What you need to know about Revenue Leakage
What you need to know about Revenue Leakage
RevOps and the $2 trillion problem
The bad news is you’re probably experiencing revenue leakage.
The worst news is you probably don’t even know it.
The (kinda) good news? You’re not alone.
According to BCG, revenue leakage is a $2 trillion problem across all industries.
It’s also where RevOps becomes vital in this new reality.
But first, what do we mean by revenue leakage?
Revenue leakage is usually talked about in the world of finance.
Let’s take billing as an example.
The gap between booked and recognized revenue is revenue leakage.
And that gap is driving between 1-5% of EBITA, (which is a lot of money!).
That kind of leakage also exists in the bowtie.
Beyond finance, a lot of folks out there are starting to look at leakage in terms of forecasts.
I.E., if something is dropping out of forecast, then that’s revenue leakage.
I think that’s true, but I would go further than that.
And yes, we are expanding the traditional definition of revenue leakage a bit.
Instead of only referring to revenue that your organization has earned but has not collected, we (and Clari) also see revenue you counted on earning but have not collected.
And that’s actually happening throughout your funnel.
For example, you put into place a solid plan of how you will achieve your growth goals.
But without knowing you have all of these small little issues (leaks) throughout your bowtie that keep you from hitting target.
And this can have a real impact on the success of the business.
The unseen problem
The biggest problem we have with leakage in your funnel?
It might be happening without you realizing it.
Because If you were to know that it happens, you could fix it immediately.
If you knew that you were not invoicing the right amount, you would fix that right away.
If you knew you your conversion rates with one key industry are slipping, you would address that.
If you knew our SDR ramp is dragging out a month on average, you would address that.
If you knew one product is churning more than it used to, you would address that.
Sometimes, it feels like the holes have an easy fix to them.
And I’m sure you have fancy dashboards to track the core issues you expect to see.
But what happens if there’s something wrong in your funnel that you don’t expect?
And it’s not just about being aware of leakage.
It’s about being aware in real time.
Because you can always see that leak in a report or ad-hoc analysis, or some QBR.
But we all know that by the time that report comes out, it’s already too late.
The solution?
You need to see these leaks as they happen.
Where RevOps comes in
The good news?
Most of you are already tackling this.
Stopping these kinds of leaks is exactly the purpose of RevOps.
Doing this drives revenue, saves costs, and helps you mitigate risks for the business.
If BCG says it's a $2 trillion problem. It’s likely also a big problem in your company.
We’ve been thinking a lot about revenue leakage at Growblocks recently, and as part of our revenue platform, we’ve created a way where you can see and address those leaks as they happen. I would love for you to check it out and let me know your thoughts.