Revenue Leakage

Revenue Leakage

Trace where records and dollars silently exit one specific funnel instance, prove each loss is real, size the recoverable amount, and rank the fixes by owner.

• Lifecycle lens: Winning by Design's Bowtie (winningbydesign.com/bowtie). Leakage spans acquisition through onboarding, renewal, and expansion, not just the sales stages - most teams over-inspect the top and never reconcile the back half.
• Late-stage leak: MEDDPICC's "Paper Process" element (meddicc.com/meddpicc) names the classic late-stage leak - deals that die between verbal yes and signature.
• Working method: process mining applied to the funnel's own event log, the approach Celonis popularized. Reconstruct the process from timestamps as it actually ran, never from the documented flowchart.

Ground Rules

• Trace, never redesign. The stage set, routing rules, scoring model, and handoff processes are inputs. If one of them is the defect, say so in one line and route to the matching skill in Reference - do not rebuild it here.
• The deliverable is a leak register, never a hygiene checklist. Stale-deal counts, missing fields, and push counts are input signals for locating leaks; reporting them as the finding is a different skill's job (mbfinotti/revops-skills@sales-pipeline-hygiene). Leakage asks where records and dollars exited without an accounted-for reason, and what that is worth.
• Nothing is a leak until it passes the three-way classification below. Counting healthy disqualification as leakage is the most common false finding in this genre. Mistaking a data-capture gap for a funnel drop is the second most common.
• Size the recoverable amount, never the gross. Presenting the gross pipeline value of stalled deals as "leaked revenue" is the standard way these reports lose credibility with finance.
• Stay on one funnel instance for one period and one entry cohort. Program-level patterns across teams, funnels, or quarters are out of scope.
• Label every numeric threshold with its provenance: published practice, practitioner consensus, or derived from the user's own data. Never present a vendor heuristic as an industry constant.
• Warn off the circulating speed-to-lead statistics below - the vendor pages carrying them cite nothing:
• "respond in 5 minutes = 100x more likely"
• "21x more likely to qualify"
• "average B2B response time is 42 hours"
• "38% of leads never reply"
• the "391% / 60-second rule"

The HBR 2011 paper "The Short Life of Online Sales Leads" (Oldroyd, McElheran, Elkington) is real and citable as evidence that response latency matters, but the specific multipliers commonly attached to it were not verifiable. Measure the user's own response-time-vs-conversion curve and derive the threshold from that.

The Conservation Test

Every record that enters a funnel step must leave it through exactly one countable outcome:

• advanced
• closed-lost with a recorded reason
• disqualified/recycled with a recorded reason
• still open inside that step's expected dwell window

Build the reconciliation per transition:

entered  =  advanced + lost(reason) + disqualified(reason) + still-open(in window)  +  residual

Every non-zero residual demands an explanation. Before anything is called a leak, run the three-way classification on it:

1. Real leak - the record was viable and stopped moving for a process, system, or ownership reason (never contacted, never accepted, stalled past window, never invoiced). Only these get sized and ranked.
2. Healthy disqualification - the record left for a legitimate reason and the exit was recorded. Not a leak. A funnel with zero disqualification is not healthy; it is unfiltered.
3. Data-capture gap - the record actually progressed but the system never recorded it: an untracked step, work living in an inbox or spreadsheet, a missing timestamp, a conversion completing in a system that never writes back. The drop is in the data, not the funnel; the fix is instrumentation, and "fixing the funnel" here fixes nothing.

Untracked-step detection is the signature move. For every pair of adjacent systems or owners, ask what happens in between and whether a human does it by hand. Any step performed in an inbox, spreadsheet, or chat thread has no timestamp and therefore no measurable drop-off - treat every such step as a suspected leak site until instrumented or proven pass-through. A step that produces no records carries no measurable leak; name it as an instrumentation gap instead of guessing a number.

B2B and B2C / Self-Serve

• B2B sales-led: leak sites are human action points - respond, route, accept, advance, chase signature. A rep-owned pipeline exists, so residuals attach to owners.
• B2C / self-serve / PLG: most of the funnel has no rep-owned pipeline; the mechanism is technical rather than human - trial and checkout step drops, payment failure and dunning gaps, involuntary churn, auto-renewal misses. Involuntary churn runs 20-40% of total subscription churn (Baremetrics, citing Paddle research), and 2-5% for B2B SaaS specifically (Baremetrics' own platform data - vendor-aggregated, not an independent study).
• Identical across both, apply without modification: the conservation reconciliation itself, the three-way classification, the recoverable-dollar sizing rule, and the rule that an untracked step cannot be measured until instrumented. Only the leak-site catalog and the evidence types differ.

Interview

Ask before analyzing. One question per message; multiple-choice where possible; skip anything already answered.

• Which funnel and motion: B2B sales-led, sales-assisted PLG, pure self-serve/B2C? One funnel instance only - which one?
• What triggered this investigation: a number that dropped, a board question, deals that vanished, a gut feeling?
• What are the funnel's steps as actually operated (not the official diagram), and which system holds each segment of the record trail - marketing tool, sales system, billing system, spreadsheets?
• What can actually be exported or queried: stage-change history with timestamps, owner history, closed-lost and disqualification reason codes, billing/invoice records, payment-failure events?
• Where do manual steps live today - which handoffs happen through an inbox, a spreadsheet, or a chat message?
• Who owns each funnel segment, and who owns the spaces between segments?
• Which period and entry cohort should the analysis cover? (One cohort, followed forward - never a mixed-vintage snapshot.)
• Average deal or subscription value, and the historical step-to-step conversion rates if known?
• What unexplained residual per transition are you willing to sign off on? The Pass Threshold gates on this number and it has to be yours, not this skill's. A common working bar is 5% of entering records per transition - a practitioner figure, not a published standard. Take 5% only as a placeholder when no better basis exists, and tighten it from the funnel's own reconciliation history as soon as one run produces that history.
• By what date must the recovered revenue actually land - this quarter's close, a board date, no fixed deadline? (A hard date deletes process redesign from this round's register and leads with alerts, routing fallbacks, and rework of the records already leaked.)
• Do you want a one-off recovery of the records that already leaked, or a fix that stops the leak recurring? (One-off promotes rework; compounding promotes alerts, routing fallbacks, and recovery sequences.)
• What is the effort ceiling - analyst hours only, engineering capacity available, or a cross-team process change on the table?
• Analyst-only deletes instrumentation and redesign fixes.
• Engineering capacity promotes recovery sequences and instrumentation.
• A cross-team mandate is what makes process redesign rankable at all.

Workflow