Revenue base is your annual billing done against your regular business activities. In other terms, it is company’s actual annual income. This base enables company to define their annual spend. Revenue leakage is deep coming in this base because of some or other reason. Compromising in quality or in service, compromising on relationship engagement with customer, new vendor’s introduction in market, drastic changes in existing competitor’s market acquisition policy; slowly decay your revenue base. End of customer contract, sudden changes in policy of customer AND OR vendor; immediately impact revenue base.
Compromising in quality or in service:
In your ongoing business relationship with existing set of customers, if you start compromising in quality or in service, customer gradually start noticing it. Considering your long term association, first customer warns you about the degradation happened. If you fail to take any corrective measures, eventually customer starts searching out better alternative from open market.
Compromising on relationship engagement with customer:
Recurring business always happen on relationship quotient. Your active engagement in customer relationship ensure current and future business. On the other hand, if you start taking customers for granted, competition always there at next corner to churn your business account.
New vendor’s introduction in market:
Market with existing set of vendors and existing set of customers always go hand in hand and seamless till the time someone new come into the market to break this synergy. New vendor comes with new offerings to make the mark and for new logo acquisitions. Like any company, market also has revenue base for any particular material or service, we called it as market size. New vendor has to settle with some portion of this market size which of course a churned revenue from some or other existing vendor.
Drastic changes in competitor’s market acquisition policy:
For some or other reason, mostly either change in top management or new investment, suddenly existing competitor change the gear. Their new market acquisition policy with fresh branding and promotion and go market approach disturb the market synergy and your existing customers start sharing business with that game changer.
End of customer contract:
You may have defined contract term or period with customer. Customer may have project base requirement. Customer may shift to new location. The service or material you are providing may not require any more. For any of this or other reason, customer discontinues your contract. This has direct and immediate impact on your revenue base.
Sudden changes in policy of customer AND OR vendor or Government:
Beyond material or service you are providing, there are many factors which may impact your supply and revenue. Customer’s OR vendor’s new policy and norms. Changes in government policy, restrictions of areas, banned on certain material. It can be anything. These external factors force to stop the ongoing business with immediate effect.
We need to understand here, may it be anything, your 80% results comes from 20% efforts. Same with business; 80% revenue come from 20% customers. These 20% customers are always critical each contributing considerable revenue. You always need to care these customer with more active engagement.