Across various industries, many companies are “leaking” revenue, often for reasons that are in plain sight. It is quite common for the business processes responsible for such revenue loss to be deemed acceptable in the name of customer service or customer care. In truth, however, these practices may often go unnoticed by the customer or simply accepted, but not truly valued. In a competitive market, these practices may do little to help a company and even worse, can erode the company’s profitability.
Revenue leakage can be due to a wide variety of causes. Some of the more common ones include how agreements are structured, product design and packaging, order requirements and fulfilment, terms and conditions of service agreements, and distribution procedures.
Think about how (not whether) your company may be missing out on increased revenues due to processes, business practices, or policies that result in revenue leakage. For example, are customers unrestricted by a minimum order quantity and able to place orders so small that the orders are actually unprofitable if you consider all the costs associated with the order? Is the same discount offered to loyal customers regardless of the amount they purchase each year? Are you failing to charge for servicing your customers, or for offering a level of service that exceeds some threshold?