Strategy Centre

Lost Revenue Analysis by IRP DeepAgent

21 September 2015

Lost Revenue Analysis by IRP DeepAgent

An organisation’s CFO or FD is responsible primarily for reviewing the company’s financial performance and, on the back of that analysis, to identify trends and recommend actions that will lead to increased revenues, profitability and efficient return on investment on costs deployed.

The key weapons for a CFO are therefore data and analytical tools. Within the company this analysis might take the form of one of the following:

  • Margin analysis: Which products are generating the highest levels of margins, which are most price-sensitive and need to carry lower margins. This leads on to pricing analysis and testing.
  • Channel analysis: What are the relative sales performances of different channels (e.g. Google, Facebook, shop vs website etc.), and what is the relative CPA of each.
  • Timing trends: Comparison with the same month or week year-on-year to review sales, excluding any seasonality impacts, or month-on-month sales to review growth or lack of growth.

Whilst this analysis can generate hugely tangible results by drilling into performance and translating trends, the metrics are essentially comparing the company against itself at either a different point of time or between individual cost centres.

However, what a CFO ultimately wants to know is how the overall market is performing, as this will allow more meaningful benchmarking of their own results.

Putting it simply, if a CFO’s analysis results in a decrease in CPA from 3.5% to 3%, how can he or she know that the overall market achieves rates of 2.5%?

Unfortunately, most businesses tend to keep their financial performance very confidential; any results that must be published are high level and usually well out of date by the time of release.

IRP DeepAgent Artificial Intelligence

Lost Revenue Analysis by the IRP DeepAgent Artificial Intelligence (AI) engine is a huge step forward for serious CFOs to tackle this issue and to materially improve their analysis. The IRP DeepAgent analysis allows an additional dimension to be introduced in financial reporting: results are compared to targets, to history and now to a real externally-driven potential figure.

As an illustration, let’s say a company grows sales from £250,000 in June to £300,000 in July. This is great news — isn’t it?

A 20% increase looks good on paper. However, deeper interrogation via the IRP DeepAgent Lost Revenue Analysis highlights three problems, despite this 20% growth:

  1. The company isn’t participating in Facebook as a digital marketing channel, with all paid advertising going via Google, Bing and Yahoo. The IRP will calculate the potential revenue lost to that company through not participating in a channel using metrics taken from all other IRP clients, factoring in those that are using the channel well and extrapolating based on the company’s current revenue and traffic levels. Suddenly revenues look like they should have been 3% higher in July.
  2. The company is utilising Google but its CPA is shown to be significantly higher than the average for other IRP users and those in the same sector. The IRP DeepAgent recalculates the revenue that could have been achievable if costs had been deployed at the achievable CPA. It looks like another 8% of revenue has been lost this way.
  3. The conversion rate for the company is also lower than the average rate for other IRP clients. This highlights that even more revenue was lost due to poorer conversion techniques being used than the stronger players on the market. 6% sales lost as a result!

IRP DeepAgent Empowers CFOs

IRP DeepAgent’s Lost Revenue Analysis can empower CFOs to make fast, effective decisions to grow revenue further than any internal metrics can tell them. They will be able to report back that, whilst sales were 20% up, they should have been 37% if everything was deployed to perfection.

Knowing the true targets that are achievable — as opposed to an arbitrarily-identified wish point — will also lead to an increasingly knowledgeable and targeted organisation.

To understand more about IRP DeepAgent Lost Revenue Analysis, and how other data metrics in the IRP Insights suite can benefit your organisation, contact:


Anonymous - Is the Deep Agent Lost Revenue calculator ready to be used right now?
11 Feb 2016 12:31
Anonymous - Daniel, yes there is. If you contact your account manager we can talk you through how to access this information.
12 Feb 2016 10:49
Anonymous - Thanks Niall.
12 Feb 2016 10:57
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