Nearshore Americas

Plug Revenue Leakage and Watch Those Profits Climb

All businesses have one primary concern. Irrespective of whether you own the business or are a key stakeholder, you will be focused on revenue generation and all it entails. When all attention is given to bringing in new customers and ensuring that existing accounts continue to grow, one aspect that tends to get overlooked is revenue leakage.

If you are not familiar with this term, it’s time to understand it better and ensure that it’s addressed. This will enable your business to keep its hard-earned revenue from falling through the cracks. Revenue leakage is a major pain point for most organizations, and we find that there are a number of reasons for the same.

We will explore the causes of revenue leakage in the context of a telecom client and also the options available to reduce or prevent it. 

What Causes Revenue Leakage?

Revenue leakage is a dreaded word in any business. It’s very much in everyone’s best interests to identify and eliminate every cause of revenue leakage. One of our telecom clients, upon investigation, identified that their revenue leakage was to the tune of over US$2 million per year.

When we delve into revenue leakage, we can find several key reasons for the same. In the case of our customer, incorrect charging or billing was the primary reason. When the business is charging its customers, it may not be pricing its services accurately. They were offering discounts over existing discounts for their customers every so often.

Without proper analytics, an organization may end up providing the same discount offers multiple times to one customer. Revenue leakage could also be due to configuration errors, order management problems and similar issues. In the case of our telecom client, they were offering roaming services to their customers, without margins, due to inadvertent additional discounting.

Revenue leakage is a major problem, and it could be due to reasons such as the ones we’ve explored or rather obscure, easily overlooked patterns.

Mitigate Revenue Leakage

The best way to begin the process is to thoroughly analyze the revenue generation streams and business areas of the organization in order to identify the reasons for leakage and eliminate them. There are digital revenue assurance services that can minimize or eliminate leakages through advanced analytics as well as through a rule-based engine.

In this instance, for the aforementioned telecom client, we began monitoring aspects such as daily usage, activations and deactivations, and other relevant data. That gave us full visibility of leakage scenarios. A digital revenue assurance operations team was set up to monitor and fine-tune existing controls to generate insightful dashboards. This enabled the client to have access to all the necessary insights on a daily, weekly, monthly and quarterly basis.

With such 24/7 monitoring, there was an improvement in the detection of issues, and the client was able to mitigate risks in real-time.

Boost Profits

There are many benefits to implementing a good revenue leakage detection solution that not only identifies potential leaks but also allows for real-time mitigation of the issues. When this is done, the client experiences 100% leakage detection coverage leading to a better client experience.

Since the client had direct access to all the revenue leakage dashboards we developed, they were able to make correct decisions on a near real-time basis. They managed to identify formerly unknown leakage reasons such as miscalculations in the order management systems, normalization issues in usage records, rejected records and other related discrepancies in their billing configurations. It was only a matter of time before the results showed themselves.

For example, a customer reached out to an operator for a new connection. When the customer was being onboarded, he was put on a discounted enterprise plan instead of the retail plan that he had requested. Due to this manual error, he was offered various freebies and free minutes on international calls which were not on the plan that he had selected. In such cases, the revenue loss cannot be recovered and gets tagged as bad debt. Similarly, the company was able to identify various configuration-related problems which lead to billing inconsistencies.

Once they successfully implemented the revenue leakage solution, they were not only able to stop the leaks of over US$2 million in revenues, but also saw operational efficiency improve by 30%. This resulted in overall cost savings of 50%.

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It’s clear that plugging revenue leakage is an important aspect to be considered by all businesses. 

As a business owner or key stakeholder, we recommend you get an appropriate solution that will enable you to not only identify and eliminate current issues, but also continue to monitor relevant aspects, allowing you to mitigate potential future leakages in real time.

Anand Chandrashaker

Anand’s team is responsible for identifying client needs and deploying transformation levers that bring together technology and business domains – through levers such as analytics, process mining, automation, and implementation of proprietary / COTS solutions. He has managed a variety of roles in the past that includes FP&A, Corporate Strategy, M&A, and post-merger Integration.

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