How can you identify revenue leakage using KPIs and metrics?

KPIs and metrics are what tie together company strategy with operational performance. They are important to get right, but equally critical not to create too many overcomplicated ones that are difficult to track and hold a team/business accountable to. When done well, they provide leading signals of where a company should focus its efforts and measure the effectiveness of an execution plan. They exist to set the operating cadence and performance benchmark for a business.

Identifying revenue leakage involves keeping an eye on crucial metrics and KPIs to find potential areas of loss. Important indicators include customer churn, average revenue per user, customer lifetime value, conversion rates, billing errors, unbilled services, discount effectiveness, renewal rates, and late payments. Monitoring market share and competitors is also crucial. Anomalies in these metrics may suggest customer dissatisfaction, ineffective pricing, or operational issues leading to revenue loss. Businesses should focus on fixing billing errors, improving customer retention, adjusting pricing strategies, and enhancing overall customer experience to prevent and mitigate revenue leakage.

KPIs (Key Performance Indicators) são medidas quantificáveis que ajudam a avaliar o desempenho de uma empresa em relação a seus objetivos estratégicos, financeiros e operacionais. As métricas são medidas específicas usadas para quantificar diferentes aspectos do desempenho de diferentes áreas de uma empresa.

While KPIs are directly linked to strategic objectives, metrics are supporting data that provide additional details and insights into the KPIs. For example, if your KPI is revenue growth, some relevant metrics include revenue per customer, average deal size, customer retention rate, and customer lifetime value.

En un enfoque de BPM (Business Process Management), se puede modelar un proceso de atención al cliente en el que el cliente pasa por diferentes etapas o puntos de contacto, y el BPMS orquesta y supervisa cada una de estas actividades. al utilizar la ejecución de los procesos de atención al cliente y monitorear KPI y métricas relevantes en cada etapa, puedes identificar de manera efectiva las oportunidades comerciales perdidas y tomar medidas para minimizar la fuga de ingresos. Este enfoque basado en datos te permite tomar decisiones informadas y optimizar continuamente tus operaciones. Después de la ejecución del proceso, puedes realizar un análisis más detallado para identificar las causas subyacentes de cualquier fuga de ingresos.

KPIs and metrics are crucial for identifying and addressing revenue leakage because they provide measurable insights into various aspects of a business's performance. By tracking key indicators related to sales, pricing, billing, collections, and customer retention, companies can pinpoint areas where revenue is being lost due to inefficiencies, errors, or fraudulent activities. KPIs like revenue per customer, churn rate, and accounts receivable turnover ratio can help detect issues such as underpricing, late payments, customer dissatisfaction, or billing inaccuracies. By regularly monitoring these metrics and implementing corrective actions, businesses can minimize revenue leakage, optimize revenue streams, and improve overall performance.

Os KPIs são indicadores que construímos com base nas informações empresariais com o objetivo de controlar a performance do negócio em relação a algum ponto de vista, seja faturamento, estoques, saúde financeira, liquidez, ou indicadores específicos do negócio. Sobre a Receita, temos alguns indicadores que podem ser importantes no acompanhamento destas, sejam, KPIs de Margem Bruta, Margem líquida, Margem EBITDA. Dentro desta cerne, é possível acrescentar indicadores específicos de negócio, sejam eles macroeconômicos, de vendas de custos e de atividade operacional, que podem trazer insights relevantes para identificar os possíveis "ladrões" de receita, com isso poderíamos até criar planos de ações para mitigá-los.

In my experience KPI’s would help the company in setting a benchmark for it is performance and to have a faster response to changes by analyzing specific metrics which are important to the success of the company ( the KPI’s). And by having a set of KPI’s related to revenues such as sales , MRR , growth in customer base the company would be able to identify any leakage at early stages.

Assuming you have the right system of KPIs in place you will definitely see where the leakage is. The way I like to think of KPIs is a system of double-clicks. I like SaaS metrics the most, they are very elegant but let’s stay business model agnostic and keep it basic without going into funnel, churn etc. Revenue is down. Why? Double click on that, what’s inside - some notion of Quantity x Price. Price ok. Quantity is down, ok, what analytics we have inside (products, customers, etc). So as you keep drilling down you will know where the leakage is. You might need to do more work to know the exact reasons, factor in seasonality, market conditions, but you will be able to identify the problematic metric dragging total revenue down.

KPIs and metrics are essential for detecting revenue loss as they offer an objective view of business performance. By monitoring indicators such as conversion rate, churn rate, and average ticket value, companies can identify problematic areas negatively impacting revenue. This allows for the implementation of effective corrective actions to minimize revenue loss and optimize financial performance. In summary, KPIs and metrics provide valuable insights that help companies make informed and strategic decisions to maintain and increase their revenue.

Ao escolher KPIs e métricas para perda de receita, deve-se selecionar indicadores que estejam diretamente relacionados às principais fontes de receita da empresa. Isso pode incluir métricas de vendas, como taxa de conversão, valor médio de transação e percentual de devolução de clientes, bem como métricas de eficiência operacional, como custo de aquisição de clientes e margem de lucro.

To define relevant KPIs and metrics, it is necessary to identify objectives, select key indicators, define goals and monitor consistently with the support of analysis tools.

When choosing KPIs and metrics for revenue leakage, prioritize those directly tied to core revenue sources. This includes sales metrics like conversion rates, average transaction value, and customer return rates, alongside operational efficiency metrics such as customer acquisition cost and profit margins. Additionally, ensure alignment with strategic goals, and utilize analysis tools for consistent monitoring and optimization.

For my experience, I share 2 ideas on how to prevent revenue leakage. One, make a list of customers who bought 2 years ago but did not buy in the last 6 months. Interview such customers to understand their defection and offer them a discount to come back. Second, perform price sensitivity on the products and services (A/B Testing is a great tool) to see if prices can be raised without customer defection. Humans are creatures of habit and familiarity, so well-researched price increases may stick.

Existem vários KPIs e métricas para perda de receita: Taxa de conversão de vendas Valor médio de transação Taxa de cancelamentos/devoluções de clientes Custo de aquisição de clientes (CAC) Margem de lucro bruto Taxa de renovação de contratos e novos pedidos A que eu mais gosto de utilizar é a matriz RFV, que mede a recência, frequência e valor. A Recência é calculada pela diferença entre a data atual e a última compra, a Frequência é o número total de compras em um período, e o Valor é a soma total gasta pelo cliente

Toda informação empresarial precisa ser facilmente visualizada. A melhor forma disso acontecer é pelos KPIs. As empresas tem q entender que a informação é o grande tesouro, que precisa ser trabalhado.

Correlation between the operationals/performance records with financials would be a good revenue leakage identification. Revenue per sales order, revenue by FTE, ROI/ROE, would be an example. Compare this indicators against business case, previous periods, budget/forecast scenarios and industry benchmarks

In my experience, addressing revenue leakage requires close attention to KPIs and metrics. For instance, tracking the revenue realization rate and metrics like revenue leakage rate and DSO are vital. To combat leakage, we've re-engaged inactive customers with tailored discounts and conducted price sensitivity analyses using A/B testing to optimize pricing strategies

Para utilizar KPIs que monitorem e evitem a perda de receitas, é importante construir um planejamento estratégico eficaz e abrangente. Durante esse processo, é necessário compreender onde está a geração de valor do seu negócio, entender as expectativas e necessidades dos clientes e conhecer a persona do seu público-alvo. Dessa forma, ao criar metas, é possível desenvolver KPIs que estejam em consonância com a satisfação e as necessidades dos clientes. Quando esses KPIs estiverem alinhados com o planejamento do negócio, será possível monitorá-los continuamente e tomar decisões quando não estiverem de acordo com o planejado. Posteriormente, será possível criar um plano de ação mais direcionado e alinhado com a materialidade para o cliente.

Ao monitorar de perto os KPIs e métricas relevantes, os empresários podem identificar padrões e tendências que indicam possíveis áreas de perda de receita. Uma vez identificados, os gestores podem e devem investigar as causas de maneira profunda, além de implementar estratégias para mitigar a perda de receita, como otimizar processos, melhorar a eficiência operacional ou ajustar a estratégia de custos e preços.

As I consider, analyse pricing and discount KPIs, which means monitor metrics related to pricing and discounts, such as average discount rate, price variance across customers or regions, and price erosion. Even though analysing customer data KPIs, follow metrics related to customer data quality, such as data completeness, accuracy, and timeliness. Poor data quality can lead to missed revenue opportunities, so it is important to maintain high standards in data management. And tracking contract compliance metrics related to contract compliance, such as contract renewal rates, adherence to service level agreements, and utilization of volume discounts.

We can assess the quality of revenue by looking at what percentage of revenue is recurring and what is new. Higher % of recurring revenue is always better as it adds stability to cash flows. Also look at the incremental cost of generating additional revenue. Revenue with low incremental cost is more scalable. Shifting focus to cashflow, revenue can be analyzed from the lens of conversion to cash. Monitor the relationship between revenue and receivable through day sales outstanding (lower the better) or revenue and unearned revenue / advances. In case of unearned revenue to revenue, inverse is true. A higher ratio is desirable as it means business is collecting revenue in advance.

Em um Negócio são vários os KPIs de diversos pontos de vista que podem ser considerados em sua gestão, o interessante neste ponto é jamais utilizar um único KPI como fonte de tomada de decisão, deve-se sempre mesclar vários de vários pontos de vistas diferentes, de tal forma que se possa abranger todo o negócio ao se desenvolver um plano de ação.