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Warning! You’re Leaking Revenue … but how Much and how Fast?

Check the revenue gauge

My first car was an old Pontiac Bonneville.  The car was fantastic – a little ‘seasoned’ but otherwise perfect for my 16-year-old self. There were just two problems: first, it had a slight, but steady, oil leak.  Second, the ‘check oil’ light stopped working. The first problem I knew about. Unfortunately, I found out about the second problem the hard way while driving 65 mph down the highway. The engine locked up, the car was towed, and because of the ‘seasoning’, I ended up trading the title for the tow fees.

One great thing about my job is that I have the opportunity to talk to senior leaders at some of the best companies in the world. Their biggest concern isn’t that they are leaking revenue – they assume some leakage as a cost of doing business – it’s that they don’t know how much or how fast. The problem isn’t the oil leak, it’s the oil light.

There are lots of solid business reasons to leave some revenue on the table. Maybe you shouldn’t exercise CPI+ price increases because there’s strong downward pressure on your industry. Maybe you should over-service your customer and not charge certain fees because of a currently “rocky” relationship.

The problem is, in most companies, these decisions are handled in an ad hoc way, often by sales reps or service teams who lack all the necessary information. No one knows the magnitude of the opportunities.  No one is developing a programmatic approach to solve the problem. And that means no one is accountable for driving results.

It’s a shame, because those results add up quickly.  I’ve worked with companies who’ve discovered an annual recurring revenue gain of over $12 million, just by examining one big source of leakage across their most valuable customer relationships.

The truth is that significant revenue opportunities could be escaping from almost anywhere along the customer value lifecycle—from sales to delivery, operations to retention. Here are just a couple of the places you should be looking:

Purchase Commitments

Your customers made a purchase commitment for a specific volume of product or services or a certain spend amount. But are they still meeting their agreement? Without consistent checkpoints in place and timely, accurate insights, you could be getting shortchanged.

Cost Pass-throughs & Chargebacks

When your company’s supplies, utilities or other operational fees increase, are you eating the full cost? Identifying and applying appropriate cost pass-through opportunities to customer accounts can make a significant difference in your bottom line.

As an executive, you need to make conscious, informed decisions about your business. When my oil gauge was working, I knew how much oil I was leaking.  I knew when to add oil and I knew how much. Without that visibility, I found myself buying another ‘seasoned’ car (with a bad transmission, but that’s a blog post for another day).

Discover the other points where you could be losing big revenue opportunity in our 5 Major Leaks in Your Customer Value Lifecycle infographic.

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