One of the financial metrics used in contact centers, revenue leakage is quite simply any revenue that is expected to make it into your business’ coffers and yet doesn’t, for whatever reason. Plugging these leaks requires solutions that are both operational and customer-experience oriented, but doing so can mean thousands or even millions of dollars added to your bottom line.
Revenue leakage is one of the financial metrics by which your contact center can be judged. It is quite simply any revenue that should make it into your business’ coffers and yet doesn’t, for whatever reason. It is often defined in a couple ways:
- Money that you have to pay back to your customers as reimbursement for experiences that didn’t go as they expected, mistakes your employees made, etc.
- Revenue that doesn’t come in as projected due to billing errors, missed cross-selling and upselling opportunities, etc.
Common reasons for revenue leakage include:
- Unforeseen billing and invoicing errors. For example, healthcare organizations have to account for leakage from denied insurance claims and other billing errors. The Centers for Medicare and Medicaid Services has found that only 70 percent of claims are paid at first submission; of the remaining 30 percent, 60 percent are never resubmitted, to the tune of millions of dollars lost forever.
- Other inefficient, often manual processes such as payroll that can make it difficult to tie expenses back to incoming revenue.
- Discounts (whether sanctioned or not) and other promotions or rebates that can cause greater revenue erosion than projected.
- Any mismatch between customer expectations and your deliverables, even those due to poor communication.
How Bad is Bad?
At first glance, some level of revenue leakage would seem to be a necessary operational expense – after all, no one can maximize every opportunity all the time. But then you run across statistics like these:
- The Aberdeen Group has reported that manual billing leads to error rates of 12 to 15 percent.
- The 2016 Council for Affordable Quality Healthcare Index found that manual transactions cost providers and health plans approximately $3 more than similar electronic transactions.
- Analysts are reporting the following leakage rates within the banking industry: BCG, 3-5 percent; Tower Group, 7 percent; and DHL has estimated that some banks mischarge 70 percent of transactions.
So it seems clear that ensuring your contact center isn’t contributing to these levels of leakage could help your business regain thousands or even millions in lost revenue.
Stopping the Drip…
… With Your Customers
There are two aspects to this: One, to understand which of your customers’ unmet expectations are costing you money, and two, to make sure your contact center is offering incentive packages that don’t actually erode your business’ revenue.
The first step is a full analysis of returns, cancelled contracts, and other issues your customers are having with your products, your team, and your business in general. Next is a related analysis of the process and outcomes of any discounts, rebate programs, and cross-selling and upselling promotions; find out how each affects your bottom line and continue only those that most successfully lead to bigger deals.
Finally, train your agents that the most effective way to convince customers to pay full or higher prices is to sell value. Quantifying selling points like excellent customer service, on-time delivery, and high-quality products will build customer loyalty much more effectively than allowing either your agents or your customers to focus on the lowest price.
… Through Your Own People
Employee attrition is the bane of any contact center, and its contributions to revenue leakage should not be underestimated; for example, the Everest Group has reported that annualized attrition of 30 to 50 percent causes a revenue leakage of 1.6 to 2.6 percent before any other contributing factors are considered. This leakage is caused by the gaps in efficiency between the fully trained, knowledgeable agents who leave and their replacements.
Does your contact center have a plan in place for dealing with attrition? It should include best practices for hiring as well as agent training and should include its own budgeting.
… Through Your Systems
Some of this just means studying your own processes and working smarter. For instance, many healthcare practices fail to offer different ways to pay, such as payment plans; yet offering multiple ways your patients can pay up front will only help prevent revenue leakage. Along the same lines, doing an analysis of the reasons for your practice’s claim denials will allow you to put plans and checks in place to minimize this form of leakage.
The next system to consider is your own access to your business’ data. Is your data siloed or trapped in inaccessible locations or systems? Is all of your customer data easily aggregated and available to your agents? Can you maximize your data through highly targeted, automated campaigns such as renewal notices or new product announcements?
Answering these questions can be daunting, but considering how much of your contact center’s processes can take place in the cloud, it doesn’t have to be. VHT has decades of experience simplifying contact center processes through solutions that overlay your existing structures. They can help plug every source of contact center revenue leakage, from giving your customers more control over their experience with your center to making sure your agents can see all relevant data about each contact.