Arrest the Drip with Revenue Leakage Analysis And Visualization
Revenue leakage is the under-the-radar loss of money and productivity due to operational system inefficiencies.
A system glitch could cost millions. In 2019, Cathay Pacific experienced a system glitch, where $16,000 worth of first-class seats (from New York City to Danang, Vietnam) were sold for $675. That was a massive 96% discount in total. The massive revenue loss was unintentional, but the airline decided to honour the “New Year Special” deal.
Revenue leakage is a persistent problem in organizations. Leakage in revenue can be prevented before it brings a devastating impact on profits.
Pricing, invoicing, and account reconciliation errors are common in retail and e-commerce businesses. These errors may happen when you rely on manual workers to safeguard your financial data.
Revenue leakage often happens when data entry is inaccurate; there is an input of wrong digits or other clerical errors, resulting in missed opportunities and a loss in revenue.
Revenue leakage is essential to prevent as it could potentially eat into the wafer-thin margins of your business.
This often happens unnoticed and recent studies have indicated that 1% to 5% of a company’s EBITDA is prone to revenue leakage. Revenue leakage may impact your organization’s profitability, and plugging this leak can contribute directly to improving your company’s bottom line.
New research from ESG analyzed 1,350 organizations worldwide to produce a three-stage maturity curve for data utilization and put a dollar value on moving up that curve:
1. Leading-edge data innovators use data to raise gross profits by 12.5%.
2. 97% of the top-tier innovators meet or exceed their customer retention targets.
3. Mature organizations are almost 10 times more likely to draw more than 20% of their revenue from new and innovative products and services.
CFOs need advanced technologies that reflect accurate pricing to combat revenue leakage before it starts.
Data analytics and artificial intelligence tools can help detect and mitigate such anomalies. By monitoring key performance and operational metrics, businesses can take appropriate action when it happens and perform corrective measures to minimize inadvertent losses.
The benefits of using data analytics in fraud and anomaly detection:
– Stop criminal fraudsters and miscreant employees from hurting your organization
– Stay one step ahead on the digital curve to win the digital fraud war
– Accurately forecast revenue potential and stay closer to budget
– Always stay up-to-date on your business's financial performance
Don’t leave money on the table! Protect your revenue with data-driven solutions.
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Source: How to use anomaly detection to seal revenue leakages due to price errors
Source: What is Revenue Leakage and How to Stop it Before It Starts