the speed of business. By integrating with siloed GTM tools and running as a layer of revenue intelligence above, it is possible for organizations to implement a single source of truth across all of their siloed GTM operations, one of the fundamental building blocks towards improving revenue precision.
Plugging Revenue Leakage
As mentioned earlier, human or system induced variability in GTM programs become a source of revenue leakage for the company creating operational risk and impact revenue precision. Identifying and correcting these inefficiencies and inconsistencies is essential to improving revenue precision. Modern day revenue leakage mitigation tools are now available that can model the end-to-end revenue engine, formulate key risk indicators (KRIs) and key performance indicators (KPIs) specifically designed to detect, root cause and recommend ways to remediate instances of revenue leakage.
Driving Policy Adherence
Given that many of the revenue process inefficiencies originate from human action (or inaction, a ‘fix it and forget it’ approach cannot be assumed with revenue leakage. Humans are creatures of habit and over time, they will resort to the same incorrect behaviours that led to the revenue leakage in the first place, leading to a drop in revenue precision over time. Maintaining revenue precision will require that the process improvements are adhered to over time. This kind of policy adherence needs to be driven via regular training sessions with revenue-impacting employees. In addition, revenue leakage mitigation tools can be deployed to ensure that the revised policies are being followed over time in order to deliver to the revenue precision requirements of the organization.
BigLittle can help you discover hidden revenue leaks and improve revenue precision
BigLittle RevenUp delivers instant integration with critical revenue data sources, creating a safe and easy integration to your GTM data for the RevOps team. This consolidated connectivity allows you to combine all your previously-siloed operational go-to-market data from various systems into a single reliable resource, enhancing cross-functional visibility, identification of revenue leakage and revenue optimization. Additionally, decision-making processes are more informed, strategic planning is amplified, and operational efficacy is remarkably improved.
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