Defining Sales Leakage

by James Obermayer

Sales leakage, that is the loss of potential sales for whatever reason, can have a devastating effect on an organization if not properly dealt with. Sales expert James W. Obermayer of Cerius Interim Executive Solutions addresses the problem in the following article.

"Me? My company? We're doing fine," said the company president. And then he looked up from his desk, and asked, "Tell me again what you mean by sales leakage. We're making quota. Almost. Don't think we have any leakage. Tell me more about it."

"Maybe you don't have it, "I said, "But most companies have some degree of it." Sales leakage is like a dripping faucet. An occasional drip here and there isn't too painful. But a leaky faucet can waste thousands of gallons of water each year. Translate the leaky faucet to sales leakage from 25 or 30 points in the enterprise and you have enough accumulated leaks to prevent your sales team from making quota."

"Give me some examples," the president said, "Just a few. And don't just tell me that the salespeople need training. Everybody talks about training. I know we need more training. Tell me something I don't know."

And that started the conversation; the give and take that led to the probability of enough leakage that it was a problem. It was draining a few percent from many sources. A drip here and there on the wrong product or at the wrong time steals from the bottom line and that is the issue. Sales leakage drains sales and profits from even the healthiest organization.

A thorough sales leakage search will find both small and big issues that most people know about, but don't have the authority to fix. Yes, it can be sales productivity losses; marketing spending without an expected ROI, sales leads that go unanswered, sales territory turnover and maybe even untrained salespeople. The root causes of sales leakage waste the efforts of your most valuable human capital: sales and marketing staffers.

Some leakage is easily found; some takes time to search out with the help of sales and marketing personnel. The real issue for finding and fixing sales leakage is getting the commitment of the company president to get everyone working on the leakage problem.

Companies can do a leakage review on their own. If they know what to look for, issues can be found and addressed and then money will drop more quickly and surely to the bottom line. Quotas can be met. The permanent fixes usually take a consultant who knows what to look for so that leaks can be stopped.

A professional leakage audit takes a few weeks for problems to pin pointed. The best way I have found to implement permanent fixes is to build co-captained teams led by a representative of the Cerius Consulting Group and the marketing and sales management staff. The teams work together to prioritize recommendations that bring the most immediate relief (60 -120 days). The longer-term leakage issues are addressed on over time by teams of people most affected by the outcome.

There are many issues to consider: Are you successfully capitalizing on the prospects you have? Are your sales costing you too much? Are you losing too many sales to your competitors? Are sales and marketing personnel working together as a team?

The end result is that the consultant stays engaged only long enough to make sure that the issues are being addressed. Follow-up meetings for a few quarters keep everyone on track.

As for this company president in our example, it took 90 days to find the leaks. No management changes were required, but processes and procedures required some repairs. It isn't difficult. But someone has to make the decision that it's time to find the leaks and improve the sales volume along with the bottom line.

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