How to calculate the attrition rate of your customer base?

Some companies manage to attract new customers, but all end up losing some, and some by whole wagons! In fact, every year, companies lose an average of 10% of their customers, or 50% every 5 years, according to a study by the Harvard Business Review.All sectors and companies are impacted by the volatility of customers who are more demanding and informed than ever: the rise of certain international e-Commerce sites, plethora of offers just a click away, increased competition and new entrants, price fluctuations, etc. who do little or nothing to retain their current customers are witnessing, powerless, a massive exodus of their customers to competitors who will do anything to attract and retain them. This loss of customers has a name: Attrition, or Churn (in the language of Game of Thrones). In this articles we explain how to calculate the rate of attrition of its core customers .

Why calculate the churn rate?

Acquiring a new customer cost between 5 and 25 times more than retaining already acquired customers. It is therefores in your best interests to try to retain your hard-won prospecting customers !

Then, and as Venerable William Thomson said: “ If you cannot measure it, you cannot improve it .” For non-English speakers, this means: “ if you can't measure it, you can't improve it ”.

To reduce your attrition rate, that is to say: reduce the number of customers who leave you over a given period, you must first know the number of customers who leave you. It seems obvious, yet without a CRM tool  or an up-to-date customer file, few companies are able to give you the number without going through the accounting.

Once the extent of the phenomenon has been identified , you can investigate the reasons for these departures ! If you don't knows how many customers you are losing over a period of time, you will not be able to plan corrective actions, including a different strategy to decrease the bleeding, which will result in lost sales.

Definition and formula of attrition rate

The attrition rate is an indicators that allows you to measure the loss of subscribers, or customers over a given period. Conversely, we find the retention rate.

Tip : Retention rate + Attrition rate = 100%. For example :

Tx Att + Tx Ret = 100. Easy!

When should you calculate the attrition rate?

Calculating this rate on a monthly basis is a good compromise. Over a week, too many parameters may come into play, and your analysis may be biased. If you calculate it over the year, it's already too late to fight back!

One point per quarter or four-month period is, in our opinion, essential. Everything also depends on the customer life cycle (or lifetime value in used vehicles). We talked about it in this article on customer acquisition cost .

 

 

Our advice to reduce your attrition rate

4.1 Identify your loyal customers and segment them

Do any trends emerge from your analyzes? If this is not already the cases, create your different personas  based on the profiles that you have been able to develop thanks to the data you have on your loyal customers.

4.2 Personalize your customer relationship

Thanks to the implementation of a marketing automation tool ,

4.3. Set up automated scenarios around critical dates

Always thanks to a CRM, or a marketing automation solution, set up workflows to manage in a personalized way the relationship around the key dates of the customer journey in your company.

Breaking down the customer journey into several stages allows you to position yourself on each critical date and improve the care of your customer, and ultimately their loyalty.

Healthandbeautytimes         themarketingguardian  imtechies  techiesguardian  healthsunlimited

 

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